API Monetization is the process by which businesses use application programming interfaces (APIs) to generate revenue. In a digital economy, having well-developed APIs is crucial to establishing and maintaining relationships. APIs are widely considered the cornerstone of business development. APIs grant others access to your data and resources to use in the creation of websites or apps, letting them integrate your data and resources into their work.

API Monetization

Hopefully, by the time you are integrating API management systems, your business model is healthy, and already functioning probably. Moreover, your business model should be able to provide a framework for your monetization channels for your business.

In addition to how you’re going to monetize your API, you have to keep it up and running and perform well for your consumers.

It was estimated that the global API management market was worth $1.1 billion in 2018. During the period 2019-2024, the industry is expected to grow at a compound annual growth rate (CAGR) of over 22%. APIs are mainly responsible for this massive growth due to an increased demand for devices and applications to be connected.

Therefore, API monetization can improve your company’s growth and allow you to mine your APIs for gold in today’s digital economy. Similar post

Types of APIs

There are many types of APIs. Choosing the right API monetization and pricing model is dependent on the type of API that satisfies your needs.

These are the main types of APIs:

  • An internal APIs (also known as a private API). Focuses on the internal operations of an organization. They contribute to the improvement of efficiency and productivity.
  • Partner APIs. They enable integrations with selected partners and customers, as their names suggest. In addition to consolidating external relationships, they help enterprises expand their presence.
  • Public APIs (also called open APIs). There are no restrictions on using these and they are publicly available. The enterprises let third-party developers develop applications that leverage their capabilities and data. As a result, development costs and time are reduced, productivity is improved, and innovation is increased.

The majority of enterprises use partner APIs or public APIs to generate fiscal gains from APIs.

A wide range of reasons can be used to deploy an API, and not all APIs are created equal. These are some of the typical patterns for API monetization.


APIs are frequently offered with a free tier to allow anyone to test them, obtain a sense of their value, and decide whether to subscribe. This allows consumers to test an API and determine whether it will meet their needs before spending money.

 When it comes to monetizing APIs, free API monetization is a good option in conjunction with other strategies. 

Your organization may face problems if you implement the API alone, without a strategy for selling services to those with higher demands.

Consumer pays

Following the provision of free API access, the next step towards API monetization is establishing a price that consumers will pay for the resources or services the API provides. APIs charge their consumers according to three common approaches:

  • Tiered. There are API providers out there that offer different tiers of paid access. For instance, bronze, gold, and platinum. With each tier, the services and allowances are different, and the prices increase accordingly.
  • Pay-as-you-go. Utility-based models are also an option, where API consumers pay for the use of APIs. The provider charges based on their cost plus a logical profit after accounting for bandwidth, storage, and other hard costs associated with API consumption.
  • The last type of API provider defines API resources based on units, and then assigns a unit price to each. API users pay for the number of units they anticipate using, but may purchase additional units as needed

To recover operational costs and generate revenue, API providers combine tiered, pay-per-use, and unit-based pricing models.

API Monetization

Consumer gets paid

A company can actually share revenue with API consumers when an API drives other revenue streams for them. This approach encourages integration and successful implementation of API resources, which boosts revenue for API providers. Consumers are sharing API revenue under three distinct models:

  • Ad rev­enue share. API providers sometimes offer a network of advertising products as part of their platforms. API providers generate revenue from advertising embedded in API consumers’ sites and apps. A portion of the advertising revenue is returned to the API provider.
  • Affiliate. It is possible to monetize API ecosystems using some of the strategies used to monetize websites. There are many revenue-sharing models you can choose from, including cost per acquisition (CPA), cost per click (CPC), and one-time plans.
  • Credits to bill. Some API providers charge consumers for their services. API providers credit API consumers’ bills based on advertising revenue or affiliate revenue, reducing developers’ overhead for integration and potentially reducing API providers’ costs.

Indirect monetization

APIs can also be monetized indirectly by generating revenue through advertising, API access, and other avenues. APIs can deliver value indirectly in several ways.

