In a world that has become more connected through more data than ever before, one of the most frustrating things you could experience is being unable to move from point A to point B directly on a data journey. Every day, we use disparate applications and software products, all designed to generate and present data in different ways. Being able to link the data from these different sources, however, has seemed to be an impossible task. Unless you are using APIs.
Over the past decade, APIs (Application Programming Interfaces) have grown to become the bedrock of inter-software data connectivity. The number of APIs in use has almost tripled in number and developers and tech companies alike have become reliant on using them to foster speedy transfer and retrieval of data from disparate software systems. According to ProgrammableWeb, there are currently over 22,000 APIs on the web. Yet, we cannot say that APIs have become fully mainstream. This is a testimony to just how much software systems and developers have become immersed in the use of APIs as data vehicles.
Using APIs is a win-win scenario for developers and API providers. The providers get to sell their API as a product and developers can spend less time reinventing the wheel by using ready-made products. For example, when building an app that uses a map, rather than spending time and money building a new map and adding functionality, developers can simply pay Google to use their Google Maps API. But what is the value of APIs to you as a regular business owner? Why should you look into investing in APIs or building your own APIs? Let’s explore the functional benefits of APIs and how to build an API business by monetizing your APIs.
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What Is an API in Business?
It is easy to think of APIs as just another type of software enabling data transfer on the web but they are so much more than that. From refreshing your apps to get the latest updates, to monitoring your driver’s location on the Uber app, everything is enabled by APIs. Using an API in business makes it easy to scale up small applications with better functionality without having to build large technologies that require many resources- you just make use of the ones already built by larger corporations.
With the number of use-cases for API business models springing up every day, it is only wise to carve out a business venture from it; one that can go on to generate so much income in the future. As stated earlier, API is like a layer that connects third-party systems to a more powerful system. APIs have a lot of resources to offer developers. Developing applications requires large amounts of resources such as online maps, ML (Machine Learning) Algorithms, and image recognition software among others, all of which APIs can provide. Having established that, here are some of the reasons why your company should invest in APIs for business.
- Reduces the complexity of products:
By providing an API with encompassing functionality, you will only be easing the stress for developers. Rather than having to build a multi-faceted product that requires a lot of resources, you can simply build a framework and use your API to plug in all the functionality you need. For example, rather than trying to create your own database of product data for your eCommerce store, you can simply build an API that connects with Amazon’s API to extract and download publicly available product data directly from Amazon’s catalog. Also, some developers may only need few features from your SaaS solution. With a business API, they get exactly what they need from your product.
- Increase traffic to your platform:
Building a public API can also be a strategy to drive users to your platform so they can check out your other offerings and products. If developers are integrating your API into their apps, then the end-users will most likely be passing through your own platform more. A good example is Twitter’s API for embedding tweets. The API allows you to embed tweets on your website pages and users can click on the embedded tweet to go directly to Twitter if they need to check out more details.
- Easy exchange of information with partners:
Data can be exchanged continuously and seamlessly between business partners; thanks to APIs. This is way better than how the exchange has been done in the past through manual filling of spreadsheets.
Creating Another Revenue Stream With a Business API
One of the major reasons to invest in an API for your business is to create a supplementary stream of income. The versatility of APIs in integration with disparate pieces of software makes them ideal as a business offering. Several Data-as-a-Service companies use this type of business model, using APIs to source data and then sell the data to users. This is one way in which you can start an API business. Once you release an API, you can turn it to several purposes, most of which will directly or indirectly improve your business’s bottom line.
The proliferation of APIs in business has really been a blessing to developers and there is an increasing rage to get into the API market and invest in a business model that not only helps you but also sells itself. Since your product is attributed with wide functionality, it provides an option to developers to use a part of your product as a foundation for theirs.
There are several API business models which you can choose to invest in and monetize your API through them. Let’s take a look at some of them.
