W HITEPA PER

How to choose the right

API business model
3 steps to capture the maximum value from your APIs
Table of Contents

Introduction 03

Steps for choosing the right business model

and getting the most out of your APIs 05
Step 01: Identifying your intended audience 06
Step 02: Defining your desired purpose and expected benefits 07
Step 03: Choosing a suitable API business model 08

After you choose a business model 22

Build developer experiences to sustain API ecosystems 22
Define monetization parameters 22

Provide a value quid pro quo 23

Conclusion 24
Get started with choosing the right API business model 25
Introduction

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

In today’s business environment, with customer expectations
changing at an unprecedented rate, more and more organizations
are expanding their digital ecosystems to extend their reach to
new customers and create more connected customer experiences.
These ecosystem expansions are causing traditional industry and
sector boundaries to all but disappear.

Pioneers like Amazon, Wells Fargo, and McKinsey analysis estimates that as much as
Splunk are reshaping markets with their $1 trillion in total economic profit globally
expanding ecosystem footprints. They are could be up for grabs through redistribution
doing this by leveraging their platforms of revenues across sectors within ecosystems

that are built on the foundations of API-led
connectivity. APIs, once merely treated as
tools for technical connectivity, are now the
critical bridge connecting an organization’s
core competencies to new channels to better
engage with customers.
While 80% of organizations are adopting
APIs, only 12% have a leadership-mandated
API strategy in place. Without a formal
strategy, you are choosing to limit the value
of your APIs — relegating them to a tool
that can simplify project implementations.
3
in the API economy. Whether you are new
to the API economy or already have an
established API strategy, having a pragmatic
approach to choosing an API business model
will help improve your share in the API
economy. In this whitepaper, we’ll discuss
how you can monetize and/or drive new
innovation avenues when you treat your APIs
as products/services.
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

However, if your organization is looking to

use APIs beyond that — to forge new
partnerships, monetize assets, and open
new innovation avenues — the first step is to
establish a formal API strategy and embrace
ecosystem principles.
APIs are value drivers, not
revenue machines
Many organizations mistakenly minimize
API business models as simply monetization
methods and view APIs as a channel to
generate direct revenue. While it is imperative
to design a monetization strategy, API
business models are much more — they are
a means to effectively capture and measure
the economic value from an API by helping
you identify the right methodology to tie
technical metrics to business metrics. An
API strategy might be an entry point for
a business to move towards a platform
business model. However, the fundamental
purpose of defining the right API business
model is so much more than that. The right
business model can help you establish a
framework to align with your overall digital
strategy and build infrastructure to sustain
an API ecosystem.
“The right business model can help
you establish a framework to align
with your overall digital strategy
and build infrastructure to sustain
an API ecosystem.”
Before you choose a
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
business model
Instead of a myopic focus on an API, you
should approach defining a business model
with a holistic view of how an API fits into
your ecosystem. To help identify the role
of a business model in an ecosystem, you
can refer to the 7 step methodology for
cultivating an API ecosystem.
You can help sustain your organization’s
API ecosystems by taking the time to
define the right API business models and
identify what value a specific API provides
to its stakeholders. Identifying the value is
certainly art mixed with science that requires
infrastructure and stakeholder support. To
navigate the ambiguity, it’s helpful to answer
4
some key questions before you choose a
business model:
→ What are your key capabilities and assets?
→ Who will be interested in the assets
and why?
→ Who are your competitors (beyond
industry incumbents, any digital
ecosystem touching your customer is
a competitor)?
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
→ What is your unique value proposition that
differentiates you from the competition?
→ Who should you partner with to fill the
gaps in your current competencies?
Steps for choosing the right business model

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

and getting the most out of your APIs
Though APIs are ubiquitous, constructing a sustainable API business
model is an ever-evolving process that requires nuanced approaches.