  • Marketing vehicle. Companies can use APIs to promote their online presence and use them as marketing tools. By implementing brand visibility strategies, developers can become third-party marketers, representing a core company and its brand.
  • Brand awareness. The API can provide third-party websites and applications with a type of brand exposure that uses API consumers as an engine in order to extend a brand’s reach.
  • Content acquisition. APIs aren’t all about providing consumers with content, data, and other resources. Content can be written, updated, accessed, and deleted via APIs. It is possible to build value within an organization and its platform using APIs.
  • SaaS. Online software sales through SaaS (Software-as-a-Service) have become common. SaaS clients can often benefit from APIs that complement the core software and its offering. SaaS platforms often include API access as part of their core functionality, but it can also be offered as an optional feature for premium subscribers.
  • Traffic generation. A website or application can also use APIs to drive traffic to itself. The design of an API that uses hyperlinks to connect to central websites or apps-and encourages users to build their own apps and websites too-is a great way to increase traffic.

The API can be viewed as an in-house lab that conducts research and development. An incubator for ideas, applications, and connections between partners that accepts ideas and integrates them. Through APIs, companies enable the introduction of outside talent and ideas to fuel innovation.

In some cases, API providers choose and invest in the best integrations, leading to company and technology acquisitions.

API monetization is not one-size-fits-all, and neither is access or pricing standards. To remain competitive, API providers constantly tweak, adjust, and experiment. You can monetize your existing and new resources by using APIs. APIs are business development tools.

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The value of APIs is built on the relationship that API consumers and API providers forge over time. It is key to building trust that we share a common road map, and this is the foundation for our relationship. For API providers to effectively protect their API consumers’ interests, API providers should actively communicate where API resources are going, so that API consumers can prepare for these changes and adjust to them as well as provide feedback that could affect API roadmap planning. 

API users will be unhappy faster if they are kept in the dark about API usage and are surprised by changes and failures in their applications.

API ecosystem

APIs are developed by hanging a handful of APIs in an API management area, which can be accessed and used by consumers. But the goal is to turn an API area into a self-managed ecosystem of passionate partners and consumers through an active API consumer community.

A sustainable API ecosystem depends on symbiosis. These resources aren’t just for API providers; they’re also for API users to engage in new business strategies and engagement.

Users will be attracted to an active API. As long as users receive the value they want – and the support they need – the information will ultimately spread. Tech, business, and politics must all work together to make an API ecosystem viable. API consumers and providers need to strike the right balance that offers value not only to the people who create, consume, and integrate API resources but also to the end-users of apps.

Opportunities with APIs

Aside from utilizing APIs, several opportunities have emerged for businesses as well as developers. Accessing resources by web-based means has expanded into new areas, including the following:

  • Buildings. Automated systems are already present in many buildings, such as heating, air conditioning, electrical, and water systems. API access to hardware and software is becoming increasingly important to building equipment manufacturers. Wouldn’t it be great if we could learn to use less energy, diagnose problems in real time, and make repairs or tuning ourselves as needed.
  • Home. We are surrounded by devices on a daily basis. All of our smart devices are in our pockets, from work to home. The API has moved past our computers and is now integrated into our homes. In addition to heating and air conditioning thermostats, lighting and security systems are being developed in the next generation of home automation. Despite the fact that many home automation providers do not yet offer APIs, we are increasingly seeing companies adopt developer ecosystems, relying on APIs to drive innovation throughout home technologies.
  • 3D printing. Through web APIs, 3D printing is no longer limited to hobbyists and artists. Manufacturing landscapes are poised to change in a serious way as a result of robotics. APIs for 3D printing are provided by several platforms.
  • Automobiles. Automobile manufacturers, such as Ford and GM, are transforming vehicles into API platforms, allowing businesses and developers to develop new products and services within vehicles.
  • Quantified self. It is now common to find devices that allow wearers to gain a better understanding of themselves. Quantified self devices commonly measure sports and fitness-related personal activity. Health tracking and lifestyle tracking are just a few ways that they can be used.

APIs offer many opportunities, but these are just a few of them. APIs don’t just make data available online; they also connect our physical world to our virtual worlds and the data streams we depend on.

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