API Business Models for You
There are a number of categories of business models that are highly profitable. These models operate quite differently from each other. Some of them include:
- The product model:
This is the most simple of monetization types, though it comes with several issues. First, this model requires the ownership of valuable data and information. Essentially, what you are doing here is creating an API and offering its use directly to end-users for a charge. Anytime a user makes use of your API, there is a cost associated with it. Your charging mechanism could be monthly fees or one-time signups. However, the major problem with this model of API business is that unless your API can work with bulk data transformation for users, or offers extra functionality, it is hard to justify the cost to yourself and the users. This means you are either undercharging, which is bad for you or overcharging, which is still bad for you. Most times, you will be overcharging and this additional cost makes it hard to enter for the average user. This factor automatically limits the category of your users to just premium users. A good example of API as a product business model is website hosting platforms (though they all seem to have found a way around the cost issues).
- Business function model:
It is usually referred to as an “enhancing” type of Return On Investment. This model isn’t exactly concerned with directly monetizing the API itself. Instead, it is more concerned with the API enhancing core business functions. Basically, the API in this situation is a supporting offering. It is not the main business offering itself. In this kind of situation, the free API is really a gateway to the other parts of the business and functions as a value proposition. By proving the value of the data generated to interested users and directly funneling the traffic to other parts of the business, the API essentially pays for itself.
- The subscription model:
This model usually involves billing directly for the API monthly or yearly. This model looks straightforward though it can be challenging if the product offered is not a market fit. Running this API business model requires you to show your prospects how they stand to gain from your product if they made use of it. A very good way to implement this type of API business model is by running a freemium-style promotion. You offer basic access for free and then ask users to pay for advanced functionality. Businesses that want to start small but with the potential to keep using your API, are a good catch. There is a high chance that they will continue to use your API when they reach a larger scale. An example of this API business model is email extraction sites. These sites offer you basic functions like name and email extraction, then ask you to pay for more advanced details like the position of the employee in the company, address, etc. Some of these platforms offer you a limited number of subscriptions for free per month and ask you to pay for more access. The Google my business API is also a good example of this model.
- Point-based model:
This model is charged on a per-unit basis. It works like a pay-as-you-go design. In this model, an API provider values each API resource and assigns a unit price to it. Consumers of this API model pay for the number of units they use. If extra units are needed, they pay for them. A very good example of this type of API business is Scraping Robot’s public web scraping API. Every unit of scraping costs only $0.0018 and you only pay for the number of scraping units you use.
- Transaction fees model:
This model is usually adopted for payment gateways. The model allows a consumer to pay a fixed fee per transaction made by an end-user.
- Data-as-a-Service: This is another indirect method of monetizing an API. Rather than making the API available for public use, you use it to extract and collate valuable data from the internet and then sell it to companies that need data. This API business model is a form of offering your API as a product, but here, your entire business relies on the API and the API is not the final product offered to users.
Implementing APIs for Business With Scraping Robot
In the world of APIs for business functions, Scraping Robot has managed to carve out a niche that not only offers a very valuable public API for data integration but also combines it with an efficient web scraping service. And we have eventually come up with a data collection and integration solution like no other. Our public API can be integrated with any software and our web scraping service can pull data from any website on the internet. Together, they can help you create a data funnel that automates your entire data integration process from start to finish.
We have several web scraping modules that can help you extract any type of business data. With surplus proxies from our partner company, Blazing SEO, we get the data you need in as long as it takes you to blink. Our developers are also available to help you create custom scraping solutions or help tailor our API to fit your software for seamless integration.
For tech companies, developing APIs for different business models never gets old. The benefits are numerous. APIs will always serve one or more aspects of human lives which makes them indispensable. With over 20,000 APIs available in the digital space, that is enough evidence to show how lucrative it is. Starting an API business has all the benefits of building a new business and almost none of the disadvantages. If you don’t want to build your own API yet, you can check out Scraping Robot’s API first to have an idea of what it is like.