In partnership with ProgrammableWeb, we exhaustive list of models to choose from, we

have developed deep experience in API have created this guide that will enable you
business models by working with thousands to select the right business model and get the
of organizations at varying stages of API most value from your APIs.
maturity. Rather than providing you with an

The steps are:

5
STEP 01
Identifying the
intended audience of
an API

STEP 02
Defining your desired
purpose and the
expected benefits of
the API

STEP 03
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

Choosing a suitable
business model

We will also talk about what to do after

you’ve selected a business model to ensure
the continued success of your APIs.
 Step 01

Identifying your intended audience

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

API ecosystems are organized with the
goal of “win-win-win” in value creation for
all stakeholders involved. The first step to
choosing the right API business model is to
identify the three fundamental constituents
of the API value chain:
→ API provider — stakeholder building an
API product to expose a digital asset.
→ API consumer — partner, internal, or
external stakeholder consuming the
API to create new experiences for the
end customer.
→ End customer — end-user benefiting from
the use of API in the provided experience.
API consumers and end customers can be
internal or external to your organization.

3 fundamental constituents of the API value chain

END CUSTOMER

6
API CONSUMER-EXTERNAL

API CONSUMER-PARTNER

API PROVIDER

API API

INTERNAL EXTERNAL

API
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

PARTNERSHIP
 Step 02

Defining your desired purpose and expected benefits

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

The second step is to define the “why” or money savings. Relying on the overall API
behind the API. This is done by defining the strategy as the guiding principle will help you
intended purpose and expected benefits. define and articulate the indirect value.

Please note that not all APIs are designed
to drive direct value. For example, APIs
designed to drive legacy modernization or
digital transformation initiatives help accrue
value to the bottom line in the form of time
Each combination of the intended audience,
purpose, and benefits (see image below) leads
to the structure of a unique business model.

API business model selection framework

INTENDED AUDIENCE

7
INTERNAL EXTERNAL

DESIRED PURPOSE

LEGACY MODERNIZATION PARTNER PROGRAM

DIGITAL TRANSFORMATION PRODUCTIZATION

DIGITAL NATIVE STANDARDIZED

CHARGEBACK ACCOUNTING MARKETING

EXPECTED BENEFITS — DIRECT

REDUCED COSTS DRIVE REVENUE AVOID PENALTIES UTILIZE INCENTIVES ALTRUISM

©2020 M U L E S O F T ­­— M U L E S O F T . C O M

EXPECTED BENEFITS — INDIRECT

TIME TO MARKET EFFICIENCY REUSABILITY CUSTOM RETENTION COMPETITIVE ADVANTAGE

BRANDING SIMPLIFY ONBOARDING COMMUNITY DEVELOPMENT LEAD GENERATION TRANSPARENCY

 Step 03

Choosing a suitable API business model

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

With your audience identified, the purpose Internal
and expected benefits of your API defined,
Organizations in every industry are turning
you are now ready to take that information
more to APIs to transform their tech
and choose the right business model based
backbone to be able to support next-
on the framework above.
generation technologies. APIs streamline
operations by establishing connectivity
The following portion of the guide outlines
between existing business capabilities and
key API business models constructed
new innovations. In cases where APIs
by combining the building blocks in the
are used for internal development, your
framework.

Internal API business models

API PROVIDER

8
LEGACY MODERNIZATION

API

INTERNAL SYSTEMS
AND CAPABILITIES

API API

INTERNAL DIGITAL
ACCOUNTING TRANSFORMATION
API

UNLOCK DATA
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

API COMPOSE DATA

DIGITAL NATIVE CREATE EXPERIENCES
API
investments should be valued-based on Digital transformation

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

the magnitude of reduced operational
expenditure, increased efficiency, or
improved agility provided by modernizing
monolithic architectures. To account for the
value in internal investments, you should
choose an API business model based on the
purpose served by the internal APIs, such as:
→ Legacy modernization
→ Digital transformation
→ Digital native
→ Chargeback
Digital transformation efforts continuously
improve the customer experience and evolve
the underlying technology to increase the
speed of delivery of these experiences to
the market. APIs form the bedrock of these
transformations by operationalizing data
and functionality from across the enterprise
into new and more easily composed digital
experiences and outcomes. These efforts are
vital — 90% of IT leaders say their revenues
will be negatively impacted if they fail to
complete digital transformation initiatives
in the next 1-5 years. Digital transformation
efforts benefit organizations by:

