Ron Huber

Ron Huber is the CEO and co-founder of Achieve Internet. He's an experienced senior executive with over 15 years managing and leading software teams in the online media, Internet, and software development space.

About the Author



APIs are a critical asset for businesses as they provide access to valuable information and functionalities. They also create an opportunity for API monetization—the process of charging for access to or use of an API to create new revenue streams.

But how are businesses monetizing their APIs? With Apigee!

This article will discuss the key components of Apigee API monetization as well as what you need to do to set it up.

What is Apigee API Monetization?

The Apigee API Monetization solution provides enterprises with powerful tools to streamline their business and create new revenue sources. Apigee is a leading platform for API management, providing everything you need to monetize your APIs successfully.

With Apigee, you can easily set up rate limiting, analytics, and billing, which are vital for any successful API monetization strategy. Apigee also offers a wide range of tools for marketing your APIs and analyzing how clients use them.

Critical Components of API Monetization

Several key components go into Apigee's API monetization. If you're new to this process, here are the essential tools you need for your monetization success.

  • API Portals: A partner ecosystem that makes it easy for developers and non-technical partners alike to access and consume API products.

  • API Proxies: API proxies act as intermediaries between applications and backend services, making API requests on their behalf.

  • API Product: An API product is a collection of API proxies that you can use to deliver customized, production-ready bundles to your developer community.

  • API Product Bundle: An API product bundle is a collection of related API product services that can be accessed through APIs by developers to build software.

  • Rate Plan: A rate plan defines the costs of accessing APIs provided as part of a monetized API bundle between your company and your client.

How to Set Up Apigee Monetization

You don't want to share your API with just anyone, which is why you'll need to follow certain steps that give you full control of who has access to you API ecosystem and how they can use it.

Once you've completed these steps, you will be able to share your APIs with your developer community and build your revenue stream.

1. Render API Proxies

API security is an important concern for any company that processes API requests and responses. Creating a proxy between your API and applications that call it is one of the most effective ways to protect your API once you monetize it.

By creating a proxy that models your API, you can easily control how it's used. You could then attach policies to transform and mediate requests based on your monetization needs.

The most common policies to attach include:

  • Security: Authentication, authorization, and other content-based security measures, for example, VerifyAPIKey, VerifyAccessToken, and OAuth 2.0.

  • Traffic Management: The policies in this category will help you control who accesses your API proxy and how they're able to use it, for example, the Quota policy.

  • Monetization Variables: This policy is a great way to to populate the monetization variables with usage data so that the monetization system can calculate charges/fees, for example, the DataCapture policy.

  • Developer Subscription Checks: This policy determines if the developer has sufficient funds in their account and is a legitimate client, for example, the MonetizationLimitsChecks policy.

2. Set Up API Products

Once you have set up your API proxies, it's time to create market-driven API products. These are specific groups of resources that address the needs of developers and business units in your community.

API products allow you to:

  • Control how your APIs are presented to developers

  • Enforce consistent branding across all of your API products

  • Make it easier for developers to find and use the APIs they need

  • House your APIs in a single portal

  • Apply and enforce policies at the product level for APIs within a product

  • Simplify policy management for large numbers of APIs

Remember, product registration is required for your developers to view the API product offering. To do this, you'll have to complete a few more steps.

3. Develop a Transaction Recording Policy

When monetizing your API, you need a transaction recording policy specifying the details that Apigee will use to calculate charges, revenue sharing, and refunds for API usage.

For example, Apigee can perform revenue sharing calculations correctly if you inform it of your pricing structure, such as what constitutes a successful transaction and the net or gross price of a transaction.

The transaction recording policy enables monetization to capture all the necessary information to process payments more efficiently.

4. Create an API Package

Next, you'll need to create an API package or API product bundle. This collection of API products is presented to developers as one cohesive unit and is typically associated with different monetization rates.

API packages are a great way to make your API product more visible. It can help you reach new customers and increase monetization rates.

For example, you have a "payment" API product and a "messaging" API product. You can bundle these products together to create a new package that provides payment messaging resources, making them more appealing to developers looking at this type of service or solution.

