---
title: "How to Create a Business Model Around an API"
description: "Learn how to create a business around your API, turning it from a hobby project to a revenue generator."
canonicalUrl: "https://zuplo.com/blog/2024/01/10/how-to-create-business-model-around-api"
pageType: "blog"
date: "2024-01-10"
authors: "billDoerrfeld"
tags: "API Monetization, API Best Practices"
image: "https://zuplo.com/og?text=How%20To%20Create%20A%20Business%20Model%20Around%20An%20API"
---
APIs aren't just hobbyist projects anymore. They are increasingly at the heart
of some significant business models. And, if you're a solopreneur developer, you
may be thinking about how to
[monetize your API](/learning-center/what-is-api-monetization).

However, there are various API business models and monetization methods, meaning
creating an API business is not crystal clear. Also, API-based products require
a unique value proposition that solves a common need. Not to mention, an
unparalleled developer experience.

Below, we'll cover some tips for creating your first API-driven business. We'll
consider how to monetize your API and the API management tools you'll need, and
look into some API-as-a-product companies to see how _they're_ generating
revenue.

## Choose The Right API Business Type

The first thing to note is that not all APIs are public software-as-a-service
(SaaS). In fact, 61% of them are private APIs, found the
[2023 State of the API Report](https://www.postman.com/state-of-api/).

Internal API-first strategies can benefit the business, making software more
reusable and consistent. There is also the potential for utilizing APIs to
enable partner ecosystems. For instance, if your API involves reselling
products, a revenue share model might make more sense than a model where the
customer pays.

One
[whitepaper from ProgrammableWeb](https://www.mulesoft.com/api-university/programmablewebs-guide-to-modern-api-business-models)
lists over 20 different API business models. Your path to revenue generation
might look different depending on your use case. So, consider your options
before diving headfirst into monetization.

## Create Unique Value With Zero Friction

If you are shooting to build an API as a product, it's a good idea to specialize
in a niche that represents a common need for which developers do not want to
reinvent the wheel to create. And, the service must be friction-free.

What does your API do? Whether it's international payment automation, natural
language processing, airline data aggregation, PDF generation, or something
else, hone in on the functionality and design a fluid onboarding process so
developers can reach "Hello World" in minutes.

## Design The Appropriate API Monetization Model

Productizing an API will involve crafting a suitable direct monetization model.
The thing is, there are various types of API pricing strategies to deploy. And
your model will likely combine multiple methods.

One popular method is usage-based pricing, also called "pay-as-you-go." For
example, [Anvil](https://www.useanvil.com/products/pricing/), a paperwork
automation API, provides PDF filling at a per-call flat rate of $0.10 per
completion.

Another standard method is to utilize subscription-based tiered pricing models.
Get developers hooked on a freemium tier, then upsell them to plans with higher
limits, bulk discounts, and add-on features. For instance,
[Nylas](https://www.nylas.com/pricing/compare/), a platform of communication
APIs, offers a free tier with additional plans it calls Entry, Core, and Plus.

Some API calls are more processing-intensive, and you might want to weigh them
differently than others. For instance,
[OpenAI](https://platform.openai.com/docs/overview) gauges the cost of requests
to its AI models using tokens and bills you for your monthly usage (psst - check
our our guide to
[monetizing your AI model](/learning-center/monetize-ai-models)).

## Use A Gateway To Meter API Requests

Not only can an API gateway help enforce rate limiting, authentication, and
authorization policies, but it can also be used to meter requests on a per API
key basis.

An API monetization platform can significantly help automate operational aspects
like API usage metering, and billing. Some API gateway consoles with
monetization capabilities include Amazon API Gateway, Zuplo, Moesif, and others.

## Final Tip: Make It Self-Service

API reliance is increasing. With the advent of more generative AI, API use (and
monetization) is only anticipated to grow. And Silicon Valley is taking notice.
For instance, the 60+ startups on the
[API-First Index](https://www.apifirstindex.com/) have collectively raised over
$22 billion in funding.

Above, we've covered some ideas on building an API company and looked into types
of API monetization models to help you generate revenue from your services. But
keep in mind that an API business is not a "set it and forget it" enterprise —
it's more than just wrapping an endpoint with an API monetization platform.

Reaching API unicorn status requires continual maintenance, listening to
developer needs, and optimizing
[self-serviceability](https://nordicapis.com/self-service-is-key-for-api-monetization/).
And let's not forget, a killer service at the core.