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How to Monetize APIs with Azure API Management

Howard van Rooijen By Howard van Rooijen Co-Founder
How to Monetize APIs with Azure API Management

We've worked with many customers over the last decade who have attempted to transform their organizations or deal with industry disruption by embracing the API Economy. These orgs have taken internal data & algorithms and created new business models and "coopetition" opportunities, or used APIs to break down internal siloes, or have leveraged Open Banking APIs for competitive advantage.

How API's underpin digital transformation

Digital transformation shouldn't be thought of as just a way for old organizations to reinvent themselves; at its core it's about the digitalization of services, the monetization of data, algorithms, processes, and expertise in a way that severs the link between value and scale by removing humans involvement from the equation.

5 years ago we worked with the Azure API Management team to release a tech briefing on Digital Transformation with Azure APIM. It's still just as relevant today, and a great place to start if you're thinking about embarking on an API journey.

Is your organization ready to design, build, and support APIs?

We also created an API Maturity Model to help people to understand that embarking on the journey of designing, building, testing, deploying, supporting, marketing, metering & billing APIs can be a daunting prospect, but can be tackled by adopting a simple "assess & invest" feedback loop.

api maturity matrix example

Building an API offering and monetizing it is far more complex that it first appears, and the Field of Dreams "build it and they will come" approach seldom works in the real world.

Is your organization ready to sell APIs?

The barrier to entering the API Economy has been significantly reduced with services like Azure API Management, but the remaining challenge is how you approach designing your business model, your monetization strategy and your revenue model.

You can find 100s of articles about choosing the right API Management solution, but none about the "secret sauce" that is the strategy and operational mechanics around actually monetizing your APIs... until now!

API Business Model

In order to create a healthy business model, you need to understand your customer's journey and how your API will deliver aligned value at each stage:

  • Investigation
  • Implementation
  • Preview
  • Initial production usage
  • Initial growth
  • Scale
  • Global growth

API Revenue Model

You can create a revenue model by utilizing the two dimensions of Quality of Service and Price (how many call per second you support, and how much you charge) to articulate your value.

To maximize the lifetime value (LTV) you generate from each customer by designing a revenue model that supports your customer at each stage of the customer journey, so that your revenue model is aligned with your customers and you are seen as an enabler, rather than as a hinderance at each stage.

API Pricing Model

A pricing model describes a specific set of rules for the API provider to turn consumption by the API consumer into revenue. For example, to support the customer stages above, we would need six types of subscription:

  • Free
  • Freemium
  • Metered
  • Tier
  • Tier + Overage
  • Unit

Deep dive into API Business, Revenue and Pricing Models

We've produced an in-depth guide to Monetization with Azure API Management, which covers the concepts above in far greater detail, with a number worked examples.

From theory to implementation

We wrote a second article called How Azure API Management supports monetization, which demonstrates how you take the concepts and make them real using Azure APIM's out of the box features, and how you integrate APIM with payment providers like Stripe and Adyen to deal with processing payment transactions and managing subscriptions.

Show me the code!

To accelerate your ability to monetize your APIs, we've created a GitHub repo that demonstrates easy to deploy examples of how to integrate Stripe and Adyen payment providers with Azure APIM, and implement & enforce pricing rules & limits.

Showing the Architecture of integrating Azure API Management with Stripe or Adyen Payment Providers

But we didn't just want to provide you with code and documentation, we wanted to provide walkthroughs to take you through each step involved in getting the samples up and running.

Walkthrough: Monetize APIs with Azure APIM Using Stripe

Walkthrough: Monetize APIs with Azure APIM Using Adyen

A special thank-you to Mike Larah for the coding, Barry Smart for additional brain power and James Broome for being our voice over artist! And thanks to Vladimir Vinogradsky, Mike Budzynski & Miao Jiang from the Azure APIM Team for involving us. We're super pleased with the results and we hope you will be too!

Hopefully all of these resources will help you jumpstart monetizing your APIs. If you have any questions please feel free to reach out.

Appendix:

Azure Weekly is a summary of the week's top Microsoft Azure news from AI to Availability Zones. Keep on top of all the latest Azure developments!

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Howard van Rooijen

Co-Founder

Howard van Rooijen

Howard spent 10 years as a technology consultant helping some of the UK's best known organisations work smarter, before founding endjin in 2010. He's a Microsoft ScaleUp Mentor, and a Microsoft Azure MVP, and helps small teams achieve big things using data, AI and Microsoft Azure.