API Pricing Strategy Webinar (Benchmark Data)

R Software Inc. | 600 California St, San Francisco, CA | www.rapidapi.com
The Ultimate
API Pricing Webinar
RapidAPI RapidAPI

About RapidAPI
RapidAPI: The World’s Largest
API Marketplace
(RapidAPI.com and
Market.Mashape.com)
Iddo Gino
CEO, Founder, JavaScript
Programmer

What You’ll Learn Today
1. How Businesses Use APIs for Monetization
2. The Pros and Cons of Common Pricing Models
3. Why You Need A Free Tier
4. How the Industry Prices APIs (Original Benchmark Data)
5. Pricing Strategy in Practice: Three Example APIs
6. How to Add Pricing to RapidAPI

1. How Businesses Monetize APIs

*Source (CrunchBase Data):
https://goo.gl/U9gLU6
Over $500 Million was
invested in API
companies in 2016.*

Free Developer Usage
Data Collection
• Use API to collect data from third
party apps
• “Login with Facebook” –
Facebook knows what apps
consumers use and when

Free Developer Usage
Product Adoption
• Encourage integrations to boost
product stickiness
• Developers build custom
integrations for their use cases
• Harder for customers to leave for
competing platforms

Paid Developer Usage
Charge by Usage
Developers buy a service through an API
(and everyone else…)

2. The Pros and Cons of Common Pricing
Models

Traditional API Pricing Models
Pay As You Go
Pay per individual call
Fixed Quotas
Purchase fixed number
of calls per month

*Source: RapidAPI internal
PRO TIP:
The average price-per-
call is $0.03 for Pay As
You Go APIs on
RapidAPI.

Pros and Cons
Pay As You Go Fixed Quotas
• Predictable pricing
• Predictable revenue
• More revenue from low volume
developers
• App shuts down after quota is
reached
• Pricing scales linearly with
activity
• Pricing scales for larger apps
• Revenue is unpredictable
• Pricing varies monthly for
developer (harder to budget)

Introducing the Overage Model
Pay As You Go
Pay per individual call
Fixed Quotas
Purchase number of
calls in bulk
Overage Model
Buy quota of calls, pay
per additional call

Benefits of the Overage Model
Overage Model
• Predictable pricing
• Predictable revenue
• App is never shut down
• Miscommunication
around overages

Sample Pricing Models: Image Storage
API
Pay As You Go
$0.01 per download
$0.05 per upload
Fixed Quotas Overage Model
500 downloads / month
100 uploads / month
• 250 downloads / month +
$0.01 additional download
• 50 uploads / month + $0.05
per additional upload

Recommendation: Overage Model
• We recommend the overage model for most use cases as it
has the benefits of both pay as you go and fixed quota models
• When marketing to developers, be explicit about overage
amounts to avoid miscommunications at the end of the month.

Free vs. Freemium vs. Paid APIs
Free – no paid options available
Freemium – one limited free tier with a quota
Paid – no free options

What Type
of API is
this?What type
of API is
this?

What Type of API is this?
Freemium!

Developers are
to subscribe to a plan with a free tier.
3X more likely

Free
47%
Freemium
23%
Paid
30%
Free Freemium Paid
Public APIs on
RapidAPI*
*Source:
Analysis of 1,800+ public APIs on RapidAPI.com

Free
47%
Freemium
23%
Paid
30%
Free Freemium Paid
291,850
developers
47,536
developers
15,388
developers
Public APIs on
RapidAPI*
(number of developers)
*Source:
Analysis of 1,800+ public APIs on RapidAPI.com

Recommendation: Include a Free Tier
• Developers are more likely to subscribe to a freemium vs. paid
API
• Once developers embed your API (even a free tier), there’s a
higher cost to switch to another API
• Developers prefer to “try before they buy”

4. How to Price Your API with Industry Benchmarks

Deciding on the Pricing Structure
Overall Model
Overage model
Pay as you go model
Fixed quota model
Frequency
Per day
Per month
Per year
Product
Per object
Per request
Mixed
(objects and requests)

