The document discusses best practices for monetizing APIs, including landing developers first by having them pay a token amount to recognize the value of the platform. It also recommends providing self-service tools to reduce onboarding friction and allow developers to manage their accounts. Measuring metrics like conversion rates and time spent in each onboarding step can help identify issues to iteratively improve the process. Different API business models like prepaid vs postpaid billing and tiered vs pay-as-you-go pricing are also covered.

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Best practices when monetizing APIs

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Who am I?
● Co-founder and CEO of Moesif,
the leading API analytics
platform
● Focus on API strategy,
monetization, analytics, and
devrel
● I love IPAs!
derric@moesif.com

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Selling to developers is hard
No Single Developer Persona
Not invented here syndrome (NIHS)
Developers are skeptical of sales and marketing
Constant stream of higher priority tasks
Developers can build it themselves!
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Developers need buy-in from many
stakeholders
Legal and
Security
Product
priorities
Finance and
Procurement

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Land developers first
Get developers to pay a token amount and recognize value in
the platform.
Large bottoms-up
funnel
Fast time to
paying

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

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

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Each API business is different
Prepaid vs Postpaid
Tiered vs Pay As You Go (PAYG)
When to invoice
Level of support
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1. Prepaid vs Postpaid
Prepaid billing: Customer
purchase credits / quota ahead
of time creating that is then
“burned down”
Pros:
● Better cash flow
● More familiar with
traditional enterprise
Cons:
● Friction in onboarding
● Harder with PAYG
Postpaid billing: Customer
only pays for their usage after
it’s consumed
Pros:
● Less onboarding friction
● Makes PAYG easier
Cons:
● Additional credit risk
● Can be abused

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2. Tiered vs Pay As You Go (PAYG)
Tiered Pricing: Traditional SaaS
pricing with predefined suite of
features/capacity for each tier
Pros:
● Enforces a min spend
● Predictable for customer
● Easy to implement
Cons:
● Friction in expansion
● Rigid / be a turnoff
Pay As You Go: Usage-based or
consumption-based pricing
based on a unit price.
Pros:
● More efficient for customer
● Less friction in expansion
● Can “appear” cheaper
Cons:
● Can cause billing surprises
● Hard to implement

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3. When to invoice
Recurring: Customer pays each
month/quarter/year
Pros:
● Easier for finance team
● More predictable
Cons:
● Costly for low cost SaaS
● Complex if prepaid
Threshold: Customer only pays
after a threshold is reached
Pros:
● Reduced transaction cost
● Makes prepaid easier
Cons:
● Harder for finance to
recognize revenue
● Company liability

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The pitfall of self-service…
Account management is not scalable
Issues during
onboarding
Changing business
needs
Billing surprises and
issues

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Reduce support time with self-service
management
● Provide visibility and
reports on what's
consuming their quota
● Provide tools to
upgrade and manage
their account without
involving personal

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Avoid surprises with self-service account
communication
● Automatically notify
customers when they
approach or breach
plan limits
● If Pay As You Go,
empower customers to
set their own usage
thresholds

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Reduce friction in payments with partners
● Provide ability leverage
existing contracts
already approved by
procurement
● Reduce credit card
issues such as
employee attrition or
low limits

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Rely on quantitative feedback to iterate on
onboarding issues
Page
Visit
First Hello
World
First Working
App
30%
6 hours
50%
2 hours
20%
13 hours
Sign Up

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What to measure?
A developer could stay in a single stage for days. You should
track both:
Conversion rate
for each step
Time to reach
next step

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Developer personas
1000’s of languages &
frameworks
Different roles create
title ambiguity
Different education/
experience levels
Different channels used to
discover new tools

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Now you can slice and dice your onboarding

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Key Takeaway:
Deliver a great self-service onboarding

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A P I A n a l y t i c s
Derric Gilling
derric@moesif.com

23. New York
JULY
Australia
SEPTEMBER
Singapore
APRIL
Helsinki & North
MARCH
Paris
DECEMBER
London
OCTOBER
Jakarta
FEBRUARY
Hong Kong
AUGUST
JUNE
India
MAY
Check out our API Conferences here
50+ events since 2012, 14 countries, 2,000+ speakers, 50,000+ attendees,
300k+ online community
Want to talk at one of our conferences?
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