apidays New York - Best practices when monetizing APIs, Derric Gilling, Moesif

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Best practices when monetizing APIs

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Who am I?
● Co-fou n d e r an d CEO of Moe sif,
th e le ad in g AP I an alytics an d
m on e tization p latform
● Focu s on AP I strate g y, g row th ,
an d an alytics
● I love IP As!
derric@moesif.com

Selling to developers is hard
In d ivid u al d e ve lop e rs h ave a lot m ore au ton om y
an d au th ority
De ve lop e rs can b e ske p tical of sale s an d m arke tin g
Bu yin g is m u ch m ore d e ce n tralize d th an b e fore
Not in ve n te d h e re syn d rom e (NIHS)
De ve lop e rs can b u ild it th e m se lve s!
1
3
5
4
2

Developers need buy -in from many
stakeholders
Legal and
Security
ROI vs Risk/Cost
Finance and
Procurement

Land developers first
Ge t d e ve lop e rs to p ay a toke n am ou n t an d re cog n ize valu e in
th e p latform .
Larg e b ottom s-u p
fu n n e l
Fast tim e to
p ayin g

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

Then, sell through developers
Developer on a
self service
Leadership requirements
Increase usage
Other teams / use cases

Sales focus on high ROI opportunities
Cu stom e r alre ad y se e n valu e b e fore sale s e n g ag e s
Grow in g u sag e , au tom atic e xp an sion
Con su ltative , h ow to g e t m ore valu e
He lp m e e t ce rtain re q u ire m e n ts
1
3
4
2

Each API business is different
P re p aid vs P ostp aid
Tie re d vs P ay As You Go (P AYG)
W h e n to in voice
Le ve l of su p p ort
1
3
4
2

1. Billing Strategy
Prepaid billing: Cu stom e r
p u rch ase cre d its / q u ota ah e ad
of tim e th at is th e n late r
con su m e d
P ros:
● Be tte r cash flow
● More fam iliar w ith
trad ition al e n te rp rise
Con s:
● Friction in on b oard in g
● Hard e r w ith P AYG
Postpaid billing: Cu stom e r
on ly p ays for th e ir u sag e afte r
se rvice is alre ad y con su m e d
P ros:
● Le ss on b oard in g friction
● Make s P AYG e asie r
Con s:
● Ad d ition al cre d it risk
● Can b e ab u se d

2. Packaging Strategy
Tiered Pricing: Trad ition al SaaS
p ricin g w ith p re d e fin e d su ite of
fe atu re s/cap acity for e ach tie r
P ros:
● En force s a m in sp e n d
● P re d ictab le for cu stom e r
● Easy to im p le m e n t
Con s:
● Friction in e xp an sion
● Rig id , n ot alig n e d to valu e
Pay As You Go: Usag e -b ase d or
con su m p tion -b ase d p ricin g
b ase d on a u n it p rice
P ros:
● More e fficie n t for cu stom e r
● Le ss friction in e xp an sion
● Can “ap p e ar” ch e ap e r
Con s:
● Can u p se t cu stom e rs w ith
b illin g su rp rise s
● Com p le x to im p le m e n t

3. Invoicing Strategy
Recurring: Cu stom e r in voice d
on a sch e d u le like e ach m on th ,
q u arte r, or ye ar
P ros:
● Easie r for fin an ce te am
● More p re d ictab le
Con s:
● Bad u n it e con om ics for low
cost SaaS
● Com p le x if p re p aid
Threshold: Cu stom e r in voice d
on ly afte r a cre d it th re sh old is
m e t (can b e p re p aid also)
P ros:
● Re d u ce d tran saction cost
● Make s p re p aid e asie r
Con s:
● Hard e r for fin an ce to
re cog n ize re ve n u e
● Com p an y liab ility

3. Value Metrics
Nam e Exam p le W h e n to u se
Tran saction volu m e Nu m b e r of AP I Calls, Me ssag e s
Se n t
AP Is an d e ve n t-b ase d
p latform s su ch as SMS an d
an alytics
Re ve n u e /cost sh are % of re ve n u e , tran saction fe e P latform s focu se d on m on e y
su ch as p aym e n ts or e xp e n se
re p ortin g
Data volu m e Gig ab yte s se n t, Min u te s m ad e P latform s focu se d on d ata su ch
as log g in g or storag e
Use r-ce n tric Mon th ly u n iq u e u se rs th at are
active
A m od e rn ve rsion of ch arg in g
p e r se at or p e r u se r
Re sou rce Com p u te Un its, active h ou rs Com p u te in frastru ctu re su ch as
a d atab ase or virtu al m ach in e

The pitfall of self -service…
Account management is not scalable
Issu e s d u rin g
on b oard in g
Ch an g in g b u sin e ss
n e e d s
Billin g su rp rise s an d
issu e s

Reduce support time with self -service
management
● P rovid e visib ility an d
re p orts on w h at's
con su m in g th e ir q u ota
● P rovid e tools to
u p g rad e an d m an ag e
th e ir accou n t w ith ou t
in volvin g p e rson al

Avoid surprises with self -service account
communication
● Au tom atically n otify
cu stom e rs w h e n th e y
ap p roach or b re ach
p lan lim its
● If P ay As You Go,
e m p ow e r cu stom e rs to
se t th e ir ow n u sag e
th re sh old s

Reduce friction in payments with partners
● P rovid e ab ility le ve rag e
e xistin g con tracts
alre ad y ap p rove d b y
p rocu re m e n t
● Re d u ce cre d it card
issu e s su ch as
e m p loye e attrition or
low lim its

Measure and reduce the timeline to working
app
Page
Visit
First Hello
World
First Working
App
30 %
6 h ou rs
50 %
2 h ou rs
20 %
13 h ou rs
Sign Up

What to measure?
A d e ve lop e r cou ld stay in a sin g le stag e for d ays. You sh ou ld
track b oth :
Con ve rsion rate
for e ach ste p
Tim e to re ach
n e xt ste p

Lot’s of developer personas
10 0 0 ’s of lan g u ag e s &
fram e w orks
Diffe re n t role s cre ate
title am b ig u ity
Diffe re n t e d u cation /
e xp e rie n ce le ve ls
Diffe re n t ch an n e ls u se d to
d iscove r n e w tools

Understand what’s driving activation using
funnel analysis

Key Takeaway:
Deliver a great self -service onboarding

A P I A n a l y t i c s
Derric Gilling
derric@moesif.com
https://www.moesif.com/casestudies

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