
Ask HN: How much to charge for our API? - essentia
We have been working on an algorithm for a while, and later realized that it can turn into a great marketing campaign (sort of “creating a story for your product” type of thing). We pitched the idea to a big company and they are very interested in using it to sell more products (their annual revenue is around $250M). They told us that they prefer use our service as a per-use API with a maximum cap. But we are not sure how to go about pricing. Our questions are as follows:<p>1) Should we price the API calls based on the value of the product? (each product that our service will help to sell costs $100 on average)<p>2) Is it better to price the API calls based on ‘usage’ or based on ‘products that ended up sold’?<p>3) Is it common to request a lump-sum amount up-front (e.g. $50K) in addition to API costs that we will charge later? (since we will tailor our product based on their website and needs, we actually need to spend time and effort to make our service work on their end)<p>4) How to go about the maximum cap? (basically if the API gets used so frequently, they want to know the maximum amount they will ever get charged) Should we value it based on companies revenue? ($250M) or are there other factors we should consider?<p>So to sum up, its not really just the cost of our API call, but also the cost of using our idea and our algorithm. Any other suggestions are also highly welcome.
======
fenier
A few different things here.

1: Unlikely, most often this leads to complicated pricing structures, and
would you really be willing to take less from a store using it to sell...
Candy vs a Store using it to sell say, Ovens.

2: It's likely better based on usage.

3: That is likely integration cost + contracted usage / time-frame.

4: Figure out what your infrastructure can support. Get estimated traffic from
the types of sites you want to be a part of. Is the traffic on every page, or
just the 'thank you' page. Do comparisons. Chances are you'll need adjustments
(either on the API itself, or the inbound traffic) to avoid performance
issues. Multiply that by the number of customers you expect to get a rough
approximation of the total calls and the max ballpark of each customer.
Recommend coming in somewhere below the Max throughput as the targeted
baseline cap (figure out if cap is daily, weekly, monthly, quarterly, etc, and
how those differences affect your inbound traffic).

Some things to think about...

Does the API have security on it that needs to be configured?

Do you have a customer facing Dashboard that proves to the customer that your
product works via API analytics (how much traffic they've used, etc)?

Do you have a customer facing Dashboard that allows the client to make any
changes to the configuration of the data return, or is that all done in the
URL signature.

Can the requested Signature and the Dashboard have different configurations,
if so, which wins?

Do you have a Analytics integration package that proves to the customer that
your product works?

Do you have an idea of how your product would work in a A/B test scenario?

Do you intend to prove value real time, and if so - does that mean your API
needs to account for 'hold out' scenarios to establish a comparison baseline?

Do you have your API documented for Developers, including sample requests and
same responses to build their integration around?

