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Ask HN: Would you prefer paying $1 per 1000 API calls or $30 fixed monthly?
- encoderer 9y agoPossibly you’re just gathering data. If you’re thinking about how to price a product of your own: 1) nothing wrong with starting very simple because you’re not making your product better by writing billing code 2) common answer to your question is “do both” — google two part tariff
- sjtgraham 9y agoWhich allows you to build a viable business?
- jonathan-kosgei 9y agoA fixed monthly absolutely does, because; 1) I can offer discounts on annual prepayments which helps cash flow and gives the user a bargain 2) The payment is upfront and there's no need to send dunning emails at the end of the month when several user's card payments fail.
- diamondo25 9y agoDepends on the service and availability. Look at Mailchimp for their options. Especially buying credit is always useful. If you need to charge them at the end of a period, you will lose money.
- grenoire 9y agoWhatever is cheaper, of course!
- poulsbohemian 9y agoMore information needed. $1 / call might be a deal if that is actually a savings over an alternative means of achieving the outcome. Or, $30/mo might be a real bargain for the consumer but a terrible business model for you. Also, depends on the target buyer and their expected usage.
- drwl 9y agoI would agree with this — this question seems like it would be better with more context.
- jonathan-kosgei 9y agoIt's actually $0.001 per call
- mariogintili 9y agoAll inclusive/fixed rates are predictable...tend to be budget friendlier. I guess someone doing some rough bootstrapping would want to pay-as-they-go
- matchmike1313 9y agoAssuming that $30 represents 30,000 calls I would prefer to pay $1 per every 1,000 and have the flexibility of more granular pricing.
- dpweb 9y ago$1 per thousand with a $30 maximum charge.
- RGamma 9y agoI agree with this. This gets you the cheapest offer (pay as you use) while having an upper cost bound giving you peace of mind.
- ISL 9y agoAn upper cost bound can also be applied with a hard user-configurabe usage cap. For a company, having your largest customers have negligible marginal cost for increased usage seems unwise.
- analogic 9y agothis some kinda brain teaser or somethin?
- quadrature 9y agoIts an exercise in learning how to price a product.
- ollemasle 9y agoIt depends how many API calls I plan to do monthly. So it depends on the service :-)
- mindvirus 9y agoDepends on the API. Generally I prefer flexible pricing, since we might need to scale up - i.e. if we double some limit, I want to be able to pay $60 rather than be blocked. Some other considerations: 1. Have a free tier to let developers play with your API. i.e. first 1000 calls per month are free. 2. If you do variable pricing, let people set a limit and alert them before they hit that limit.
- jonathan-kosgei 9y agoI actually do both those things! I have a free tier of 1500 requests a day and once you subscribe you get an email when you're at 90% your usage.
- pavel_lishin 9y agoDepends on whether other people control how often I call the API. Is it a scheduled task I run? Then I'd rather pay $1/1000. Is it a trigger that fires when a new user signs up for my service, or sends a link? I'll take the guaranteed flat rate.
- jonathan-kosgei 9y agoIt's actually called on each page load so I imagine you'd 100% go for the flat rate :)
- mansilladev 9y agoAt a very high level —- I’m willing to pay a premium for a service at any reasonable cost, and if my business is dependent upon it. Metered use encourages consumers to be more mindful of how they use APIs. Monthly fixed fees help consumers to forecast spending more loosely; however, as a business that is depending on your service, I am also concerned about your operational scale (all you can eat is great until too much has been eaten by the aggregate customer base). As most others will probably say: it depends. If your service is a commodity that I can switch out for another service easily, perhaps a fixed monthly fee is the only way to go. But if it’s a very unique service, metered may be the way to go.
- 35bge57dtjku 9y agoMaybe x/month plus y/call over a certain amount, for the people who use a disproportionately large amount of resources?
- twblalock 9y agoI've worked on a lot of API integrations and $1 for a single call is way more than I've ever paid. At that price, I'd burn through more than $30 on the first day just by testing out the integration.
- mromanuk 9y ago$1 per 1000 Calls
- twblalock 9y agoHeh, I misread that. But I think that's still expensive. For example, the Google Maps API gives you 25,000 free calls per day and charges 50 cents per 1000 calls after that.
- rhacker 9y agoWhile he's suggesting $1 for 1000 calls, I find it interesting to suggest $1 per call for "anything" wouldn't be worth it... for example would you pay $1 to pull someone's credit report? (not that you need to, but just as an example where $1 per API call would actually be cheap).
