APIs and Monetization
October 30, 2023

Ankit Sobti
Postman

It's understood that APIs are essential building blocks of modern software. But are APIs products in their own right, ones that can produce revenue? Most API developers and professionals say yes, with 60% viewing their APIs as products, according to Postman's 2023 State of the API Report.


A product, according to Gartner, is simply a named collection of business capabilities that are valuable to a customer segment. And it makes sense that APIs are increasingly seen as products, serving both internal and external customers. But how does this view vary by industry and company size? And how much revenue can APIs generate?

It turns out that the larger the company, the likelier it is to view its APIs as products. At companies with over 5,000 developers, 68% of respondents said they considered their APIs products. At the other end of the spectrum were companies with fewer than 10 employees. There, just 49% of respondents viewed their APIs as products.

Significant Revenue

How much revenue can APIs create?

Quite a bit in some cases. When asked whether their APIs generate revenue, 65% of respondents in the survey said: yes. Of those answering in the affirmative, 43% said their APIs contribute more than a quarter of their total business revenue.

And almost 10% of companies with money-making APIs said their APIs generated more than three-fourths of total revenue. These companies were almost twice as likely to be in financial services as other sectors.

Companies that generate the greatest revenue from APIs take a different approach to software development, according to the report. They are much likelier to adopt an API-first approach.

API-first prioritizes APIs at the beginning of the development process, positioning APIs as the building blocks of software. API-first organizations develop APIs before writing other code, instead of treating APIs as afterthoughts.

API-First Leaders

For context, across all 40,000 survey respondents, 11% ranked themselves API-first leaders (scoring a 9 or 10 on a 10-point scale). But at companies whose APIs produced more than three-fourths of revenue, 28% of respondents ranked themselves API-first leaders — almost three times as many as in the general survey population.

What do these revenue stats mean for companies with APIs?

It suggests that investment into APIs is a sound strategy going into 2024. And in fact, organizations' investment of time and resources into APIs will rise or stay the same over the next 12 months, said 92% of respondents in the survey. That's up from 89% last year.

APIs' evolution from product intermediaries to products in their own right is a trend that bears watching. And for companies with APIs, it's worth weighing how much to invest in them, and even to an API-first approach. The decisions may have a tangible impact on the bottom line.

Ankit Sobti is Co-Founder and CTO of Postman
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