→ Modernizing existing infrastructure

Legacy modernization — effectively reducing costs, driving
reusability, and improving efficiency by

9
Legacy modernization investments use
filling gaps in IT delivery capacity.
APIs to refactor traditional bulky software
infrastructure into more easily serviced
→ Improving the speed to market in
components. Incumbents with outdated IT
delivering new user experiences,
systems modernize their tech backbone to
regardless of the platform.
compete successfully against startups. Such
modernization efforts provide value to the
→ Increasing customer retention by
organizations by:
enabling innovative customer experiences
by using new internal APIs or APIs from
→ Reducing costs through reusability
other organizations.
driven by API-led application composition
with equally composable cost-effective
→ Creating additional lines of revenue by
substitutions of existing expensive systems.
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

using APIs to enable new digital business

channels and customer touchpoints.
→ Improving efficiency with reduced time
to market in responding to new market
innovations and pressures (e.g., competitor
moves, customer requirements,
government regulation, etc.).
CUSTOMER STORY

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Airbus

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To meet the growing demands, Airbus adopted an API-first
strategy, unlocking the data from their legacy platforms to optimize
manufacturing and supply chain processes. Airbus reduced their time
to market for IT projects from four months down to four to six weeks.
CHRIS TAYLOR, VP OF DIGITAL ACCELERATOR

Airbus’ design, quality, performance, Since the company’s legacy systems could
safety, and comfort set the standards for not support this massive growth, Airbus
aviation. With about 25,000 daily flights, needed to revolutionize its approach to IT —
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

Airbus aircraft are taking off or landing transforming this manufacturing company
every 1.4 seconds — and demand expected into a technology company.
to double in the next 15 years — Airbus
needed to significantly ramp up aircraft Read Airbus’ customer story
production while decreasing costs and
improving efficiency in a sustainable way.
CUSTOMER STORY

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Royal Bank
of Canada

MuleSoft has been critical in enabling our IT team to bring our legacy
technology and modern platforms together. We now have a single

11
view of each and every customer. And, with our new solution, clients
are onboarded in just 24 minutes, versus weeks.

GREG BELTZER, HEAD OF TECHNOLOGY, RBC WEALTH MANAGEMENT

Best-in-class customer experiences are
now the new battleground for financial
services firms. In order to remain
competitive, Royal Bank of Canada had
to further embrace digital and provide
legacy, and cloud systems. With these APIs,
the team was able to completely digitize the
onboarding and account opening process,
reducing the new customer onboarding time
to 24 minutes.
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

customers and advisors with a seamless

wealth management experience. Read RBC’s customer story

With MuleSoft, the RBC team built reusable

APIs to unlock and integrate siloed data in
the client database, and other on-premises,
Digital native
Digital native platform models (e.g., Uber,
Amazon, or Spotify) power their apps with
APIs to create consistent experiences across
devices. APIs in these models act as a
single source of truth, preserving platform
longevity by decomposing functionalities into
microservices and benefits organizations by:
→ Improving efficiency by reusing
microservice architectures within
multiple environments.
→ Avoiding costs in information distribution
across channels.
→ Driving competitive advantage by
absorbing helpful information from
customer touchpoints, expanding
ecosystems by extending core capabilities
across industries, and disrupting
competitors built on traditional
technology stacks.
Airbnb has been a mobile-first
digital native from day one. By
adopting an API-first mentality,
Airbnb has decreased platform-wide
inconsistencies with development
consolidation, benefiting overall
internal operational efficiency. Now,
the company is pivoting toward
adopting a single source of truth; an
internal Graphist API that distributes
Airbnb content to all platforms.
Chargeback
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
Chargeback models provide accountability
for IT resource consumption across
the organization. When IT resources are
consumed via APIs (e.g., when legacy
IT systems are turned into API-based
components), a full API lifecycle management
system can be used to monitor of usage of
those assets through consumption metrics
and demonstrating the cost-benefit of API
investments by:
→ Providing visibility into IT bandwidth and
the financial efficacy of using APIs.
→ Identifying key areas of growth and helping
prioritize investments.
→ Reducing interdepartmental
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communication overheads and technical
debt in serving internal teams.
VMware vRealize Business for
cloud provides cloud costing analysis,
consumption metering, cloud
comparison, and planning. vRealize
provides cost visibility and business
insights to run cloud more efficiently.
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
External organization. Based on the target audience

