Ask HN: How much to charge for an API call?

You missed providing enough data to come up with something that would actually make revenue for you. Abstracting from a business model you have, there are SaaS businesses that don't charge for API call but a license fee that compensates the costs. Valuing an API call is hard, first you need to discover your costs related to handling that call at all, those fall into 2 groups:

1. direct costs - this one is relatively easy, you just keep track of all your spending that you need to cover to handle that API calls, this will be mostly: compute, storage, network costs, software licences, 3rd party software licences. You should have a good idea how much you need to spend on infra to handle 1kk API calls. There is a caveat here (!) increasing storage costs that grow every month. Lets say you save a transaction in DB for every API call made and you charged a customer for that. The thing is that (depending on your agreement with the customer) you have to keep that transaction in DB for lets say next 36 month. If you're handling millions of transactions... these numbers add up and you set set yourself in a very uncomfortable position after some time when you realize that even though you charge per API call, it's not enough to cover the costs of keeping data in DB that grows every month.

2. indirect costs - Depending you your business setup, you may need to incur office costs, backoffice staff, sales commission, SWE team compensation, on-calls... payment gateway commission, taxes and FX rates fluctuations if you're charging globally in different currencies. The bigger the org the harder it will be to know all of these indirect costs. Btw. these costs are usually flat and there is not much linear dependency on the number of API calls you do (but there is to the number of customer you have).

Where it gets interesting, is when you enter economies of scale... which means that you can keep your indirect costs relatively flat and your direct costs in a non-linear relation to the number of API calls made. To put into an example:

- tiny scale, 1kk API calls will have 100USD of direct costs + 10k USD of indirect costs = price per 1k calls is (10100 USD / 1 000) = 10,1USD

- a bit bigger scale, 100kk API calls will have 15000USD of direct costs + 10k USD of indirect costs = price per 1k calls is (25k USD / 100k ) = 0,025USD

see? You've handled 100x more traffic but your direct costs increased only by 15x and indirect stayed the same - this is what you should focus on in the end when building API SaaS product - how do I get into economy of scale the fastest.

I'd create a higher tier, like double the price, with API access.

But offer a very high rate limit.

Pricing is a core concept you may want to get some consultation on with trusted advisors and mentors.

You can adjust your pricing but it's a big ship, so it's good to get close to right.

What sorts of cliffs do your internal applications face? Any block pricing, where it is cheaper or more expensive after a certain amount of compute? You'll want to build these into pricing in some way, either in the assumptions or directly as a passthrough.

The other folks commenting that it depends on your costs are spot-on. The following are important data points for getting your economics right:

0) Advertised SLA. What uptime and response time are you guaranteeing your customers?

1) Minimum cost of the platform (i.e., no traffic). From here, also determine what full utilization looks like in terms of max number of API calls within your advertised SLA.

2) Cost of platform at scaled utilization based on load projections. This is where you can figure out how to make money when negotiating committed or volume-based pricing for specific customers.

3) The overall human cost of building and maintaining the platform. Don't forget that you're not just covering the price of running the platform, but the time that you and possibly others have put into it. The last thing you want is for success to force you to make your platform more expensive because it's grown past the available sacrifices a single person bootstrapping an application can make. You'll be able to retain and delight customers better if your pricing model accommodates a mature business that supports actually paying someone a salary from the get-go.

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