Monetizing your APIs: Five Questions to Get Started
Businesses develop APIs for a range of reasons. Not all of these involve monetizing the API, but many do. Here are some valuable steps for starting the monetization process. If your goal is to monetize your API, there are five critical questions you must answer first.
1. Users and Personas – Who will use your API and what capabilities does each type of user require?
Using personas to identify your audience can help define the roles and the access needed for the different user types. For example, different market segments may only need to view a portion of your product line, but your partners and internal users may need more access or unlimited server calls. This is a good time to understand your unauthenticated user experience vs. users that have been identified with certain needs via SSO. This may also drive some decisions around self-serve revenue opportunities and the need to deliver a product that is invoiced or bundled.
You will likely find that you have several types of users with different needs. Examples of user types include developers, business owners, existing customers, and new/prospective customers. In addition, you may have partners that need access to a subset of the API’s full functionality. These entities could include companies/organizations, universities, and participants in proof of concept trials.
2. Integrations – What integrations are needed to support the API?
Most organizations have a current infrastructure that needs to be assessed for integration into this new commerce offering. Important integrations include: finance software such as Oracle, CRMs/Lead Generation software including Salesforce, gateways that are currently in use elsewhere and SSO solutions you currently use like OKTA. To avoid creating new silos of data and missed opportunities, you should create workflows to ensure proper integrations to these repositories, which enable you to add, edit and market to your users. Internal users may also need to bypass some of the commerce solutions, so getting the details right can save time down the line.
3. Pricing Models - How will users pay to use the API?
There is a range of pricing models that can be used for API monetization. Options include; freemium, flat rate, access fee + variable cost, pricing per packet(pure variable), and bundling with other offerings. Most companies will find the need for more than one model to compliment current revenue models.
For example, a partner may get limited access free of charge, while users that find the API products via search may need to enter a credit card via the commerce software. Bundling may also be appropriate for existing customers, particularly when there is a danger of cannibalizing successful revenue models already in place. If you are not certain about your pricing models up front, another option could be to use promotional codes that offer specific pricing for a limited time, or to a limited group of customers with maximum flexibility to make changes quickly.
4. Governance & Administration - Who will you run the processes you are establishing?
Your API product supported by many internal processes that are supported by many teams. In order to deliver a quality product and experience, resources will be needed to maintain the API management software, the community, the content, the marketing, and the finance end of the solution. Mapping out workflows to fully understand the processes and resource requirements will help in building the solution as well as run it efficiently down the line.
5. Marketing & Promotion - How will you market and promote your API products?
Lastly, this is a website just like any other. It’s also a product line. Working closely with the marketing team will impact the UI/UX as well as the integration into their toolkits. If you use Google Analytics or SiteCatalyst, a commerce plan for analytics should be modeled. Additionally, all customer notifications and communication touch points should be considered as a baseline. Specifically, for API revenue models, it is a good idea to discuss API guides, “try it” experiences and tutorials in addition to the documentation. This is also a good time to look at the user profile dashboard and tools. Do the product offerings require monitoring or advanced analytics for the customer? Are the API products complex and need additional education or live customer service tools? These can be rolled out in phase, but are good to discuss during planning.
While the process is demanding, if monetizing your APIs is part of your digital transformation initiatives, these steps are a good, high-level start.