Ways to monetize on your APIs with a devportal

What does the business case for monetization look like in the long term? We present examples as a way to explore popular business model(s) in use for the monetization of APIs. For this article, we are using ‘monetize’ in the broadest sense and not just for direct revenue generation from your APIs.

Business Models for monetization

Differences in business models for monetization are defined through the benefit received by you, your developers/API consumers, and the ultimate end users of your APIs.

Ways you can benefit from your API’s adoption:

• Brand recognition and trust,
• Increased adoption of more APIs from your brand,
• Increased use/sale of your hardware and/or software,
• Increased capabilities of your hardware and/or software,
• Partnerships with companies that compliment your products or services.

Ways your developers/API consumer can benefit from your APIs adoption:

• Financial incentives to using your APIs,
• Interface with a broad range of platforms and services,
• Build on your APIs for additional capabilities or innovations,
• High scalability, low friction, high availability depending on the use case.

Ways the end user—consumer of the end products involving your APIs—benefits from your APIs adoption:

• Access to more options for doing something,
• Exposure to technologies that would otherwise be unavailable,
• Broader access or choice of innovation, design, and user experience.

All three—you, your developers/API consumers, and the end users—must benefit to successfully monetize on an API offering.

Table of Contents

• 1. APIs are available for free
• 2. Developer is paying for use of your APIs
  • Pay as you go model
  • Freemium model
  • Tiered pricing model
  • Points based pricing model
  • Transaction fee pricing model
• 3. Developer is paid by you for using your APIs
  • Revenue share model
  • Affiliate and referral programs
• 4. Indirect revenue streams for APIs
  • APIs used by Consumers
  • APIs used by non-consumers
    • Increase product value leading to customer retention
  • APIs for B2B customers
    • Increase resale of established products
  • Content acquisition and content syndication models
    • Expansion for partnerships, platforms, and sharing by a common denominator
  • Integrations that expand your business
  • APIs for Internal consumers and non-consumers within your business
    • B2B Integrations within a single business
• Conclusions

1. APIs are available for free

Monetization model: Free

Developer portals provide a means to increase adoption of your APIs to your target audience. You benefit from the marketing and subsequent adoption of your interfaces, the API consumers benefit from the self-service documentation and access to use your interfaces for free, and the end user/customer benefits from the end results.

Increasing business value through API adoption

We surveyed the nominees for the 2020 and 2021 DevPortal Awards, asking the question, What business value does your developer portal create? The answers were normalized, collated, and counted from a total population of 42 nominees with some businesses giving multiple answers.

Business value of developer portals

• Market APIs, products & solutions (26);
• Provide self-service documentation (26);
• For developer onboarding (13);
• Provide a communication channel to people using the API products, build a community through DevREL(13);
• Support partners and eco-systems companies (11);
• Customer and Employee retention (11)
• Remove friction during solution evaluation (10);
• Feedback for product development (10);
• Improved customer experience through interfaces (no-code, low-code, pro-code through a developer) (8);
• Monetize on APIs, products & solutions (8); and
• Provide a platform from which to test products (6).

As illustrated above, only 8 of the 42 companies providing a business case for their developer portal mentioned a monetization focus. Instead, most devportals focus on

• Providing documentation that is needed for implementing the APIs,
• Showcasing the strengths of products, technology, or developer brands,
• B2B marketing, market to developers, and marketing to product owner audiences,
• Providing developer relations (DevRel) activities in the form of events, social media outreach, forums, and blog communications to developers,
• Building on operational tools, operating systems, or apps, related to technology adoption.

In addition, some company-level business drivers were listed as follows:

• Increasing trust signals and providing a better engagement model to keep ahead of competition;
• Digital transformation: Fostering innovation around an existing business ecosystem through API products; and
• Open banking beyond PSD2 regulatory requirements.

Section 4 of this article, Indirect revenue streams for APIs, goes into more detail of the value benefit to offering APIs for free. There are differences in how internal and external APIs can be leveraged and several models that go beyond a ‘free API offering’.

2. Developer is paying for use of your APIs

Monetization model: Developer Pays

For a model where the developer pays, the developer needs to be able to make a living on the API. The developer (or B2B customer) must ultimately receive downstream revenue through the use of your API to balance the expense.

Sections:

• Pay as you go model
• Freemium model
• Tiered pricing model
• Points based pricing model
• Transaction fee pricing model

Pay as you go model

Your developer or API consumer pays for what is being used without a minimum or a tier in periodic installments. They need to be able to ‘try it’ before they ‘buy it’ to ascertain that what they are receiving in the transaction is valuable.

Some examples of developer portals following this model are TomTom Developer Portal, Amazon Web Services, IBM Cloud, and Algolia.