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

and the expected benefits, external business
Any API exposed to stakeholders outside of models can be further classified into:
your organization should be considered as
an external API. External APIs should not be
misconstrued as only direct revenue channels → Partnership
— frequently, organizations expose APIs to
comply with regulatory requirements or to → Standardization
market their brands. Before trying to monetize → Productization
an API, as the provider, you should identify
the consumer’s willingness to pay for the asset → Marketing
and the direct and indirect benefits to the

Partnership API business models

API CONSUMER-EXTERNAL

13
PARTNER’S
PRODUCT

API CONSUMER-PARTNER

REVENUE
API SHARE

API PROVIDER
REVENUE REVENUE
PROVIDER SHARE SHARE
API
PLATFORM/ API API RESELL
SOLUTION
API

API
CONSULTING
ALLIANCE
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

CO-CREATED
PRODUCT

API
CONSULTING
Partnership share of the revenue on each sale, click,

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

or conversion.
The distinct value of your organization’s data/
services defines your API strategy.
→ Reselling the API as-is on a partner
platform where partners retain a
You should reconcile your customer
commission per transaction or integration
experiences against your core competencies.
with the API.
If there are gaps between the desired
customer experiences and your capabilities,
→ Selling a platform of applications with
those gaps are opportunities to collaborate
embedded APIs. API providers create
with partners. In these cases, you should
custom revenue share agreements with
leverage your APIs to build focused
partners to build API-based solutions
partnerships to streamline operations and
for end-customers. Unlike the other
define new customer experiences. Partner
revenue share agreements, the partner
agreements involve carefully vetted partners
solutions are hosted on and resell the API
and tend to be less publicly transparent. API
provider’s platform.
business models that help assess the value
of these partner agreements include:
Through Salesforce’s AppExchange
Partner Program, Salesforce offers

14
→ REVENUE SHARE
partners and developers various
→ ALLIANCE opportunities to engage with experts,
→ CONSULTING collaborate with other partners,
and build new solutions using
Salesforce APIs. The Program grants
REVENUE SHARE a share of their revenue, and benefits
from the reach and awareness the
With revenue share agreements, an API
marketplace drives.
provider captures value by providing API
access to carefully vetted partners. In this
model, a partner creates a new end-customer
experience — which becomes an additional
go-to-market channel with the API. The value
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

added by revenue share agreements vary by

partners who are:

→ Selling a new product/service that’s

enabled by the API, thus becoming a
provider affiliate. Partner developers get a
ALLIANCE
With Alliance agreements, you are working
with partners possessing complementary
core competencies to advance shared
goals. API providers work with partners to
serve customized experiences for mutual
customers. In alliance agreements, revenue
sharing is not the key driver but rather the
value lies in outsourcing development and
improving end-customer retention.
With the proliferation of complex
digital components like dashboards
and onboard sensors, automotive
companies are increasingly relying
on APIs to deliver seamless customer
experiences. The Smartcar API for
BMW allows mobility apps to locate,
unlock, and query odometer readings
from the car using a BMW connected
drive account.
CONSULTING
In this model, consulting services are offered
to end customers in helping them utilize
the providers’ APIs. Consulting firms help
API providers expand their reach to end
customers with limited skills to capitalize on
the APIs or help end customers outsource
API-based application development. API
providers partner with consulting firms in
various scopes to evangelize their products
and increase the adoption of their offerings.
Standardization
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
Organizations are often obliged to
standardize their API initiatives — not
for profit, but to avoid regulatory fines
or respond to market pressures. In such
scenarios, APIs are designed either to
comply with government-driven
interoperability regulations or to meet
standards influenced by industry consortia.
You can define business models around
these APIs by the value they create in:
→ Avoiding penalties and injunctions by
complying with government mandates.
→ Utilizing incentives sponsored by the
government to uphold an industry
standard. By cooperating with
15
government initiatives, your organization
can offset its expenses and benefit from
industry-wide interoperability.
→ Simplifying onboarding for new customers
by embracing API standards defined
by industry consortia. Standardized
integrations are defined in various
industries to meet market pressures and
improve overall customer experience.
Professional service firms, like
Deloitte, often help their clients
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
integrate with third-party APIs as
part of a wide array of digital
experiences built for the consulting
firm’s customers.
CUSTOMER STORY

