Senior Analyst at Intelligence Node, a retail analytics and AI price optimization company
APIs or Application Programming Interfaces were once popular only in the technology sector. But today, they form the link that binds the different technological ecosystems of an organization.
Businesses that were the early adopters of APIs are now developing their own products to help maximize efficiency. These interfaces help organizations monetize data, innovate, and grow. Price APIs can get the historical data on prices for any product in your inventory.
Implementing a successful price API strategy can be highly beneficial to a business. Just look at these cases. At least 50 percent of the revenue developed by Salesforce.com is through API; eBay makes about 60 percent, and Expedia.com about 90 percent.
Although the number of organizations with fully-developed APIs remains small, it is estimated that in the next 12 months, there would be thrice the amount of public APIs. Reports also predict that the APIs of the future would have better services, including machine learning capabilities, increased access to online wallets, integration with digital currencies, and more.
With all this information, it comes as no surprise that organizations want to capitalize on the price API market and drive innovation and revenue generation. For this, the adoption, execution, and governance of a successful API strategy are essential. And driving the successful execution of a price API strategy can be done in these four steps.
Step 1: Evaluating and Prioritizing the Price API Value
There’s no doubting the value APIs generate. But businesses must identify the key areas where they are needed. The one question organizations need to ask themselves is, “In what areas can APIs affect customer experience, revenue generation, and productivity the most?” And then work from there.
Let’s look at the example of a retail business. Do they need to create a product price API that helps them investigate historical sales records? Are product APIs (that help customers access data quickly) more important than price APIs? Analyzing the impact each would create can help businesses gain clarity about which API to prioritize.
The different areas which need investigation are as follows:
Business Revenue: The quantitative impact the different price APIs would have on the business.
Strategy: How does the API strategy align with the company’s long-term goals?
Technical Difficulty: Details on the back-end system and integration and the difficulties encountered while creating the price APIs.
Readiness: How easy is it to implement this price API strategy from a policy, legal, and operational standpoint?
Step 2: Monetizing the Created Price APIs
After the companies identify the value an API brings to their operations, it is time to focus on reaching this goal. Surprisingly, this is where most organizations fall short. When you’re developing price APIs for optimization, it is essential to quantify the monetary value of this data. This includes checking the different revenue streams it might open up, how proprietary the data is, and what users might be willing to pay to access it.
After you’ve found the answers to these questions, the next step is to check how the organization’s overarching monetary strategy fits in the scheme of things. Finally, the pricing agreements with different partners can be determined.
The different monetizing approach can be as follows:
Pay for Use: Here, the partners pay based on the volume they use.
Revenue Sharing Model: The API partners develop business for the API service provider and get paid for the profits generated.
Freemium Model: The basic services of the price API are available free for the partner to use, but some features need to be paid for. This model is usually adopted when it is important to increase a brand’s reach among the audience.
Price APIs are not just a source of revenue. They can be used to cut down on costs internally as well. Using price APIs for making the internal operational and technological procedures simpler reduces costs. These potential savings, simplification of processes, and acceleration of operations should also be taken into account.
Step 3: Governing the Price APIs
The implementation of price APIs comes with its own set of challenges. It provides unprecedented levels of interaction between organizations, ecosystems, technologies, and partners. In such a scenario, data privacy and security become a cause of concern. There is also the question of regulating the funding, development, and coordination of the APIs.
The solution for this is simple – the API Center of Excellence (CoE). The CoE is a body that oversees the development and function of several APIs (including price APIs) in an organization using dashboards. This body helps to provide developer access, preventing duplication, and enabling reuse of the price APIs.
In some large organizations, the CoE was also in charge of deciding what APIs are needed and identifying their capabilities. Sometimes, they even report to the CTO of the company.
The CoE is also responsible for developing appropriate security measures, including two-factor authentication, network monitoring, and establishing proper protocols. It also manages the funding requests for the different price APIs. Constant platform support is also one of the major objectives of the CoE.
Finally, the CoE has to support staffing arrangements as well. This includes establishing API portfolio directors that govern the development process. Software engineers, case specialists, and personnel that can translate business needs into technological developments are essential in this step.
Step 4: Scaling and Growth
Just like any other product or service, price APIs also need to be promoted to be widely used. The best approach to this adoption campaign is to create a sample or pilot for customers and developers. Next, the formal production can begin based on the failure or success of the pilot. Lastly, the wider adoption push can be coordinated to scale the price APIs.
In this step, having an interested and innovative pilot team is of critical importance. The organizations, at this stage, can use performance metric tools to get some insight into the usage of the price API and make improvements where necessary. The number of user registrations, data errors, and API response times are some of the metrics that can be used to gauge the API’s performance.
The potential of price APIs is limitless. But the key to success lies in the implementation of the strategy. It’s not as simple as building a website. Investing sufficient time and resources is of utmost importance. Using product price APIs to create competitive benchmarking, creating multiple shopping stores, and managing inventory. Price APIs have significant value to add to any organization. So, executing a formal price API strategy should be the topmost priority.
Create your free account to unlock your custom reading experience.