How to monetize your Healthcare API
Integrating your Healthcare API into software products and third-party software systems for Health is a clear objective in your business, but how to transform it into recurring income for your business?. Here we tell you how to monetize your Healthcare API.
Tabla de Contenidos
- 1 Monetization strategies for your Healthcare API
- 2 How does it affect your current pricing policy?
- 3 Step 1: Identify the business event
- 4 Step 2: Analyze the current use of your API
- 5 Step 3: Choose your monetization strategy
- 6 Step 4: Define your consumption tiers
- 7 Step 5: Set your rates
- 8 Step 6: Measure and adjust
- 9 Conclusions
Monetization strategies for your Healthcare API
There are two approaches to the monetization strategy of your Healthcare API: pay per use and quota per consumption tiers.
Pay per Use
It consists of establishing a rate, normally very low, for each call to your API.
The main advantage of this approach for your API consumer is that it translates into a cost model that is totally adjusted to the real use that your end users make of your API.
It is possible to define consumer plans and apply a different rate per request.
This can help you so that companies with a lower usage forecast for your API, find more affordable prices and therefore more compatible with their budgets.
Companies with a higher usage forecast usually handle higher budgets and therefore may find a slightly higher usage rate acceptable.
But in any case the pay per use fee must be very small: cents. How many cents? It will depend on the business case and the volume of recurrence of use. An API to place warehouse orders will have a much smaller monthly usage than an API to issue electronic prescriptions, for example.
This approach may seem like a potential loss of revenue for your business, but actually, it’s the other way around.
There are many more potential customers for your API with medium and small budgets than with large budgets. Those customers are going to use your API if they see that the associated cost fits their budgets. Otherwise, you will never reach them with your product.
Quota per tiers
This approach consists of establishing certain consumption tiers, that is, a number of requests in a certain period of time, normally one month. Each tier is assigned a flat rate.
When establishing the segments, a fee may be established for each request above the limit of the tier subscribed by the consumer. This way, your user is encouraged to upgrade the subscription to a higher plan if usage is maintained above the current plan in a sustained manner.
For the consumer, this approach is less attractive than payment for pure use, but for the API provider it allows a simpler forecast of the expected income.
How does it affect your current pricing policy?
Competing against oneself is not a good idea, so when you define the monetization of your Healthcare API you have to keep in mind any other pricing and distribution model that you are currently using.
If you design your monetization strategy carefully, there should be no conflict with your other sales channels and the prices you use in them. What you are doing is to make your offer more flexible and with that, you are opening the door to many customers who may find your product interesting but does not fit into their budgets.
So the question that arises is: how do you design your monetization strategy correctly?
Let’s summarize it in the following steps:
- Identify the business event
- Analyze the current use of your API
- Choose the monetization strategy
- Define the consumption tiers
- Set the rates
- Measure and adjust
Step 1: Identify the business event
At what point in the use case does a call to your API occur? In other words, what is the business event that triggers a call to your API?
In some cases it is quite evident, but in others it is not so much.
It is easier to understand with some examples:
- An API for detecting arrhythmias from the data of an electrocardiogram will be called each time an electrocardiogram is performed on a patient. The business event is the realization of an electrocardiogram.
- An API that sends the glucose data of a diabetic patient will be called each time the patient performs a glucose reading, or whenever the sending of that reading is scheduled from the App, or whenever the EMR of the endocrinologist requests it . In this case, the sending request or the scheduled sending is the event.
- An electronic signature API could be called each time a signature is made or for each document that must be signed. In other sectors, the number of calls will vary greatly between both criteria, because a document may require many signatures, but in Healthcare sector both criteria are usually equivalent.
- An Appointments API will be called to register an appointment, modify or cancel it, but also to open or close a medical appointment. Which event do you choose? Ideally, the one with the highest recurrence (medical appointment).
For cases like the one in the last example, there are strategic options you can consider.
For example, you can monetize the same API differently depending on the business event.
Step 2: Analyze the current use of your API
You are already clear about the business event that triggers a call to your Healthcare API.
Now you must study how many calls you are currently receiving in your API.
We are assuming that you already have customers that are consuming your API. If this were not the case, then you should estimate how your API will be used based on the event you identified in the previous step.
In this step you should get a clear idea of the average traffic you are going to receive.
You should also keep in mind if the traffic you receive varies a lot from one client to another, and from a few months to another. This will help you identify possible consumption tiers for your monetization plans.
Step 3: Choose your monetization strategy
You already have a pretty approximate idea of what event you are going to monetize and which consumption tiers you will manage.
Now you must choose whether you are going to use the pay-per-use approach or the quota-per-tier approach.
This step and the next two will probably be done together.
Whether you already have customers for your Healthcare API or if you are launching it for the first time, you should have your income objectives and your current prices as a reference.
Now it’s about fitting the pieces.
Step 4: Define your consumption tiers
Considering the number of calls you expect per month and the variability that you observe after analyzing your use cases and the current traffic in your customers, you should answer the following questions:
- Are you going to define consumption tiers? ? How many? If you have observed current API consumption averages that vary from one customer segment to another, you have a very good reference to define suitable consumption tiers.
- Are you going to define an initial plan of low consumption at no cost? This is usually a good idea to facilitate the subscription of new consumers. With a free tier, they can integrate your API into pilot projects, optimize the way they use your API and verify the user experience they achieve before assuming a cost.
- If you receive calls over each tier, are you going to set an extra rate or are you going to treat those calls as erroneous? In a healthcare environment you will normally establish an extra fee and in no case will you reject a call because it’s above the subscribed plan.
Step 5: Set your rates
This step is mathematical. With a simple calculation, you must fix for each tier and / or for each call, the rate that you are going to apply.
If your approach is pay per use, in each tier you must make sure that the cost it generates for your subscriber is adequate, especially within the consumption limits of the tier, and above those limits.
You must choose rates that are consistent with the plans you have defined, so that no plan competes with another, but complement each other step by step, making it easier for your subscribers to choose the most appropriate one, and upgrade to a higher one when it is of interest.
Step 6: Measure and adjust
You have already defined your monetization strategy.
Now you can publish your pricing plans in your API and new consumers will subscribe to the plans that best suit their different use cases.
These consumers will soon start generating traffic to your API, and it will be time to measure this traffic. This stage is absolutely key and essential for your API management, but also to adjust the monetization strategy of your Healthcare API.
Are there many calls over the limits of each plan? Is the number of calls your API receives coherent with the tiers you have defined?
Your API usage analytics will help you to respond with precision to these and other questions. This way you can make sound management decisions in the monetization of your APIs. You can adjust certain tiers or their rates, to the actual use that your subscribers are making.
In this article we have explained how to monetize your Healthcare API.
As you have seen, it is a very important process that will allow you to generate significant income with your Healthcare API, as new consumers integrate your API into the software they put in the hands of their end users: healthcare professionals and citizens.
We have also seen that it is a strategy fully compatible with any other distribution and sales model you have for your product.
And remember that as important as defining the monetization of your Healthcare API, is to measure and analyze its consumption to optimize the entire strategy.
Therefore, when you choose the platform where you will publish your Healthcare API, make sure that it allows you to perform all these tasks at the lowest possible cost.