Pricing By Object or By Request
By Request By Object
• Support different requests
having different prices (ex.
image uploads vs. downloads)
• Potentially harder to
understand
• Most straightforward for
developers to understand
• Doesn’t account for variable
cost API calls (ex. sending an
email to a mailing list)
Charge per single API call Charge by API action

Example Mixed Pricing Plans

What RapidAPI Currently Supports
Overall Model
Overage model
Pay as you go model
Fixed quota model
Frequency
Per day
Per month
Per year
Product
Per object
Per request
Mixed
(objects and requests)

BASIC
RapidAPI Plans
CUSTOM
Private, invite-only
developer plans
with custom
quotas and pricing
• Student plan
• Testing Access
• Enterprise client
• First plan level
• Freemium API will
be $0 with quota
PRO
• Second plan
• May include
additional features
ULTRA
• Third plan
• Higher quotas
• More features
MEGA
• Fourth plan
• Highest quotas
• Most features
1 2
3 4

Benchmark Pricing for RapidAPI
Source: Average of 1,800+ APIs on
RapidAPI weighted by subscriber count
BASIC PRO ULTRA MEGA
Plan Price $0.00 $9.08 $76.00 $370.00
Overage $0.08 $0.01 $0.007 $0.02
Quota
(calls per month)
64,326 688,991 4,051,181 16,120,060

PRO Plan Distribution
• Most plans between
$0 - $10
• Spike around $50
and $100 for more
high value plans

ULTRA Plan Distribution
• Most common
ranges are either
close to $25 or close
to $50
•Median price is $59

MEGA Plan Distribution
• MEGA plans have
the broadest range of
prices, with spikes
from $0 – 99 and
$1,000+

Recommendation: Pricing Rules of
Thumb
• Basic –a free tier with a quota
• Pro – a developer tier for $10 - $20
• Ultra – a company tier for about or less than $100
• Mega – a tier for very high usage at $150+

Content
What am I providing with my API?
How valuable is each call?
Venue
Artist
Costs
How much does it cost me to fulfill
a call?
Competitors
How are other industry players
charging?
The Three Cs
of API
Pricing
Before nailing down
a number, ask
yourself these
questions…

Example #1: Business Data API
Content
(High)
Full business
intelligence. Use
cases include shallow
searches and deeper
dives.
Costs
Some costs are
minimal; others
require outside
vendors (ex. credit
checks).
Competitors
Specialized
information with little
competition.

Example #2: SMS API
Content Similar by endpoint.
Costs
Fixed price per call;
tight margins.
Competitors
(High)
Charge for highly per
call, larger plans for
bulk calls

Example #3: Shipping API
Content Similar by endpoint.
Costs
(High)
Prices are high. Fixed
fee for outside
vendors (ex. post
office, storefront).
Competitors Smaller field with less
competition.

Recommendation: Understand Your “C”s
• List out your specific API circumstances around content, costs
and competitors
• Determine which “C” most drives your pricing strategy
• Look at competitors to see how they are priced

Final Tips from RapidAPI

The Bottom Line
• Decide if your model (pay as you go, fixed quota, overage) best fits your
API needs based on the pros and cons
• Add a limited free tier to increase developer adoption
• Price your API in four tiers: free, developer, company, high-volume
• Determine which “C” factors (content, cost, competitors) drive your
pricing strategy

Step 1: Create or access your API
• Create or login to account on
market.mashape.com (RapidAPI
owns both marketplaces)
• All changes made on the
Mashape marketplace side will
be reflected on RapidAPI
account

Step 2: Go to your Pricing Page
• Go to “My APIs” > “API” >
Pricing Page
•Or access pricing page directly:
https://market.mashape.com/USERNAME/A
PINAME/pricing

Step 3: Edit Pricing
• Add public and invite-only plans
• Select one plan as “Recommended”
• All changes will be reflected on
RapidAPI as well
Tips and Tricks

Thank you!
Contact support@rapidapi.com
for questions or help

API Pricing Strategy Webinar (Benchmark Data)

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