A presentation given by Derric Gilling, CEO of Moseif, at our 2024 Austin API Summit, March 12-13. Session Description: The talk would target product owners looking to turn APIs into revenue centers. Specifically, how to price and package APIs, different strategies around prepaid, postpaid, and PAYG billing, and how to choose the right metric to charge, etc. Then, we’ll chat on the go-to-market to drive developer adoption.

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Productizing and Monetizing APIs

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Who am I?
● CEO of Moesif, the leading API
analytics and monetization
platform
● Helping API first businesses with
PLG and developing
usage-based pricing
● I love IPAs!
derric@moesif.com

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Manual tasks
Value Through UI
Full Service Rollout
Automation/AI
Value Through APIs
Targeted Use Cases
Selling Traditional SaaS is
Much Harder Today

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2004
On-Prem
2014
SaaS
2024
API
Authority of developers
Cost of software
Buying Power Shifted to Individual Devs

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Confidential and Proprietary. © 2024 Moesif, Inc. All Rights Reserved
5
Let’s first define the business strategy
Business
Strategy
Architect
Build Publish
Grow &
Expand
Measure KPIs
Iterate or
Deprecate
Business
Engineering

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Each API business is different
What to charge for
Prepaid vs Postpaid
Packaging Strategy
When to invoice
1
3
4
2

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Transaction volume
Revenue/cost share
Data volume
User-centric
Resource
Pricing Aligned to Customer Value

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Billing Strategy That Works for Customers
Prepaid billing: Customer
commits to credits / quota
ahead of time before
consumption
Pros:
● Better cash flow especially
when high cost like AI apps
● More familiar with
traditional contracts
Cons:
● Friction in onboarding
● Harder with PAYG
Postpaid billing: Customer
only pays for their usage “in
arrears” after service is already
consumed
Pros:
● Less onboarding friction as
no commit needed
● Makes PAYG easier
Cons:
● Additional credit risk
● Can be abused

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Packaging Strategy That Works for Growth
Tiered: Traditional SaaS tiers
with predefined set of features
and quota
Pros:
● Enforces a min spend
● Predictable for customer
● Easy to implement
Cons:
● Friction in expansion
● Rigid, not aligned to
customer value
Pay As You Go: Usage-based or
consumption-based pricing
based on a unit price
Pros:
● More efficient for customer
● Less friction in expansion
● Can “appear” cheaper
Cons:
● Can upset customers with
billing surprises
● Complex to implement

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Invoicing Strategy That Works for Finance
Recurring: Customer invoiced
on a schedule like each month,
quarter, or year
Pros:
● Easier for revenue
recognition/GAAP
● Predictable revenue AND
cost
Cons:
● Bad unit economics for low
cost SaaS
● Complex if prepaid
Threshold: Customer invoiced
only after a credit threshold is
met (can be prepaid also)
Pros:
● Reduces transaction
overhead cost
● Makes prepaid easier
● Better for variable usage
Cons:
● Harder for finance to
recognize revenue
● Company liability

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Confidential and Proprietary. © 2024 Moesif, Inc. All Rights Reserved
11
Growing an API product
Business
Strategy
Architect
Build Publish
Grow &
Expand
Measure KPIs
Iterate or
Deprecate
Business
Engineering

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Developers need buy-in from many
stakeholders
Legal and
Security
Project
Priorities
Finance and
Procurement

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Self-service reduces initial friction
Legal and
Security
Project
Priorities
Finance and
Procurement
Click-through ToS Fast integration Manager’s Credit
Card

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Land lots of developers first
Get developers to realize value and pay a token amount
Large adoption
funnel
Fast time to
paying

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Then, sell through existing developers
Users on Self-Service
Enterprise
Requirements
Expand Usage New Use Cases

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Aha Moment
Increasing Usage
Accelerated Usage
Self-Service User
Sales Engages
Identify New Use Cases
PLG Sales
Flywheel
Sales drives usage-based expansion flywheel

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Scaling self-service is hard
Issues during
onboarding
Changing business
needs
Billing surprises and
issues

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Reduce support cost with a great self-service
experience
● Provide visibility and
reports on what's
consuming their quota
● Provide tools to
upgrade and manage
their account without
involving personal

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Avoid surprises by over communicating
● Automatically notify
customers when they
approach or breach
plan limits
● If Pay As You Go,
empower customers to
set their own usage
thresholds

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Confidential and Proprietary. © 2024 Moesif, Inc. All Rights Reserved
20
Measuring KPIs and Metrics
Business
Strategy
Architect
Build Publish
Grow &
Expand
Measure KPIs
Iterate or
Deprecate
Business
Engineering

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Infrastructure metrics align to engineering
goals, not product goals.
Uptime SLAs
Resource
Utilization
Performance
Requests
Per Minute
Errors
1 2 3 4 5

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Product owners should focus on one of three
business goals
Adoption Engagement Retention

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Adoption: Reduce Time to Hello World
First Hello
World
First Working
App
Sign Up

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Engagement: metrics should measure
customer value
eCommerce SaaS Data API Logistics API
Checkout conversion rate Usage of integrations and
extensions
Match rate/found in
database
Successful order
fulfillment

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Retention: Grow long term customers
Good product retention curves flatten or look like a “smile”

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Confidential and Proprietary. © 2024 Moesif, Inc. All Rights Reserved
26
End of life
Business
Strategy
Architect
Build Publish
Grow &
Expand
Measure KPIs
Iterate or
Deprecate
Business
Engineering

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Don’t break their stuff. Handle deprecation
gracefully
Leverage in-app notifications
You’re using an outdated SDK

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Monetize Your APIs With Moesif

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API Analytics and Monetization
Derric Gilling
derric@moesif.com
https://www.moesif.com/casestudies