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Wells Fargo

The FX API, which we are offering to our partners, has been a game
changer… they can seamlessly integrate their applications or their

16
systems with our platform

SID VYAS, CTO, CAPITAL MARKETS AND INVESTMENT BANKING TECHNOLOGY

Wells Fargo has been at the forefront of
Open Banking initiatives. In 2016, the bank
announced one of its first Open Banking
APIs, part of an effort to provide third-
party developers and other institutions with
secure access to consumer data. Since then,
the bank and other firms. As a result, Wells
Fargo can benefit because firms beyond Xero
and Intuit can use these APIs in innovative
ways in order to create tailored solutions and
services for customers. And, in the process,
Wells Fargo can accelerate collaboration
with outside organizations and third-party
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

Wells Fargo has entered into a series of data

exchange agreements, including partnerships developers, while ensuring the secure
with Xero, an accounting platform, and Intuit. exchange and protection of customer data.

For Wells Fargo, an Open Banking initiative Read Well Fargo’s customer story
is necessary because the APIs it creates can
act as a “tokenized handshake” between
Productization COIN-OPERATED PRODUCTS

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

API providers conventionally create API
products as a doorway to monetize underlying
data or capabilities. In these scenarios, you can
create business models to unlock consistent
revenue streams by treating APIs as:
→ COIN-OPERATED
→ UPSELL
With a coin-operated business model,
you are directly monetizing the API as a
standalone product. To drive the maximum
revenue, you must further optimize the
business model by aligning to the consumer
needs and increasing the value provided by
the API. Based on the use case, API service
pricing can be optimized by choosing or
combining models like flat fee, freemium,

Productization API Business Models

API CONSUMER

17
API PROVIDER

FREE
API
UPSELL DIRECT SELL

API
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
tiered, per request, pay as you go, volume-
based, .SLA-based, per method, rate-limited,
or device/geography/use case-based (or)
support required.
AccuWeather offers tiered pricing with
different combinations of flat fee and
monthly rates.
UPSELL
You can upsell products by selling APIs
as part of a higher subscription tier within
a digital platform offering. APIs create
incentives in upgrading to higher tiers by
providing secure access to additional platform
capabilities, offering a competitive edge to
the platform, and driving customer retention
with high switching costs.
Salesforce Sales Cloud provides
access to Sales Cloud APIs only
for organizations subscribed to an
enterprise license by classifying their
offering into four different pricing
editions: Essentials, Professional,
Enterprise, and Unlimited. Access to
the Sales Cloud’s suite of APIs is
only provided for Enterprise and
Unlimited editions.
Marketing
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
Not all APIs exposed publicly need to
be monetized. Many large API programs
are supported for marketing purposes to
help promote the core platform, grow a
network, increase brand awareness, or honor
commitments to transparency. These public-
facing API programs can fall into a variety of
business models, including but not limited to:
→ PACKAGED APIS
→ AUDIENCE MODEL
→ BRAND LOYALTY
→ OPEN APIS
PACKAGED APIS
18
This business model is where an API is a
component of a larger platform’s standard
access tier. Inclusion of the API entices
platform adoption and may also be an
expected asset for the overall offering
(such is the case for CRM or cloud hosting
platforms). The inclusion of APIs drives
additional revenue by increasing adoption,
and improves customer retention rates.
AUDIENCE MODEL
An audience model offers API access to allow
consumers to connect with the network
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
and contribute to the network (e.g., adding
listings to Airbnb) without revenue sharing
but instead, just facilitating data curation.
The main goal is to increase the amount of
content and data within the system and
improve usability with a programmatic
CUSTOMER STORY

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Salesforce
Commerce
Cloud

The Commerce Cloud Developer Center is truly the one-stop-shop for

Commerce Cloud developers. It provides our customers with what they
need to build headless apps quickly and gives Commerce Cloud the
structure it needs to innovate and introduce new services and features

19
going forward.

