What’s the Value of an API Anyway?

There’s no doubt that APIs make companies and applications more efficient. They connect with increasingly demanding consumers and are a source of revenue as well. A recent report from Mulesoft showed, 50 percent of large companies (10,000 employees or more) are making more than 10 million dollars in annual revenue from APIs. With such a large revenue stream, don’t you wonder what’s the value of an API?

How to Calculate the Worth of Your API

The algorithm to calculate the worth of your API is as followed:

Number of users/10,000  X (Dev Hours to Create Service x Average Hourly Cost of Dev)) / Competitors +1

 

So let’s say we have 5,000 users, 80 dev hours, $50 dev hour cost, and 10 competitors.

 

V= $181

 

V=((5000/10000) x (80×50))/10+1

Why is this Important?

It’s good to know the general value of an API when determining the budget of development, in almost all cases the benefits from an API ( improved customer experience, increase efficiency, etc.) more than pay for the development.

What APIs Are Bringing to the Composable Enterprise

APIs are the driving force behind business strategy and connectivity goes beyond integrating back office systems. Utilizing the cloud, APIs and mobile are enabling decision makers to quickly access applications and information they need, in a self-service way.

How Riptide Can Help

We specialize in providing scalable cloud solutions and strategies that can streamline your processes, connect your systems, automate your workflow and enable you to focus on important things, like maximizing revenue and growing your business.

Drop us a line and let our custom software development, mobile applications, and enterprise system integration experts solve your business problem.