Featured Article from Software Licensing

Everyone today seems to be creating a B2B mobile app. They’ve seen what’s coming: droves of customers from the so-called “Millennial” generation who are eschewing traditional communications like telephone in favor of newer channels like social media and mobile app. A mobile app is a great way to bridge the world between digital and brick-and-mortar, or e-commerce and home services. They are particularly relevant in the budding “Internet of Things,” or IoT marketplace.

There are a whole host of apps out there that connect people to goods and services, such as car or bicycle rental, ride-sharing, parking or toll payment by mobile phone and more. The “Internet of Things,” or smart networked devices, are what drives the business models. But some companies are pushing services and goods based on mobile apps further and actually making money off the apps themselves. They frequently do this by developing IoT APIs and making them available to others to build on top of. It’s usually done by building in Web APIs.

Web APIs make prototyping apps faster and easier, since they’re based on the common HTTP protocol (which every developer knows). Nearly all app platforms have a wide variety of Web APIs available for app developers, and they allow for the creation of even very sophisticated app features (think speech recognition, analytics and omnichannel communications).

So how do you make money on them? According to a recent article by Sheena Chandok writing for IoT Zone, the most obvious way is to charge for them. If you’re determined to make them available for free, you can cross your fingers and hope developers use your API more often and build more apps on top of it, thereby consuming more storage and ultimately subscribing to a paid plan. Another way is by using your API to promote your product and services.

“An interesting monetization approach is to have your API allow content to be extracted and used by other people,” wrote Chandok. “In this case, you could require branding information to be shown when the API is reused, even though you’re not charging directly for the API.”

Another way to make money indirectly is by using analytics to collect valuable information and then sell it. Some companies generate revenue from their IoT APIs by forming partnerships with other companies who then encourage their customers to use it. If the indirect method doesn’t work for you, consider using your app to make money directly.

“Micropayments, referring to those small payments made each time a user accesses a service, are a somewhat new monetization method in the world of APIs,” wrote Chandok. “But in the IoT, this method makes a lot of sense, especially when you consider the opportunities parking lots or toll booths could present in terms of tying in micropayments to cars connected to the Internet.”

Some important things to keep in mind: whichever model you choose, you need to measure your apps use and make sense out of that information with analytics. Don’t skimp on security, either, or your chances of making money through your IoT API will plummet dramatically, and even turn your efforts into a liability. Solutions providers such as Flexera Software can help with API monetization, empowering application producers to generate sources of new revenue through flexible software licensing, activation, software delivery and full lifecycle management of customer usage rights.

To learn more about monetizing API development, register for the upcoming All About the API show, taking place in Las Vegas from July 18-21, 2016. More information and registration information is available on the All About the API Website.