How To Define Your API Business Model

5 Things Every Product Manager Should Know When It Comes To Develop A Successful API: Part 4

About this series

  1. First steps and what to outsource
  2. Dependencies and infrastructure
  3. Product mindset for API development
  4. Business model and growth → This One
  5. How to write documentation for an API → 10/11 at The Technical PM’s Newsletter

The Technical PM

Business model for API products

  1. Consumption plans: in this case, the company or person who will consume the API pays for the group of features that will use the application,
  2. Fees in the services: In these cases, the company charges on top of the services provided by the application. For example, if you have an API for a financial services company, you can charge a fee for each transaction made through the API.
  3. Free: This may be a different case, examples of companies that openly release data to the market, the open-source ones, or have some link to the government (yes, governments have public APIs).
Photo by Carlos Muza on Unsplash

Request Limit

  • Premium: unlimited requests per day
  • Basic: Up to 1,000 requests per day
  • Free: up to 100 requests per day

How To Define Your API Business Model

  1. Define your audience. Try to understand if those who will consume your API are companies or independent people. Also, understand if your API will be used in contexts other than what was initially defined;
  2. Define the problem. Work on understanding what problem you are solving for your user. Why is he consuming my application? And what problem are you trying to solve? These are relevant questions to be asked;
  3. Understand your product offering. With the audience and problem defined, it is time to think about what you can offer as a solution to them. In this phase of the business model, the product is adjusted to fit what the market needs and what you are able to offer.
  4. Establish monetization solutions. Now is the time to understand how your company will make money. A business model is incomplete until you identify how your company will make money. Look for ways to charge those who consume in a way that makes sense for the company and for potential contractors.
  5. Test your business model. Finally when everything is “ready”, test what you have developed. Conducting surveys and seeking early adopters is the best way to go at this point. You can always tweak your business model, but you should always consider leveraging direct market feedback when doing so.

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Henrique Maltez

Henrique Maltez

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Hi, I’m Henrique Maltez, writer of The Technical Product Manager