TomTom Developer Portal’s pricing method: B2B customers can make use of free API requests, as business grows, they can move to the Pay As You Grow plan. For more, TomTom Developer Portal also has an Enterprise contract. Screenshot taken, February 16, 2022.

Pay-as-you-go model from Amazon Web Services. Users pay based on their consumption need. Screenshot taken, February 16, 2022.

Users can choose the IBM Cloud’s Pay-as-you-go pricing option. It grants access to several services and products. Screenshot taken, February 16, 2022.

It’s free to subscribe for Algolia’s services. The pricing is based on the actual usage, there are no long term commitments. Screenshot taken, February 16, 2022.

Freemium model

With the freemium model, the basic features of the integration are free. With additional monetary compensation, value added features are available. Some examples of freemium are Dropbox, and ArcGIS Developer.

Businesses can try Dropbox’ services for free for a given amount of time (it was 30 days at the time we visited the website). Screenshot taken, February 16, 2022.

ArcGIS Developer communicates what users can have for free. Screenshot taken, February 16, 2022.

Tiered pricing model

For higher levels of access to resources, features, or value - tiered pricing models allow the developer or business to choose the level of access that they need for their use case of your APIs. As examples, see PayPal Developer’s subscription model or the packages available on Pabbly.

Pabbly’s different packages with discounts based on time and the number of customers. Screenshot taken, February 16, 2022.

Points based pricing model

Points based pricing models allow developers to pre-buy a limited number of points and then increase their spending based on how quickly they are used up. Different APIs or features are assigned a number of points that are then charged during use. This allows for customization or adaptability by use case for complex systems or interfaces.

Google Cloud’s point based pricing. They use different metrics and units. Screenshot taken, February 16, 2022.

Transaction fee pricing model

Finally, a fixed or variable percentage of a transaction can be paid to the API provider. Both Google Maps Platform and Sprint Messaging API provide examples of transaction fees.

Users can become EPS Rapid’s partners (Expedia Group Partner Solutions). Screenshot taken, February 16, 2022.

Affiliate and referral programs

A partner includes your content (maybe in an API marketplace) to drive potential customer traffic to you. This can help you to collect impressions, clicks, engagement, or action/acquisition. Examples are Skyscanner, Google Adsense and amazon.com. For referrals, only once an eventual customer purchases the product does the middle party developer earn revenue.

Skyscanner Affiliate Programme offers partners the chance to earn a share of the commission they make on bookings. Partners can promote Skyscanner in text links, banners or travel widgets (the last time we visited the website, it was paused). Screenshot taken, February 16, 2022.

4. Indirect revenue streams for APIs

Monetization Model: Indirect revenue streams

The many reasons for using a developer portal as a means of indirectly increasing business through API adoption include:

• increasing awareness of your specific content or product offering,
• providing examples of internal use cases to speed up time to market,
• the need to meet regulatory requirements or digital trust signals to customers, and
• developer retention through DevREL and support.

Sections:

• APIs used by Consumers
• APIs used by non-consumers
  • Increase product value leading to customer retention
• APIs for B2B customers
  • Increase resale of established products
• Content acquisition and content syndication models
  • Expansion for partnerships, platforms, and sharing by a common denominator
• Integrations that expand your business
• APIs for Internal consumers and non-consumers within your business
  • B2B Integrations within a single business

APIs used by Consumers

Inviting developers to contribute to use cases using your APIs can shorten the time to bring your hardware products to market. Consumer APIs are used to build customer facing capability for your company. An example is integrations connecting to Amazon Alexa, Netflix, Youtube, and other services.

Amazon Alexa’s developer portal combines the hardware and software experience through promotion of Alexa for Skill Builders, Alexa for Device Makers, and Exploration of Enterprise Solutions.

APIs used by non-consumers

Non-consumer APIs are used to help with productivity, time to market, meeting regulatory requirements, strategy/architecture requirements, or managing domains across geography or lines of business.

Increase product value leading to customer retention

As a case study, a banking customer (of Pronovix) created an integration point to allow app developers to push transaction statements into any content. Subsequently, an independent app developer created an app that pushes these transaction statements to notify when friends share a meal and one pays for all, and the others pay them back. The bank benefits from the fact that it’s their bank that integrates with this app. This shows the innovative openness and desire to create useful solutions for its customers.

Another of Pronovix’ banking customers used QR codes as a means of providing a business solution for small businesses to fast-track their customers’ applications with pre-filled forms for loans. Making solutions that are easy for users to adopt are mutually beneficial to both their and your business.

APIs for B2B customers

B2B customers have the incentive of customer value when they make use of APIs that integrate with your enterprise. Customer retention through switching costs after deep integration is facilitated by their programmatically connecting to your enterprise capabilities. To change to an alternative provider would be costly.

