Apigee Versus Moesif for Volume-Based Pricing
APIs are ubiquitous in the modern business landscape, connecting business to resources, customers, and partners. These APIs require effective management, and this often carries a cost – in such cases, these costs are often passed through to the consumer in the form of a pricing model. Volumetric pricing, that is, pricing depending on the volume of resources used in the specific API instance, has become a popular way for businesses to balance their need for growth and scalability while reducing overall overhead.
In this piece, we’re going to look at two management platforms, Apigee and Moesif, and compare their business models for volume based pricing. We’ll look at how each implements this in practice and compare how they handle specific use cases differently.
What is Apigee?
Apigee is a comprehensive API management platform which was acquired by Google in 2016. It offers a suite of tools to help organizations build, deploy, and manage APIs at scale. Apigee’s core services range from proxy creation to traffic segmentation, with additional toolsets offering governance, security, and collaboration tools. Apigee offers monetization with tiered pricing and usage based pricing, giving users the option to decide their optimal pricing structure and pricing strategy. What is Moesif?
What is Moesif?
Moesif is a full-featured API analytics and monitoring platform built to unlock business success through insights and context. Moesif provides real-time analytics and insights, offering major capabilities in troubleshooting, error detection and correction, and effective monetization. Building upon its deep analytics capabilities, Moesif specializes in monetization strategies as a business model. Moesif provides substantial support across a variety of monetization models, from customized tiered pricing to value based pricing, and usage or quantity based pricing. Moesif allows organizations to price their API products according to the perceived value of their loyal customers.
What is Volume-Based Pricing
Volume-based pricing, also called volumetric monetization, is an approach in which the customer is charged based upon their API usage metrics. The number of API calls made, the amount of data transferred resulting from these calls, and even the number of endpoints utilized can all be used as criteria for this billing. Regardless of the criteria, this chargeable element is often referred to as a “unit”, and is best thought of in the same way you utilize water or electricity – in the same way you can be charged for Watt Hours or Liters of water, you can be charged for specific units of API resources. Volume based transaction pricing can lead organizations to volume discounting, which can be optimized with user analytics. By offering a volume pricing model with a volume discounting tier, you can offer a discounted price for loyal customers, enabling brand loyalty and reducing churn.
Volume-Based Pricing in Apigee
Apigee utilizes a system called a Rate Plan to set a usage based billing strategy. This allows developers to specific a specific variable that can be charged based on a few customizable parameters.
Creating a Rate Plan
To start, developers must create their rate plan.
- Navigate to apigee.com/edge once logged into your account.
- On this page, in the left navigation bar, select “Publish > Monetization > Rate Plans”.
- On this page, in the upper right corner, you will see a blue bar that says “+ Rate Plan”. Click on this to enter the rate plan creation page.
Define Your Rate Plan
From here, you will define the base elements of your rate plan. You will need to configure the following fields:
- ‘’’Rate plan name’’’ – this will allow you to set a custom name for your rate plan.
- ‘’’Rate plan type’’’ – this type will allow you to set the monetization strategy for the rate plan. To enable volumetric monetization, select “Rate card”.
- ‘’’Product bundle’’’ – select the API product bundle that you want to enable volume-based pricing for.
Additional fields are option, and allow you to set a start and end date amongst other attributes.
Set the Rate Plan
In order to set the plan as currently configured, you will need to click one of two options:
- “Save as Draft” will save the rate plan without making it live.
- “Publish New Plan” allows you to publish it as it currently is.
It’s advisable to simply save as a draft at this point as you still need to configure the volume pricing – to this end, select “Save as Draft”.
Define Volume Pricing
At this point, you will need to configure the actual volume pricing from a few specific options.
- ‘’’Flat Rate’’’ – flat rate allows you to set a fixed rate for each transaction.
- ‘’’Volume Banded’’’ – volume banded allows you to charge a different price depending on the total volume of transactions.
- ‘’’Bundles’’’ – bundles allow you to define batches of transactions, e.g. “1,000 transactions”, which are charged up front to the end user. This is a bulk purchase.
Enable Model
Now that you have set the model, you can put it live. Return to your draft and click “Publish New Plan” to set it live.
Considerations
A few considerations should be noted for this model. Firstly, this assumes that you are utilizing the Enterprise Edge solution for Apigee – the private cloud model does provide for volume-based pricing, but the implementation is quite a bit more complicated as it requires setting some specific values on the internal services to manage payment. Speaking of payment, this process also assumes you have a vendor configured such as Stripe – if you need to configure your payment vendor, you will need to directly work with Apigee to enable this, and on the Private Cloud product, you will need to internally connect your billing process to a third-party billing API.
Volume-Based Pricing in Moesif
Moesif makes it super easy to implement volume-based pricing.
Create the Plan
After logging into Moesif, users should navigate to “Product Catalog” in the left navigation pane. From here, click on “Plans”, then in the upper right, click “Create New”. Here, you will fill out a Plan Name field as well as select your billing provider. To keep things as simple as possible in this article, let’s go with Stripe in this scenario as well. Now that you have created the plan basics, click “Create” in the top right to commit.
Create the Price
Next, you will need to create the pricing model in Moesif. Simply click on “Price” in the left-pane “Product Catalog” area, and click “Create New” in the upper right hand corner. From here, add a Price Name and select “Linked Plan”. Select the plan you created in the first step, and toggle the Pricing Model field to “Volume”.
From here, you can create volume bands utilizing the “Add Tier” button, setting specific volumetric triggers for monetization. You can additionally set different time frames or values for this volumetric billing – for instance, you can charge per month of use or per variable pay periods, which is especially useful when you are providing introductory rates or other variable volume pricing for a specific time period.
Deploy the Billing Meter
With our pricing model set up, we now need a way to actually record usage and bill users. To do this, click the “Billing Meters” menu in the left pane, and click “Add Billing Meter” in the top right hand of the screen. In this view, you will be able to create a billing meter.
Select a name for your meter, and then link it ot the plan and price under the section labeled “Link to”. After you have done this, select “Create” in the top right corner to activate the meter.
That’s it! You are now running a volume-based pricing model!
Comparison
In a lot of ways, these implementations are very similar. Where they differ is in the friction to create each offering. Apigee provides a substantial amount of control, but in some cases this control comes with a lot of complexity – this is the case with volume-based pricing. Apigee might deliver greater control, but it takes more steps to get there, and for many people just trying to deploy a simple volumetric solution, this may be too convoluted.
Moesif, on the other hand, makes this process incredibly simple and quick, and most users – even those who may not have the technical knowledge required to get into the details with Apigee – will be able to create volumetric bands and pricing models. Beyond an ease of use argument, this also means that users who are not necessarily technical, such as financial or business staff, can help in the maintenance and development of pricing strategies. The easy to use system unlocks greater collaboration and reduced friction in deployment, making Moesif a very strong offering for most use cases.
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