- toomuchtodo 9y agoAgree very much here. I would argue I'd even pay more per API call versus pulling someone's credit report through traditional web app/fat client methods, as they business value is in the machine processable format. The trick is to align your pricing with the API consumer's value received. You want a piece of their take for the value you're delivering.
- tonyarkles 9y agoI really love the Twilio model personally. I've got a system that is pretty seasonal, and it costs $10/mo for the DigitalOcean VM and pennies/mo (+$1 for the number) most months for Twilio. Around holidays and long weekends, the Twilio costs ramp up quite a bit (I think it hit $100-200 in a weekend once), but it's fine because that's when it makes money. Only having to pay when we use it helps keep the overhead down dramatically. I've never considered looking at other options because it's been great. For developers, too, I think the pay-per-usage or fixed-monthly model works well when it's something that they can tangibly understand. Looking at my example above, I'm fine with the fixed monthly DO cost because I know that there's some fraction of some real computer "out in the cloud" that is reserved for me and that is running my code continually. I also know that Twilio has a finite number of phone numbers available, and $1/mo to reserve one of those makes sense to me. But I also know that the way most telecom agreements work is that they bill based on usage, so me getting charged based on usage works fine for me. If they wanted to charge me $20/mo for a number even if I had not sent any messages at all, that'd be harder to swallow. Edit: also, it probably depends on whether you're selling to small businesses or enterprises. My experiences with enterprises is that they seem to prefer having fixed costs even if it ends up costing more. Seems like it has to do with how budgets and funds get allocated. "Our SMS sending costs went up by a factor of 100 because it's Christmas" doesn't seem like something that flies very well, even if the pay-per-usage model averages out lower over time.
- redindian75 9y agoswings from pennies to $200/day! What do u use Twilio for? Is it pure telephony based product?
- tonyarkles 9y agoWithout going into too many details, it's a customer loyalty and retention product. Small businesses use it to keep in touch with customers who have opted in. They seem to be pretty bursty about when they use it :)
- originalsimba 9y agouh, try $1 per 10,000 API calls and maybe you're on to something.
- detaro 9y agoHow can you possibly say that without knowing what the product is?
- originalsimba 9y agoBecause it's an API and I'm a developer and a fully developed adult with several decades of computer, internet, and professional working experience in tech.
- donohoe 9y agoBoth. I’d pay per 1K API calls below a certain threshold but the peace of mind that if I get sudden spike (or make a mistake) it’s not going to bankrupt me.
- jonathan-kosgei 9y agoI'd probably do the same thing. If I'm not using a service a lot I don't want to pay for it or I only want to pay when I use it. Otherwise for constant usage I'd prefer to be able to know my spending ahead of time.
- rgbrenner 9y agoThere's a rule that's relevant here: innovate the product or the pricing, but not both. So if you're innovating on the product.. market the innovations to your users, and focus their attention on the benefits of your innovations. They should be big, obvious improvements--think 10x (not 10%). For pricing, copy it from your competitors. If you're innovating on the pricing, then that's frequently a freemium model... but it could also be flat-rate pricing, etc. To build a foothold in an existing market, you'll need to aim for pricing that's 1/10th of your competitors. If you're going to deliver a big price cut like this, you should make it as obvious to your customers as you possibly can. So the answer to your question very much depends on your strategy, but also the industry you are in and how your competitors price their products. Perhaps the worst thing you could do is both... since innovations cost money and price cuts cost money... it's a great way to die. Doing less of both just creates a mediocre product without clear marketing; making it more complicated for your users to understand the benefits of your service.
- jonathan-kosgei 9y agoThanks for replying. To give you some context the API is ipdata.co pricing at ipdata.co/pricing.html I've gotten feedback from multiple users that my pricing is overwhelming. The API is pretty much feature complete and my main focus right now is selling.
- rgbrenner 9y agoA few comments: - Your index page is missing. (I can't see your marketing angle.. so I'm not going to comment on the actual pricing... let me know when you fix it) - you're following a freemium model, but it's not obvious enough. The first plan on the pricing page should say "FREE". Your index page (which I cant see), should say free signup & no credit card required. - That's a lot of plans. Compare to Maxmind, they have 3 plans depending on what data you want (Country, City, Insights) + a free trial. - In the faq, it says I need to email you to update my credit card or change my plan. I guarantee you some user will email you their credit card number. This should all be available from their account without emailing you.
- xir78 9y ago$1 per 1000 easily, because your cost is upfront, a quota means your wasting people’s time by trying to game the cost of each call.
- gwbas1c 9y agoI'm surprised how many posters interpret this as $1 / call, when the question says it's $0.001 per call.
