You need to save money, deploy projects faster, and spend more time on developing application experiences that enthrall users. It is practically a certainty that APIs will play a critical role in your software development process, but how much does it cost to build an API?

How Much Does an API Cost to Build?

On average, it costs $20,000 to build a relatively simple API. This figure assumes that you’re building a secure, documented, fully-featured API with the services of an experienced API developer based in the United States.

It’s important to understand that there is more to an API than just coding an interface to some data source. Whether you are planning on hiring a contractor or assigning 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.

DreamFactory Hosted Trial Signup

Generate a full-featured,documented, and secure REST API in minutes.

Sign up for our free 14 day hosted trial to learn how.

Generate your No Code REST API now

How to Calculate Your API Development Costs

Over 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.

Click here to use our interactive API calculator

Want an idea of how much building your API will cost? Use our interactive API cost calculator to learn more.

Primary Costs for Building an API

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 will want to secure access using API keys and additionally lock down accessibility using role-based access controls. APIs should be built from a foundation of security.
  • 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 API 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 overages, 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.

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:

  • 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 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 siloed 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: Well-defined interfaces, strict access controls, and real-time monitoring solutions, can dramatically reduce theft and other malicious activity.

As you can see from the above, it is prudent to factor the costs of API development into your project budget. How can one effectively do so when so many factors are involved?

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.

DreamFactory Hosted Trial Signup

Generate a full-featured,documented, and secure REST API in minutes.

Sign up for our free 14 day hosted trial to learn how.

Generate your No Code 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.

Try DreamFactory 4.8.0

DreamFactory 4.8.0 has been released! This release focuses on user experience, notably with regards to database API generation. The most popular database connectors (MySQL, MariaDB, PostgreSQL, MS SQL Server, and Oracle) have long included a lengthy list of options, and it hasn’t been obvious which are required and which are optional. To remedy this we’ve broken the service creation form into three sections: Basic, Caching, and Optional Advanced Settings. Additionally, because the Services tab is the natural first tab new users should be clicking on after logging in, we’ve moved the tab to the second position in the navigational bar directly following the Home tab.

In upcoming releases users will see a stream of additional UX improvements intended to more effectively guide new users through the API generation process. Notably, for most basic use cases the administrator completes three tasks: generate the API, create a role-based access control (RBAC), and then associate the RBAC with a newly generated API key. Therefore after successful API generation users will be presented with a new view enumerating typical next steps. We’re also working on improving the service profile detail page, providing admins with a link list taking them directly to the service’s relevant other administrative features, such as API Docs and associated roles.