Examples include B2B ordering, commercial financial interactions, check inventory, shipment status. Examples from a developer portal perspective are Walmart Developer Portal, most commercial banks and, Samsung Developers.

Samsung Developers provides services for a range of interfaces that draw developers to build tools on their platform/OS.

Increase resale of established products

Companies can use a developer portal to market integrations that feed into established product sales. For example, FujiFilm supports its business developers with a FujiFilm Developer Network with ‘easy to implement solutions’ to integrate photo product ordering into apps or websites. It provides RESTful API, iOS, and Android SDKs to control and manage workflow, sales reporting, select photo products, set price points, and enable special offers. The business case for FujiFilm is in supporting the adoption of reselling its products and ensuring the quality experience of how its products are advertised and distributed. The aim is dual: to increase adoption of their technology (via business owners) and for an increase in retail product sales (via end users).

FujiFilm Developer Network focuses on making it easy for developers, creators, and small businesses to integrate with their APIs to increase the resale and distribution of FujiFilm products.

Mark Boyd of ProgrammableWeb illustrates this concept further with a case study on why Phillips targets enterprise, commercial, and hobbyist developers separately in order to innovate.

Content acquisition and content syndication models

Content acquisition and content syndication business models work with third parties to submit or distribute content via advertising, monetization, or subscription of your assets. This model is applied for example by Youtube, Twitter, and eBay.

Expansion for partnerships, platforms, and sharing by a common denominator

Smartcar.com combines APIs supported from a range of automotive industry companies (e.g. TeslaAPI Docs is directly linked to Smartcar) to provide an app development platform for car share companies.

Smartcar is a developer portal that is a one-stop shop for APIs from a range of automotive companies.

Integrations that expand your business

Business Expansion integrations expand into new geographies or demographics and offer new products or upsell new capabilities to existing clients. Affordances are promoted. An example is Meta for Developers (Facebook).

Meta for Developers (Facebook) provides tools to developers that help to expand their business via expanding capabilities.

APIs for Internal consumers and non-consumers within your business

How do you attribute expenses and budget to cost-centers through internal business monetization of APIs or capabilities offered from your IT services? These are the APIs that make libraries and data centrally available within a business so that you can keep track of expenses or cost savings through shared or reused internal assets such as servers, cloud services, and human IT resources.

B2B Integrations within a single business

Internal B2B partner-company integrations used by conglomerate partner-companies to integrate. This is used to increase existing or new company relationships and geographies through rapid partner-company on-boarding. Internal to businesses, the model is used after mergers and acquisitions. Examples include government agencies sharing information and retail/shipping partnerships. External examples are how conglomerate companies are inviting developers or companies to participate in the innovation taking place with their APIs.

Conclusion

Depending on your stage of API program development, these examples of indirect and direct monetization of APIs may be useful in determining your long term vision.

The take home lesson that we have learned through the DevPortal Awards is

• Be transparent of your business case to your audience: why are you monetizing your APIs?
• The transparency and consistency of your messaging feeds into the user experience of your developer portal.
• Understand your customer’s drivers for discovery and exploration of your API products and services. Why are they willing to contribute revenue, NPS, or retention to your endeavor?
• Finally, keep in mind what you are making available to your end user’s benefit.

A caution here—APIs create ecosystems of dependent use cases and people. A sharp pivot on a decision regarding API availability or access will have a ripple effect on your developers, API consumers, and end users. There are plenty of examples of this in the last ten years with MAANA (FAANG) companies that have since recovered business; but for a smaller enterprise this may not be so easy.

Ultimately, you want your customers to enjoy–and take for granted–the consistency in all aspects of your developer portal. Through their experience of your portal, customers will be more inclined to recommend or make use of your products and services.

More Reading

• Monetization and the Business Case - Monetization is a great tool for earning direct revenue from your API products and implementing controls on their usage. By setting the right expectations with monetization you can raise the trust of your products and your brand. We explore monetization through real-life examples with the help of 2021's DevPortal Awards experience.
• Best API Business Model - DevPortal Award category expanding on how your business model can be enabled within your developer portal for increased customer adoption, retention, and trust.
• World Class API Developer Portals - How do I ensure my API’s relevance to my business in the long run? Why does user experience matter for developer portals? Who are the stakeholders? Are there best practices for findability of APIs?

We were inspired by a concise white paper focused on ‘API monetization options’—published in 2016 by IBM, titled API Monetization - Understanding your Business Model Options, by authors Alan Glickenhouse & Larry England—to provide examples of ‘Ways developer portals monetize on APIs’ below.

All Pronovix publications are the fruit of a team effort, enabled by the research and collective knowledge of the entire Pronovix team. Our ideas and experiences are greatly shaped by our clients and the communities we participate in.