This is Part 4 in the series on API Monetisation. Be sure to also read Part 1 on the importance of API monetisation, Part 2 on direct monetisation strategies, and Part 3 on indirect monetisation strategies.
Cost and time savings can play a substantial role in successfully monetising your API because they help build a holistic business case. This section of the comprehensive guide to API monetisation will offer ways to save the business money and time, ensuring your API program has every chance of success.
Before exploring the ways APIs specifically reduce costs and save time, it is worth taking a brief detour to better understand what is meant by each term. The two are related yet also distinct.
Reducing cost is about reducing the monetary cost ($) of an activity or process, such as bringing down the cost of labour or computing power (e.g. servers or cloud infrastructure).
Reducing time, for the purposes of this article, is referring to reducing the duration of an activity or process. So, instead of taking 3 months to onboard a partner, maybe an API lets you do it in days.
Together, the reduction of costs and time relates to business efficiency. This part of the monetisation guide will explore the many ways in which APIs can make business processes faster, cheaper, and more powerful.
Onboarding is any task involved in getting a new partner or customer set up, enabling them to integrate with your systems and services. APIs can help make the onboarding process significantly more efficient.
Instead of taking weeks or months for a customer or partner to successfully start working with your product or service they might be able to do so instantly or at least in a matter of days with an API.
Good APIs on a strong platform can provide a secure, automated method for customers to gain access to your systems. Even where manual steps are needed, these can be reduced to a minimum, letting the API platform take care of the rest.
This efficiency can help you reduce the labour costs of manual onboarding processes, as well as reducing the errors that come with them. Faster, more accurate onboarding with APIs keep your business, your partners, and your customers moving forward.
Systems need to talk to other systems now, it’s part of any business. APIs can make this integration more efficient.
Beyond onboarding, APIs provide a defined and (usually) reasonably well documented way for others to integrate their systems. They give a common interface for other systems to talk to your systems. This saves time and money.
When dealing with integrations that haven’t been “API’d” there is a lot of time spent tinkering with ways to get systems talking to each other which engineers can find painful.
APIs can reduce this pain and significantly improve developer experience. Not only are there time and cost savings in making developers more efficient, but they are also able to spend more time on value-adding work that generates a competitive advantage.
Regardless of how big your business is, your people’s time and focus is of high importance. Having developers internally and in your broader ecosystem delivering integrations faster and more accurately saves time and money that can be better spent elsewhere.
Not insignificantly, good APIs that facilitate a good developer experience will also reduce the costs of staff attrition and rehiring. In this market, ensuring your team is engaged in meaningful work instead of frustrating manual processes can be invaluable to the business.
Any software system talking to another software system often requires support. Developers will experience problems with getting their systems to work correctly and bugs will come up. APIs can reduce support costs and speed up the time to resolution.
Good APIs do this by giving clear error messages, ways to trace issues, and documentation to help avoid errors in the first place.
You need to understand how your services are being used for a variety of reasons. APIs built on modern platforms allow for simple reporting that, when you’re operating at scale, provide a simple, single way of visualising performance across your technology.
APIs built on modern platforms can also help reduce the costs and time it takes to build usage reports. You can reuse this across your services, rather than always having to build reporting into each service you design. This has some limitations, but some standardisation will give you a leg up and keep your reporting efficient.
Costs are incurred by the services that your customers, partners, or internal users are consuming. If you have budgets to manage, then a modern API platform can help you control usage of your services and help you manage your budget.
This proactive, supervisory management method is a much friendlier way of controlling usage than, say, a service that just switches off because your cloud infrastructure hit its budget threshold. You can also control usage in a variety of ways, preventing spikes or controlling it per user to manage better towards your specific budgeting approach, user needs, and cost structure.
Costs contribute to API monetisation strategy
As you can see, API monetisation goes beyond direct or indirect models. More than generating revenue, APIs can make businesses more efficient through the significant reduction of costs and time, enabling team members to focus on more valuable work. In this section of the guide, we covered the variety of ways costs can bolster monetisation to and help your API program succeed.
More reading on APIs
- Part 1 of this guide: The Importance of API Monetisation For All Businesses
- Part 2 of this guide: Direct Monetisation Strategies
- Part 3 of this guide: Indirect Monetisation Strategies
- API Strategy: When to Build and Where to Start
- The 37 Dimension API as Product Assessment Framework
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Scott has been involved in the launch and growth of 61+ products and has published over 120 articles and videos that have been viewed over 120,000 times. Terem’s product development and strategy arm, builds and takes clients tech products to market, while the joint venture arm focuses on building tech spinouts in partnership with market leaders.