ANDREW LAWRENCE, DIRECTOR OF PRODUCT MANAGEMENT, COMMERCE CLOUD

Salesforce Commerce Cloud leveraged The Salesforce Commerce Cloud team

MuleSoft, to enable rapid innovation and
ensure a future-proof foundation with
headless commerce.
While Commerce Cloud was setting itself up
leveraged MuleSoft’s API Community
Manager to build Commerce Cloud
Developer Center, enabling existing
customers to discover new Commerce
Cloud APIs, software development kits, and
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

for success and future innovation internally,
customers and partners requested Salesforce
Commerce Cloud expose more APIs publicly
so that partners could build capabilities
on Commerce Cloud and customers could
build their own apps leveraging Commerce
Cloud data.
toolkits. Since transitioning to an API-led
connectivity approach and exposing APIs
with CCDC, Salesforce B2C Commerce has
truly decoupled APIs from the platform,
unlocked data, and enabled headless
commerce for its customers.
interface. The end-customers experience

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

better inventory selection — and for these
platforms, the more customers, the better.
The audience, along with community-
generated data, is monetized through
advertising or reselling user data. Thus, the
API is one of many facets of building and
growing a following that is crucial for the
business to function.
Airbnb Partner API is designed for
hosts with multiple listings, enabling
programmatic listing to increase
Airbnb’s database of offerings. This
improves interoperability with the
platform and increases the number
of listings to maximize Airbnb’s
network effect.

Marketing API Business Models

API CONSUMER

20
CONTENT AND DATA

API

TRANSPARENCY
AUDIENCE

API PROVIDER ALTRUISM

API
PACKAGED OPEN API
REVENUE LEAD

API BRAND LOYALTY

FREE ENGAGEMENT
©2020 M U L E S O F T ­­— M U L E S O F T . C O M

API

LOYALTY
BRAND LOYALTY
APIs can be designed for brand loyalty by
externalizing them. The API helps distribute
content to visible external areas, such as
client web applications or mobile apps. Since
the goal is to increase brand awareness, API
development and maintenance may come out
of a marketing budget. For example, the Google
Maps API, which invariably results in embedded
apps bearing the Google Maps logo, may require
specific branding guidelines, even though its
core model is a coin-operated product.
Though Zillow’s API is free, its API
Branding Requirements state that “an
approved Zillow logo must be displayed
directly adjacent to any data from the
Zillow API.” For Zillow, each API type
requires a specific note.
OPEN APIs
Open APIs are free for public consumption
and intended to bring marketing or long-term
benefits to your organization. Commitment
to openness often creates stickiness and can
benefit organizations by providing:
→ Transparency into a company’s
operations to increase trust and improve
public perception around an organization.
Data rights, transparency, and ethical
standards are the current focus with the
rise of misinformation and public demand
for accountability. Organizations are
increasingly relying on Open APIs to meet
accountability standards.
→ Community development around a
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
company to increase external developer
engagement and brand awareness.
Developer communities can be nurtured
through incentive programs, meetups, free
content, and other methods of advocacy.
Although the API is free, organizations
benefit from the growing community and
its culture.
→ Lead generation by exchanging Open
APIs and open source projects related to
APIs for personal contact information.
An organization can further upsell
ancillary products and services to
generated leads.
→ Altruism by providing APIs for social
good. Non-profits, governments, and
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select organizations leverage APIs to
accelerate change through environmental,
sustainability, and other social good
programs.
According to a recent blog post,
Google Ads will soon roll out new APIs
that enable advertising companies
to disclose detailed ad information,
increasing transparency in digital
advertising.
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
All these activities can benefit your
company’s image and increase perceived
value. A commitment to openness can
generate stickiness, which in the long-term
can be converted to sales.
 After you choose a business model

