As we all know, APIs are absolutely everywhere. APIs power almost every aspect of a modern tech business and even non-tech businesses. You may have an internal API that is used by developers to power internal systems and external APIs which expose functionality more publicly. As with any functionality, APIs can also be used to drive revenue by selling them to users in need. Whether you’re selling a REST API, GraphQL API, or other API, learning how to sell your API has become a popular ask. let’s take a look at a few considerations for selling your APIs.
How Do You Build an API and Sell It?
Building an API with the intent to sell it requires one massive thing: value. When looking at the API offering, you should be able to determine if there is an external need for that API, the volume of businesses that are in need of such a service, and most importantly, whether they are willing to pay for it. If you have determined that a person or business is willing to pay for your service, this is a great starting point.
Once an API is built, to sell it, you’ll need to do a few things. The first order of business is to put in authentication and authorization. This is needed so that you can make sure that paying users are granted access and that no unauthorized or non-paying users can access the API.
Next, you’ll want to ensure that proper rate limiting and quota limits are set in place. This ensures that users are only accessing the API based on the terms in their agreement. It also ensures that the endpoint is not overwhelmed with traffic, protecting against a denial of service attack.
After this, you will need to find a way to charge for API usage. This includes deciding on a pricing strategy, a registration/sign-up flow, and a way to tally up usage and charge for it. This component is usually referred to as API monetization and is where the actual revenue is derived from.
What Are the Challenges of Selling APIs?
The challenges of selling APIs include correctly implementing monetization, service availability, and security. These challenges are covered in the above section and can usually be remedied by using a suitable API management tool, creating and deploying secure APIs, and using an easy-to-use monetization platform.
The challenge of selling APIs, aside from the monetization component, is very similar to simply offering APIs for consumption in general. There is a constant battle for security and keeping tight authorization. Having services constantly available through a high-availability setup is also crucial since having a service down, especially if the API is driving revenue for the business using it, could be disastrous. Reliability is a massive factor in keeping users on a platform or continuing to pay for your API.
The last challenge to consider is how much the API is costing you internally. For instance, let’s say you have created a credit rating API that retrieves a user’s credit score from various credit bureaus. You are charging your users $3 per API call, post-paid. The credit bureaus are also charging you $1 per API call, meaning that your net revenue per call is $2. What if a user uses your service and decides not to pay their invoice at the end of the month? You will still be responsible for the API cost to the credit bureaus even if your customer refuses to pay. This challenge isn’t specific to APIs but is something you should consider when looking at potential challenges.
How Do You Monetize an API?
You’ve built an API, decided to sell it, and now need to figure out how to charge and collect the revenue. For this, you will need to have a system that logs API traffic and can charge upon it. There is always the opportunity to build a custom solution to handle monetization but it can come with pitfalls. As per any homegrown solution, engineering and ongoing support costs must be accurately forecasted. Generally, these costs bloat, especially as you scale.
An alternative is to use an out-of-the-box solution that is customizable to fit your use case. Moesif offers such a solution through the Billing Meter feature on the platform. With a Moesif Billing Meter, API traffic is logged, filtered, and sent to a billing provider, like Stripe or Recurly, so that revenue can be collected. This approach is highly flexible since Moesif can work with multiple API integrations and billing providers.
With the monetization capabilities in place, the last step is to decide on a pricing model for your APIs. Once pricing is decided and included in the monetization setup, you’ll be on your way to creating revenue.
API Marketplace vs API Portal
An API portal is a place where developers can register and manage access to an API. Much of the time, an API Gateway will be used to generate this customer-facing API portal so users can access published APIs. API portals are an extremely popular way to manage API access and offer users a direct way to use your API. A typical API portal will allow users to browse available APIs a particular company offers, enroll, and generate an API key for access. The portal may also contain API documentation or other API knowledge base articles to help users figure out how to use the API.
An API Marketplace is a place where developers can list their APIs to bring in more users. Examples of popular API marketplaces include Rapid API, APILayer, and many others. API Marketplaces allow developers to browse through APIs that are available from any companies that are listed on the marketplace. Marketplaces also generally offer an API portal as well so that users can manage their API access in a self-serve way.
Getting Developers To Use Your API
With everything in place for selling your API, the last step is to get developers to use it. This can be done by listing it on an API marketplace, building a website and marketing around it, or many other ways you’d normally promote a product.
Once you’ve attracted some developers, making the API onboarding process is crucial for getting developers to use your service. If the API is difficult to use or sign up for, developers may churn out and not use the service. Keeping track of how your onboarding process is performing can be a great way to make sure users are getting value from your service quickly and easily. Onboarding and overall ease of use are two things to keep an eye on when attempting to attract and retain developers using your API.
Selling APIs to drive business revenue is becoming more and more common. Hopefully, the above overview gives some insight into exactly how to do it and the challenges to overcome. In this post, we looked at how to sell an API, the challenges, the differences between an API portal and an API marketplace, and implementing monetization. Lastly, we looked at a few factors for attracting and retaining the developers that are using your APIs.
To make sure you’re tracking and analyzing API traffic and monetizing your APIs effectively, check out Moesif. Sign up today to try out Time Series charts, Retention reports, Billing Meters, and other great tools to help you sell your APIs.