How do you bill your web services?

Question

In developing a new web service I haven't been able to find very much information on how companies bill for their web services.

Do you bill by request or only certain requests ie) GET or POST?

-would these be tracked at the application or server level?

Do you bill by bandwidth?

-again how would this be tracked on a per user basis

Do you charge a subscription to simply have access?

-this is assuming that they are only granted an api key after payment has been made.

A combination of the above or other options?

Thanks for your help.

Answer 1

I guess It Depends™ on what the service does. Broadly, I'd say you should bill when you provide some intrinsic value; how you determine what that billing criteria is is quite domain-specific. There may be some property of the service provided which allows you to determine how much to bill.

For example, suppose you've a web service that performs a calculation. You might decide that for every successful computation you do, you're going to charge a fixed fee, say $0.01, but let users off if there's a validation problem, such as an invalid request. Alternatively, if those computations are vaguely long-running, you might have a charging model that's based on some sort of CPU-time metric.

Your point about subscriptions is a good one, and this is an area where you might potentially benefit from allowing a couple of commercial models; one to cater for the users who might perform a lot of requests per month, in which case a fixed subscription might make sense, and one to cater for users who make a few ad-hoc requests. In the latter case, of course, if you only attract those customers, then you're not going to make a good return on investment. Some kind of middle ground, whereby you have a small subscription, but then allow customers to buy a "block" or "bundle" of requests on top without incurring additional processing costs, might work.

Answer 2

Many of the ones I have seen bill by time, such as on a monthly or yearly basis. Some allow you to pay by the month, some require some (or all) of the fee up front. Access might be restricted by issuing a security certificate for the web service that expires when the customer's account expires, or possibly by having them send a client ID and letting the server check if that client ID is allowed to have an answer (but that's open to people stealing someone else's client ID ;) ).

I suppose if you have a service that sends and receives very large amounts of data, it might make sense to bill per service request, but the billing for that could get trickier. Are clients likely to make dozens of requests per day, or just a few? How much to bill per transaction? $100? $0.01? That all would depend on the nature of the service. If you want to go that route, you would probably need to be able to ensure that clients only get billed for requests that are successfully answered (I'd hate to get billed even though my client app failed to receive the entire web service message from your server).

Answer 3

Per request or as a subscription, and yes, bandwidth can be a variable that is used to set the fee. Depends of the value of binding the customer close or having a myriad of loosely coupled customers using it. There is no correct answer to the question that fits all or even most cases.

If I look at the services I have made in the past, the subscription model would be the best model to use. Sometime a tick of $ per request seems like the best approach but I have never had a service configured that way yet.

Answer 4

Most webservices I know of charge for two things:

• Volume of "usage". Generally giving low volumes "free" access (i.e., less than X hits/hour from a given IP address account combination). This is similar to say, twitter which gives you 150 hits/hour to its service from either your username, or unique IP or combination of the two (so you dont abuse it by changing IPs frequently). If you want a higher volume you pay for that access and its usually assigned by account (in twitters case you can get a dev account [for free] which gives you 20K or more hits an hour)
• Depth of Details, Access to features. Again free accounts get a minimum amount of access, but dont get access to more data or to more advanced features (filtering, etc). Lots of google services work like this, were base access is given to everyone but if you want more refined abilities (greater search, more data, faster results) you have to buy an account code with the corresponding functionality.

I havent really seen or participated in any projects with pay-for-performance, or pay-per-hit/access models as they get very difficult to reliably bill for and very hard to account for to customers, even if you use tiered or banded ranges. How do you tell your customers how many hits they have used, especially in a distributed system, with redundant fail-over, etc. If I had to pay $0.01 cents per access I would want to know exactly how its measured, and what the company had in place to control access, and how accurate their monitoring was, etc.

Its not impossible, and definitely can be done, and may work well in large bulk scenarios.

Answer 5

As all things in a market economy, the price, but also the inconvenience (or convenience) and risk associated with the actual payment (irrespective of the amount) is a function of how unique and cool and valued your service or product is.

It is therefore impossible to answer the question but in very generic terms, i.e. in the form of suggestions. You actual invoicing model may base on one or several of the following

• bill for a one-time setup fee
• bill on a subscription basis (i.e. for a defined period, with explicitly defined maximum amounts of usage)
• bill for maintenance
• bill by the act, i.e. a certain amount (possibly on a decreasing unit price schedule). Such acts should be counted at the server level, (The client-side may include some audit/monitoring/log of sorts, but the server-side should be the authoritative source of info)
• bill by volume (for example number of MBytes transfered etc.), this is applicable to services where there is a big variation in the volume of info produced for each "act".

In general, the price and the modality of accounting should seem fair, to both parties, particularly to the buyer, and typically, the simpler the better. The price should not necessarily be low, provided you can make the case that the service provided is effectively valuable, and that you either invested and took risk to introduce the service, or the on-going expenses associated with running the service are evident.

Answer 6

I agree with what has been said by Rob and Des. One thing to remember is that a subscription is a really simple concept that everyone is used to and comfortable with (if you price it right). If you want to cover a wide audience look at how the payment providers do - they have slightly different methods of payment depending on how many transactions you do per year. There'll be a fixed subscription plus a per-transaction charge and they both vary with the number of transactions. This is the most flexible, but it depends if it makes sense for your business.