5. Define Your Rate Plan

Once you've created a package, create one or more rate plans that will define the business model for your API.

Your API rate plan should include all the relevant details to determine how and what you will charge for using your service. It also defines whether there's a premium, setup fees, or revenue sharing, amongst other options available with this type of contract.

You can customize your rate plan by configuring the billing currency and frequency. Use an API key to access various APIs that will enable you to generate usage data for analysis and invoices based on this information.

Apigee supports both prepaid and postpaid billing.

  • Prepaid: With prepaid billing, app developers pay an upfront fee before the API products are used, and the per-transaction cost is deducted from their wallets.

  • Postpaid: With postpaid billing, the app developers are billed after using your API products.

6. Integrate an API Portal

Once your packages are created, rated, and registered, app developers will need to associate their apps with the API packages they'll want access to through subscriptions.

There are two ways to accomplish this.

  • Developer portals: Developer portals are platforms used almost exclusively by developers to access and use APIs.

  • API portals: An API portal is an enhanced version of a typical devportal that provides a host of critical features needed to get the most out of your API ecosystem, including granular access control, API localization, and API productization tools.

Once the API consumer subscribes, they get an API key that they put into their code to unlock access to resources in your product.

4 Tips to Get the Most out of Your API Monetization Efforts

1. Upgrade to API Portals

With the rise of citizen development and advanced API capabilities, many companies replace traditional developer portals with API portals.

With robust tools designed specifically for non-developers as well as experienced developers looking toward next-generation technologies, API portals have everything any company could need to drastically increase API adoption.

API portals let businesses:

  • Create tailored API products with ease

  • Solidify API assets in one place

  • Reduce multiple APIs with the same function

  • Increase collaboration between teams

  • Track and monitor key API usage metrics

The best part about API portals is that they save you time and money because they eliminate the need to build out internal and external portals. Instead, they utilize advanced access control that allow you to segment users into teams or groups.

2. Productize Your APIs

As we discussed earlier, the idea of API productization is quite intriguing as the key to unlocking many new opportunities for your business.

It's an approach that's gaining momentum as companies realize how it helps them reach more customers, create innovative products with ease, and increase their efficiency.

APIs provide accessible resources and methods for applications, but the data has no intrinsic value if there is no product-market fit. On the other hand, API products offer clear solutions and use cases for other companies.

There are two main ways to productize your APIs:

  • Complete package: Partners or consumers get unlimited access to the API resources with this package.

  • Targeted plan: Instead of providing one large "plan," where customers can use all your resources at once, bundle them together in smaller packages that offer more granular levels of usage.

It's important to offer multiple packages, so your API product is more appealing and competitive.

3. Determine Your API Monetization Model

To make the most of your APIs, you must understand how different monetization models work and determine which ones are right for your API products/services.

Below are five of the most common models API products use for monetization.

  • Freemium/Tiered: This model lets organizations offer basic API functions for free (with some restrictions such as time-bound trials or the number of allowed calls) and enables clients to purchase more access through different tiers.

  • Bulk Cost: This model entails API consumers paying only for the product they use (commonly known as a Pay-As-You-Go system).

  • Subscription: In this model, clients or partners pay per the terms of their chosen plan (monthly or annually) instead of paying for each API call and receive access to all available endpoints during that period regardless of whether they use them continuously or not.

  • Partner: This model provides select partners with access to APIs for them to be able to work on behalf of an organization.

  • Unit costing: This model bridges the gap between cost and revenue by determining how much it would cost for a company to charge their customers and what those charges per unit are.

4. Cultivate and Incentivize Citizen Development

With the rise of new platforms that allow for low-code or no-code solutions, citizen developers can create API products on behalf of an organization without having technical skills in IT development.

Citizen developers are a new generation that does not wait for technology to be developed but rather develops it themselves. This has major implications on how we approach software development and will redefine what our expectations from it should look like moving forward.

Businesses that cultivate citizen developers are able to:

  • Build customer-centric APIs and API products

  • Reduce the costs associated wit