API Calculator: Understanding the costs behind building an API-based application

Do you want to save money, deploy projects faster, and spend more time on developing application experiences that enthrall users? Then it’s practically a certainty APIs will play a critical role in your software development process.

Accordingly, you’ll want to obtain a fairly accurate understanding of the cost and time required to building an API. But it’s important to understand that there’s much more to an API than just coding an interface to some data source such as a database. Whether you are planning on hiring a contractor or assign a new project to your team, an API calculator can help you understand the time and cost required to develop a mission-critical part of your next project.

Why Understanding API Costs is Critical to Success

Our extensive research indicates a feature-complete, fully documented, and secured API built by an experienced United States-based developer will cost approximately $20,000 and require 30 working days. This already considerable expense presumes your organization has key infrastructure in place such as a readily available logging and monitoring solution. Further, the cost, schedule, and complexity can quickly balloon when ongoing maintenance is taken into account, and should your future projects require multiple APIs. That said, you may reasonably wonder why API development can be so costly and time-consuming. At a minimum your development team will need to:

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  • Gather a great deal of domain-specific knowledge in order to understand how the data should be exposed and managed.
  • Fully document the API and ensure the documentation is consistently synchronized with the API’s latest features.
  • Build strong security safeguards into the API infrastructure to ensure valuable data isn’t inadvertently exposed to curious or malicious third parties.
  • Integrate a robust limiting solution to ensure errant or malicious clients can’t quietly run up hosting or access costs.
  • Incorporate a real-time monitoring system to confirm the API is always operational.

Why CTOs Must Embrace an API-first Strategy

In light of these costs, CTOs and budget-minded business owners alike might be wondering whether an alternative solution exists. Consider alternatives at your peril. APIs offer a great number of internal and external business advantages, just a few of which follow:

  • The API economy is exploding: Gone are the days of compartamentalizing institutional data. Customers and partners want to reliably interface with this data, and are often willing to pay to do so.
  • APIs reduce code and simplify data access: Chances are your organizational data will need to be accessible through multiple applications and services. APIs offer a single, unified solution for building these connections, dramatically reducing the amount of redundant code required as a result.
  • APIs can dramatically reduce data theft: Thanks to well-defined interfaces, strict access controls, and real-time monitoring solutions, theft and other malicious activity on behalf of external actors and disgruntled employees can be dramatically reduced.

In light of these advantages, and the dangerous downsides potentially encountered by choosing another path, it’s prudent to factor the costs of API development into your project budget. But how can one effectively do so when so many factors are involved? Read on to learn more.

How to Calculate Your API Development Costs

Over the years of working with countless developers around the globe, we’ve learned a great deal about what is required to build, test, and deploy a successful API. During the course of these conversations it has become almost universally evident that organizations enter these projects with very little understanding of the costs involved. To help companies understand the costs, we created an API cost calculator. Please click on the image below to open the calculator in a new tab, and follow along with the remainder of this section to understand how it works.

Cost #1: Developer Cost

Without question your largest expense will be developer cost. So how much does an experienced backend developer cost? Head over to Glassdoor to learn more about average developer salaries in your area. Keep in mind compensation could increase by 25% to 50% when working with contractors.

Cost #2: Development Time

The time required to develop the API is going to be a function of it’s capabilities. The calculator breaks these capabilities into several subcategories, allowing you to tweak the time required to complete each. Let’s begin by explaining the fundamentals:

  • Research: This estimates the amount of time required to research the API project. Is there any special domain-specific knowledge? What data source(s) will be exposed by the API? Will it interact with other third-party services? You’ll want to compile as much information as possible during this phase.
  • Database Design: If this is a greenfield project, then it’s possible the data source doesn’t yet exist. If the API is intended to expose a database, and that database doesn’t yet exist, then you’ll need to factor in time to build the database structure and seed it with initial data.
  • Prototype: Next the team should aim for building a simple prototype in order to put the API into testing as early as possible. Once in testing, you’ll ideally receive a great deal of feedback regarding the behavior and functionality.
  • MVP Completion: With prototype feedback addressed, the team can next strive towards building an alpha version of the API containing most of the desired first release functionality.

It’s however this last fundamental step that trips up a great many teams. Even an API’s alpha version should never be considered complete without taking factors beyond functionality into account. Notably, a modern API should include:

  • API key and role-based access controls: Leaving your APIs open to the public is a recipe for disaster. At a minimum you’ll want to protect access using API keys, and additionally lock down accessibility using role-based access controls.
  • Interactive documentation: Interactive, self-documenting solutions such as Swagger ensure that your documentation is always synchronized with the API inputs, outputs, and endpoint descriptions. Further, interactive documentation allows your developers and users to familiarize themselves with the API before writing any code.
  • Limiting restrictions: The ability to implement API volume limiting restrictions are important for several reasons; firstly, they help prevent data access cost overruns due to overzealous clients. Second, they minimize the possibility a malicious actor can use the API to export unreasonably large amounts of data from your organization.
  • Logging capability: Whether to satisfy internal compliance policies or governmental regulations such as FINRA, GDPR, or POPI, you’ll need to log API traffic to ensure data access can be later audited.
  • Real time API monitoring and alerts: Real-time dashboards are incredibly useful for keeping tabs on your APIs’ operational capacity, allowing you to monitor HTTP response status codes, API popularity, user-specific behaviors, and much more.

As should be apparent by now, building an API is much more than merely building a bridge between your users and a data source. Hopefully our calculator will serve as a valuable tool for understanding the costs involved before venturing too far into implementation.

Did you know you can generate a full-featured, documented, and secure REST API in minutes using DreamFactory? Sign up for our free 14 day hosted trial to learn how! Our guided tour will show you how to create an API using an example MySQL database provided to you as part of the trial!

Create a REST API Now

Questions? Contact the API Experts.

Our team regularly works with an extraordinary breadth of organizations, ranging from seed-funded startups to Fortune 50 companies. Many of these customers adopt our namesake DreamFactory platform, a powerful tool used to generate a full-featured, fully documented, and secure REST APIs. The DreamFactory platform can save you thousands of dollars and countless hours of tedious development time.

If you have any questions about the platform, or just APIs in general, we’d love to hear from you! Contact us.

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