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Establishing a business model helps your organization identify a
framework to capture value from your APIs. With the framework
in place, organizations should:

Build developer experiences to sustain Define monetization parameters

API ecosystems
Driving adoption is a key component of
any successful API investment. Sustaining
a business model in an API ecosystem
requires a robust developer portal acting
as a communication nexus for all personas
served. Ideally, the full lifecycle API
management solution adopted by your
organization should also provide the ability
to engage your partners and developers in
In essence, API monetization is the way to
capture how an API improves your bottom
line. Based on the chosen business model,
organizations should define objective
parameters to correlate the investment in
an API and the value generated by the
API. Direct monetization models involve
fine-tuning thresholds and tiers, whereas
indirect monetization models rely on defining
measurable goals and KPIs.

22
CRM powered branded experiences. The
developer portal should be the battleground
to test and implement your business models
with internal and external customers.

“Driving adoption is a key

component of any successful
API investment.”
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
Provide a value quid pro quo
Whether an organization decides to directly monetize an API or offer it
for free, there is always a value exchange in the form of data between
the API provider and consumer.
In an attempt to maximize the short-term
value, providers often rush to monetize the
APIs without evaluating the actual value
provided to the consumer. Especially in the
scenarios where APIs are used to collect and
share personal data, the value of information
captured might sometimes be greater
than the value provided to the consumer.
Consumers may still provide the data for
their short-term needs, but they might be
doing so with apprehension about the value
they are receiving.
In these cases, it is important for API
providers to identify any potential
imbalances in the value provided vs. value
HOW TO CHOOSE THE RIGHT API BUSINESS MODEL
captured. Perceived imbalances in value
exchange by API consumers will gradually
erode trust and turn loyal customers into
transactional users. Organizations must
critically evaluate their API business models,
not just on data exchange, but also on
long-term ramifications like privileges,
transparency, and engagement. With this
context, it’s imperative you ensure a
balanced quid pro quo in value exchange
to establish a sustainable business model.
23
“Perceived imbalances in value
exchange by API consumers
will gradually erode trust and
turn loyal customers into
transactional users.”
©2020 M U L E S O F T ­­— M U L E S O F T . C O M
Conclusion

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

In the end, a business model is a set of pragmatically laid
out assumptions about how your business will create value.

API business models should be used to → What is the value provided by your APIs?
quantify the value in potential savings or
earnings in API products and guide your → How do you capture the value from
future investments. your ecosystem?

With the rules of creating and capturing → How can your API business model sustain
value being displaced, disrupted, and your ecosystem?
destroyed, organizations need to reframe
their beliefs about value creation and
strive to continuously innovate their API
business models. The answer lies in the
fundamental questions about your overall
API strategy and ecosystems:

24
“API business models should be
used to quantify the value in
potential savings or earnings
in API products and guide your
future investments.”

©2020 M U L E S O F T ­­— M U L E S O F T . C O M
Get started with choosing the right API business model

HOW TO CHOOSE THE RIGHT API BUSINESS MODEL

Whether your organization is relying on APIs to improve your tech back-
bone or is already leveraging APIs to forge new partnerships and drive
revenue growth - MuleSoft can help:

Visit our API strategy hub
Discover the role APIs play in your digital
strategy, get a step-by-step blueprint on how
to build an API ecosystem, and get insights
from leading organizations applying the latest
API trends.
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management
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Quadrant leader — can help your team quickly
design, test, and publish API products, as well
as nurture a community of developers.

Go to API strategy hub Contact MuleSoft

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25
Learn how API Community manager can help
you create CRM powered digital experiences
to create and nurture an ecosystem of
developers and partners to foster adoption of
your API products.
Learn more about API Community Manager

©2020 M U L E S O F T ­­— M U L E S O F T . C O M
MULESOFT, A SALESFORCE COMPANY

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