Maximize API Benefits with the Ideal API Business Model

In today’s world, the industry is pretty unpredictable, especially with customer expectations changing at an extraordinary rate. To keep up with this change, businesses are expanding their digital ecosystems to build more connected customer experiences, and attract new customers. 

Growing digital ecosystems are reshaping how businesses operate. This is happening as companies now build their models on the foundation of API-led connectivity. APIs are a significant factor when it comes to connecting a business’s core competencies to new channels that better engage with customers. 

However, while businesses are adapting APIs, only 12% have a clearly planned leadership-mandated API strategy. Without proper planning, business will end up demoting APIs to just a tool that can simplify project implementations. 

But other businesses get the full use out of their APIs. They use them to forge new partnerships, monetize assets, and create new innovation avenues. To get the most out of your APIs, you need to establish a proper API strategy, accept core ecosystem principles, and select the right API business model for your organization. 

It doesn’t matter if you already have an established API strategy, or are new to API ecosystems and their workings. Having a practical and realistic view when choosing an API business model will help increase your share in the API economy. 

Choosing the right API business model 

Although APIs are universal, building a sustainable API business model is an ever-evolving, requiring nuanced approach. These steps will allow you to find the right business model and gain the most value from your APIs. 

Here’s what you need to do: identify your target audience of an API, define your anticipated purpose and the expected advantages of the API, and choose an appropriate business model. This also looks at what you need to do once you’ve selected a business model to ensure the continued effectiveness of your APIs.

Identify Your Target Audience

API ecosystems are planned with the intention maximum value creation for all stakeholders involved. Before choosing the right API business model you need to identify the three central components of the API value chain:

  • API provider: The stakeholder creating an API product to create a digital asset.
  • API consumer: The partner, or internal/external stakeholder using the API to create new experiences for the end customer.
  • End customer: The party benefiting from utilizing the API in the provided experience.

Define Your Anticipated Purpose and The Expected Advantages 

At this stage, you have to analyze why you need the API in question. This is done by identifying the envisioned purpose and probable benefits from using or building the API. 

Choose an Appropriate Business Model 

Once your audience is identified, the purpose and benefits of your API are made clear, you can use that information and select the right business model.

Business models for internal audiences

Businesses in every industry are turning more to APIs to evolve their IT backbone so they can handle next-generation technologies. APIs will streamline operations by bridging the gap between current business capabilities and future innovations. 

If you are planning to use APIs for internal development, your investments should be valued-based on the scale of reduced operational spending and improved efficiency. You can also focus on improved agility that comes from modernizing monolithic architectures. 

To make up for the value in internal investments, you need to select an API business model based on the purpose served by the internal APIs. For instance:

  1. Legacy modernization

 Using APIs to restructure or replace traditional bulky software infrastructure into more agile and streamlined components.

  1. Digital transformation

Using APIs to improve customer experiences and developing the underlying technology to improve the speed of delivery of these experiences.

Business models for external audiences

Any API exposed to stakeholders outside your business should be considered as an external API. External APIs should not be mistaken for only direct revenue channels; sometimes organizations expose their APIs to comply with regulations or to market their services/products.

Before trying to monetize an API, as the provider, you have to identify the consumer’s willingness to pay for the asset, as well as both the direct and indirect benefits to the business. According to the target audience and the projected benefits, external business models can be further divided into: 

  • Partnership: Decrease the gap between your customers’ preferred experiences and your existing capabilities by collaborating with partners.
  • Standardization: Respond to market expectations, avoid regulatory fines by standardizing API initiatives.
  • Productization: Build API products as a gateway to monetize the underlying data or capabilities.
  • Marketing: Use an API to support marketing initiatives that enable promoting the core platform, growing a network, improving brand awareness, or creating better overall transparency.


An API business model is simply a set of logically laid-out assumptions about how your business will create value. API business models are best used to measure the value in potential savings or earnings in API products and guide your future investments. They serve as a map in terms of calculating the value derived from your business and are a great way to create new options for revenue and monetize existing assets.

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