How Expensive Is an API Call? Posted in Business Models J Simpson March 23, 2022 Programming API calls on a budget can be a delicate science. For API consumers, integrating with an API runs the risk of essentially turning strangers loose with your credit card. Even $0.001 per call can quickly add up if you’re making millions of calls a month. On the provider’s side, API developers must strike a fine balance when monetizing their API. Developing and hosting an API costs money, after all, but you need to price your API competitively if you want people to use it. Finding the perfect price point for each API call can involve some complicated calculus and even a certain amount of guesswork. To help shed some light on the matter, we’ve researched how much a typical API call costs and broke down the expenses for running your average API as a product. How Much Does An API Call Cost? An Investigation We’re going to look at this question from both the consumer and the developer side. Each has its own complications. On the API developer side, there’s a scarcity of information that makes any kind of generalizations troubling, if not impossible. The lack of precise data is part of what made us want to investigate how much an API call costs in the first place. From the API consumer standpoint, we could simplify and say, “it depends,” but that’s not going to do anybody any good. How Much Does An API Call Cost For API Consumers? Estimating the cost of an API call is problematic because these services can vary a lot. That’s not very useful if you’re trying to create a budget or calculate operating costs for launching a new product that consumes an API. To help you estimate how much consuming an API might cost you, we’ve simply calculated an average based on the ten most popular APIs listed on RapidAPI. Those are: Crunchbase (free) SendGrid ($.001) Imgur ($.001) ADSBexchange ($0.0015) API-Football ($0.0015) Web Search ($0.001) GeoDB Cities ($0.0001) Custom QR Code with Logo ($0.02) uNoGs ($0.1) Telize ($0.0005) The average cost per call between these ten APIs comes out to $.01266. That seems pretty in line with the going rate for API calls, which should at least provide a ballpark estimate when calculating a budget. Now, let’s dig into the API provider’s side to see what expenses are behind each call. How Much Should API Developers Charge Per API Call? We first addressed this topic in 2020, which remains an excellent introduction to the topic. For this investigation, we created a hypothetical use case to help approximate how much it would cost to run and maintain a modestly-sized API. Our use cases imagined an API that supports up to 100 users who are each allowed up to 10,000 API calls each month. This means this API must support up to one million API calls every month. You also need to factor in development costs as you’ll want to not only recoup the expenses you invested in your API but, hopefully, turn a profit. In our hypothetical use case, we did some math to determine how much research and development would cost. Those figures were based on the average software developer’s salary according to GlassDoor. These numbers have changed quite a bit in the last two years, though, so let’s update those figures for 2022. At present, the average salary for a software developer is $109,528. Divide that by 12, and we learn that the average developer’s monthly wage is $9,127.33. As we pointed out in the previous article, though, this changes if you bring in outside help to work on the project. This involves hiring a contractor who, on average, costs 150% as much as a salaried employee. That means the average monthly rate for a contractor developer is $13,691. In our hypothetical API use case, we approximated that developing an API would require three days of research. Our next step, therefore, is to figure out a daily base rate for our contractor developer. We’ll use 30 days in a month for our example. This gives us a daily cost of $456. The research stage of developing an API would cost $1,369.10. We can use the same base rates to determine how much it will cost to develop the database, which is an important piece of an API. This can take from between five to ten days. We’ll use an average of 7.5 days, as we did in our last example. The average cost of developing an API database would be $3,422.75 in this example. You’ll also need to prototype your API and monitor it once it’s up and running. We’ll spare you the exhaustive list of our conversions, as they’re laid out in detail in the previous article. Instead, we’ll skip straight to the answers. Prototyping: $1825.46 Minimum Viable Product (MVP): $2,281.83 Monitoring Implementation: $3,422.75 Documentation: $628.95 Now let’s add it all together to figure out how much developing an API will cost. Cost Of Developing An API: $13,004.84 Now let’s calculate how much it will cost to host your API. The good news is that there’s a free tier on Amazon AWS of up to one million calls if you’re using REST or HTTP, which fits nicely with our hypothetical use case of one million calls per month. The free tier supports up to 750,000 calls per month for web sockets. Beyond that, it costs $1.00 per million calls for the first three million calls. Since we’re using a small API for this example, let’s call it a base rate of $.000001/API call. Finally, you’ll need to do a bit of maintenance to keep your API up and running smoothly. This may require a DevOps Engineer, which costs around $60/hr, on average. Since our API is on the small size, let’s consider that our API will require 8 hours of upkeep a month. This comes out to $480 a month. We break things down on this granular level because, as developers, we’re not always trained to calculate how much it will cost to get a product to market. However, this is crucial if we’re working with investors or figuring out how much to charge for our services. Let’s cap our case study at one million calls a month, using REST, which would keep us in the free tier using Amazon AWS. That means our only ongoing expense to keep our API up and running would be $480 for maintenance. We also need to factor in the cost of developing the API in the first place. If you were to price your API at a base rate of $.001/call, that would yield $1,000/month. That’s a profit of $520/month. You’d break even in a little over two years, at that rate. Charging $.01/call would yield $10,000, however. In that case, you’d be in the black in just over a month. Of course, a hefty price tag requires your API being worth that much, though. You’ll need to do some market research into your particular niche to find out competitive rates. Final Thoughts: How Much Does An API Call Cost? The cost of an API call can vary a great deal depending on what kind of data you’re dealing with. If you look through the listings on RapidAPI, you’ll notice that anything dealing with gambling can get quite expensive. API developers and consumers should therefore perform market research in their select industry to better understand what API prices make sense for their project. If an API provider is aiming to charge a whole cent per API call and pay off the development costs in a month, though, like in our example at the beginning, they better have some valuable data or functionality!