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Well that depends. If you are operating under the same business model it's not scary at all. Say you need 3 calls to external apis to produce one api reply that

Well that depends. If you are operating under the same business model it's not scary at all. Say you need 3 calls to external apis to produce one api reply that you can sell. You just have to make sure that the total cost for the 3 calls is lower than what you earn when you sell a reply. There could be another company that is in the business of risk management. It could sell unlimited or quotad amounts of api calls for a fixed price. There is no reason for these two to be the same company.

danielrhodes 10y ago
> If you are operating under the same business model it's not scary at all. Total hogwash! It's super scary. Variable costs are something you keep to an absolute minimum in a business. A fixed price API (at least for a certain number of calls) is attractive precisely because it is not taking a chunk off your top line. You want fixed costs to be low as well, but at least your revenue can grow independently so marginal costs decrease with each additional dollar you earn. > It could sell unlimited or quotad amounts of api calls for a fixed price. If you are an API provider, it is a great deal to offer fixed pricing. First, you have a more predictable line of revenue. Second, if you are a small player, you are not as exposed to fluctuations in demand. For the latter case, that means you don't need a lot of cash on hand to even out cash flow issues. > There is no reason for these two to be the same company. This is a classic middleman business. As the API provider, you need to make sure this does not happen, unless you are having serious sales problems. You'll just get the squeeze as the middleman eats your margin.
- kordless 10y ago
  Variable costs are scary, but they are scary because they may change at a future date, not because they are variable. With a cryptocurrency backed API call, you can enter into contracts over variable periods of time to lock in price. This will give consumers of the API calls a way to predict costs moving forward. It essentially builds a futures market framework as well, and that's pretty well known to us by now. We can manage it with existing toolsets.
  - danielrhodes 10y ago
    > Variable costs are scary, but they are scary because they may change at a future date, not because they are variable. Pretty sure you are thinking of variable pricing. Variable costs are different. From Wikipedia: "Variable costs are costs that change in proportion to the good or service that a business produces." https://en.wikipedia.org/wiki/Variable_cost https://en.wikipedia.org/wiki/Variable_cost

danielrhodes 10y ago

> If you are operating under the same business model it's not scary at all. Total hogwash! It's super scary. Variable costs are something you keep to an absolute minimum in a business. A fixed price API (at least for a certain number of calls) is attractive precisely because it is not taking a chunk off your top line. You want fixed costs to be low as well, but at least your revenue can grow independently so marginal costs decrease with each additional dollar you earn. > It could sell unlimited or quotad amounts of api calls for a fixed price. If you are an API provider, it is a great deal to offer fixed pricing. First, you have a more predictable line of revenue. Second, if you are a small player, you are not as exposed to fluctuations in demand. For the latter case, that means you don't need a lot of cash on hand to even out cash flow issues. > There is no reason for these two to be the same company. This is a classic middleman business. As the API provider, you need to make sure this does not happen, unless you are having serious sales problems. You'll just get the squeeze as the middleman eats your margin.

kordless 10y ago
Variable costs are scary, but they are scary because they may change at a future date, not because they are variable. With a cryptocurrency backed API call, you can enter into contracts over variable periods of time to lock in price. This will give consumers of the API calls a way to predict costs moving forward. It essentially builds a futures market framework as well, and that's pretty well known to us by now. We can manage it with existing toolsets.
- danielrhodes 10y ago
  > Variable costs are scary, but they are scary because they may change at a future date, not because they are variable. Pretty sure you are thinking of variable pricing. Variable costs are different. From Wikipedia: "Variable costs are costs that change in proportion to the good or service that a business produces." https://en.wikipedia.org/wiki/Variable_cost https://en.wikipedia.org/wiki/Variable_cost