Additional Call Pricing Info Are The Pressure Relief Valves For API Plans
08 Nov 2017
I’ve complained about unfair API pricing tiers several times over the last couple years, even declaring API access tiers irrelevant in a mult-API consumer world. Every time I write about this subject I get friends who push back on me that this is a requirement for them to generate revenue as a struggling startup. With no acknowledgement that their API consumers might also be struggling startups trying to scale consumption within these plans, only to reach a rung in the ladder they might not be able to actually reach. My goal in this storytelling isn’t to condemn API providers, but make them aware of what things look like from the other side, and that their argument essentially pulls up the ladder after they’ve gotten theirs–leaving the rest of us at the bottom.
My complaint isn’t with startups crafting pricing tiers, and trying to make their revenue projects more predictable. My complaint is when the plans are priced too far apart and I can’t afford to move from one plan to the next. More importantly, my complaint is when the tier I can’t moved from is rate limited with a cap on usage, and I can’t burst beyond my plans limits without scaling to the next access tier which I cannot afford to reach. I understand putting hard caps on public or free tier plans, but when you are squarely in a paid access tier, you shouldn’t be shut down when you reach the ceiling. Sure, I might pay a premium for each additional call, but I shouldn’t be shut down and forced to move to the next higher access tier–which might be out of my monthly price range. I just can’t go from $49.95 to $499.95 in monthly payments as a small business, sorry.
The key element that needs to be present for me, even in situations where I cannot afford to jump to the next tier, is the ability to go beyond my plans usage, with clear pricing regarding what I will pay. I may not be able to jump from $49.95 to $499.95 as monthly payments, but I might be able to burst, and absorb the costs as I need. If my plan is capped, and I cannot burst, and know what I will be charged for my usage (even if at a premium), it is a deal breaker for me. While I would prefer API providers do away with access tiers, and go with straight pay for what you use model (like Amazon), I accept the reality that API access plans help startups better predict and communicate their revenue. As long as they have this relief valve for each plan, allowing me to stay in my plan, but consume resources beyond what my tier allows.
Having relief valves for plans won’t hurt your revenue forecasting. I would argue it will actually help your revenue (not forecasting) with bursts in revenue that you wouldn’t see with just a capped plan approach. If you have trouble seeing API access in this way, I would argue that you are primarily an API provider, and building business exclusively focused on an exit. If you can empathize, I would say you are focused on delivering a set of services that people need, and you are probably an active consumer of other services, broadening your empathy spectrum beyond just a startup exit objectives. I honestly don’t want to mess with startups ability to generate revenue with this storytelling, I’m just trying to make the case for us startups on the API consumption side of the coin. Ok, I lied, I kind of do want to mess up the revenue strategy for startups who are exclusively focused on an exit, because when there isn’t a relief valve, you won’t find me signing up for one of your predictable plans in the first place.