Why Do Some Companies Charge for API Access?
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Why Some Companies Charge for API Access

Why Some Companies Charge for API Access

The Case for Charging for APIs

Considering charging for your API (Application Programming Interface)? Maybe you’re wondering why anyone would want to pay for access to third-party integration in the first place; after all, some companies offer up their programming for free.

Whatever your interest, before you start adding dollar signs to your code like it’s full of jQuery properties (well, maybe it is), let’s define the objectives and variables behind pay-for-play API access.

Integrating APIs and Dollar Signs

Setting a price for API access isn’t a new trend. Increasingly, companies have become aware of their software’s value, and in some cases, they recognize that its integration capabilities are sometimes more important than the service alone. The rise of SaaS (Software as a Service) has made way for the exchange of tools between companies. It’s no surprise that the utilities linked to them have evolved into a sort of virtual marketplace.

To meet the market demand, some companies have based their entire business model around API access. The need for automation stirred the machine, which in turn opened formerly manual doors to reveal a client base full of businesses looking for relevant solutions.

Who’s Charging and Why

Some of the top names in tech are charging for API access – Microsoft, Google, and Twitter being among the most popular. The reason behind the pay-for-play API is actually simpler than you may think – the answer: data. As long as one company can benefit from another via an API (re: data), the originator should have the right to profit.

In addition to big brands sharing services for a fee, startup companies have surfaced to offer APIs as products. The market for automation is fluid like water. Businesses build SaaS-like roads up to the water’s edge. Discerning “architects” (or API startups) simply watch the waters, wait for the need, and thus build a bridge (API) to connect it all.

Think about it: when was the last time you drove up to a shiny new bridge without a toll? That’s why companies charge for API access.

Where API Meets ROI

So how do companies make money from API returns? The most commonly used model involves limits. Most API services start out as “freemiums.” Costs build as users exceed predefined data or usage parameters. In many ways, this model acts as a sort of subscription service through which companies make back money on a recurring basis.

Consider the Google Translate API, for instance. Google’s pricing structure revolves around database access per million characters. As API developers reach these limits through end-user habits, they’re billed accordingly. Google’s API model, like many others, ensures that companies are not only paying to use its service but that the company cannot profit from the API without sharing the rewards.

For smaller companies with big solutions, the benefits are the same. Charging for access could cover at least the cost of the initial application development; at most, it could serve as a long-term business investment that continues to offer returns.

Want to know more about incorporating an API into your business plan? Contact Oyova today to speak with a development professional, and find out how we can help your company get the most out of your API, website, and app development.