- d--b 9y agoI really dislike pricing per API call, because I'm vulnerable to bugs or attacks (on my or your side) that can cause the pricing to blow up. Also, I have the impression of getting screwed because there is no relationship between my usage and your cost (unless your API call is a call to a really complex task, 1000 calls will cost you mere pennies in equivalent CPU time, so the more I use your service the bigger your relative margin!). The only place I am happy to pay per use is for cloud services, where I rent CPU and I get billed per time used.
- 35bge57dtjku 9y agoIt seems like it'd be far easier to track usage and prevent/resolve disputes with a monthly charge, too.
- jonathan-kosgei 9y agoAnd to handle traffic spikes. I however pad my user's daily quotas (by a percentage of their plan) to be able to handle temporary spikes up to a certain point.
- m3kw9 9y agoDepends what the API does. But ultimately depends if I will reach 1000 or go over or under
- troydavis 9y agoThe answers HN readers give won’t be representative of the “revealed preferences”[1] your prospective customers - even if both are from the same person. Get 10 people excited about your product and have conversations/casual pricing negotiations with them. 1: https://en.wikipedia.org/wiki/Revealed_preference https://en.wikipedia.org/wiki/Revealed_preference, http://www.beyondcostplus.com/blog/stated-vs-revealed-preferences-pricing http://www.beyondcostplus.com/blog/stated-vs-revealed-prefer...
- troydavis 9y agoIn case a future reader stumbles across this thread.. today I read someone else's description of exactly this. From https://www.kapwing.com/blog/unexpected-challenges-of-making-money/ https://www.kapwing.com/blog/unexpected-challenges-of-making... (https://news.ycombinator.com/item?id=16542603 https://news.ycombinator.com/item?id=16542603): > 8. Customers are bad at telling you how much they would pay: Before we added the paywall, we asked a sample of users if they’d be willing to pay a fee to remove a watermark. The majority said they wouldn’t be. But when we actually added the paywall, several people who said they wouldn’t pay did. After we launched, some people have told us our product is cheap and plenty have said it’s too expensive. Takeaway: The easiest way to tell if people will pay is to make them an offer and see if they cash in.
- derekp7 9y agoI think a good way to price this out is logarithmic pricing. $1 for the first 1000, an additional $1 for the next 2000, then $1 for the next 4000, etc. Play with the numbers, based on how many calls you expect the bulk of the smaller customer to make, yet still cover your expenses if you land a handful of very large customers.
- smt88 9y agoI hate pricing schemes like that. They force me to spend time trying to predict usage, which is often impossible or frustrating.
- borramakot 9y agoThis seems strictly better than the price/1000 calls, since at least you only have to predict the order of magnitude of usage.
- jonathan-kosgei 9y agoThis wouldn't make it easier for users to figure out :)
- ronreiter 9y ago$1 per 1000 calls, with 10,000 free per month (free tier)
- FLUX-YOU 9y agoFixed monthly, but you'll likely have rate limits of some kind anyway so it's the same thing. $x/month is much, much more ergonomic for cost planning, requisitions, etc.
- rhacker 9y agoSeems like people are missing the point of the question. Saying $1 is too expensive for 1000 calls without knowing what that API call does shows you're thinking in terms of value, not in terms of a pricing model that is favorable. The OP hasn't told us if he's doing ML calculations, spinning up machines, painting a Tesla, selling an airplane ticket or what. Think in terms of the pricing model only. Yes it would be nice to know what the service does, but the OP probably can't give that away.
- kapauldo 9y agoTwilio model is best. I don't waste money if I'm not using and pay as you go.
- deejaybog 9y ago$X/mo + $y/kCalls. X is for license to the code, y is for API hosting costs. i don't know why we don't see such a cost structure much, it seems the fairest for consumer.
- jonathan-kosgei 9y ago$X could be spread out over the lifetime of the consumer to remove the initial costs of setup.
- eitland 9y agoDepends: I hate it when companies insist that I pay monthly for something I use infrequently. For something I need all the time I might be OK with a monthly fee if the price is right.
- gkya 9y agoI'd rather have the choice to pick and the choice to switch later: some thousands of calls can be okay during initial development/testing and the first days of the product, then as I use the API more extensively, I switch to a subscription. This is similar to how most online content is sold: most require you to subscribe. I follow some NYTimes newsletters, and I'd pay for the individual articles I read, but I don't want to subscribe, even if that may end up being cheaper sometimes.
- jonathan-kosgei 9y agoThere's actually a free tier of 1500 requests a day for development.
- ziffusion 9y agoDo both i.e. charge them $1 for 1000 calls, and cap it at $30 per month for a period of 3 months - after which they would need to sign up for the monthly plan to continue to get the $30 rate.
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