/Insights/Custom API development: Should your business buy or build APIs?

CustomAPIdevelopment:ShouldyourbusinessbuyorbuildAPIs?

Dec 4, 2023

9 min. read

Custom API development provides full control and security over system integrations, but it also requires a lot of time, resources, and expertise. Is it better to purchase a public API off the shelf? Check out this blog to learn about the pros and cons of building vs buying APIs.

The right application programming interfaces (APIs) can help your organization modernize and grow . You can use one of these technologies to exchange internal data, access another company's data, enhance an existing application, and carry out other business processes that improve functionality, quality assurance, the customer experience, and other functions.

But should you buy an API or build one from scratch?

The answer to this question depends on your use case. Both methods have pros and cons, and your budget will influence your final decision. Learn more about buying an application programming interface and custom API development below.

What is an API?

An API is a software intermediary that allows two or more applications to communicate with one another. Think of it as the "middle man" between different apps.

You've likely used many API solutions in the past. If you've purchased a product on eBay with PayPal, that's an example of an API . An application programming interface connects these two platforms, allowing you to pay for your order with a few clicks of a mouse.

If you've checked the weather on a mobile app, that's another example of an API. Companies like Weather.com get meteorological data from the National Weather Service, a government agency. An API service exchanges data between these two entities and presents it to you through a software application on your phone.

APIs fulfill all kinds of functions. A cloud API, for instance, lets applications exchange information in the cloud. An on-premise API allows your business infrastructure to communicate.

But how does API integration work? Well, an application programming interface uses a request and response cycle to share data between apps. In other words, someone uses an application to request data — say the latest weather information for their city — and a custom API receives that request. Thanks to that third-party API integration, the person receives the data they need almost instantly.

There's a lot more to this process than that — including API layers, API documentation, API testing, and API testing automation — but you should now have a basic understanding of how an application programming interface works.

Different API types

There's not just one API but many different kinds. Here are the most popular ones:

Open APIs

Open APIs, or Public APIs, are APIs available to anyone who wants to use them, such as an external software developer. While some of these APIs are free, most require a subscription, which means you are "buying" an API for your business.

Partner APIs

Partner APIs aren't accessible to the general public and are designed exclusively for two or more business partners. For example, a retailer can use this API type to exchange information with a supplier.

Internal APIs

Internal APIs are designed to be used within your organization, meaning the general public and other businesses can't access them. For example, you might create an API to integrate your sales and marketing teams.

Then there are different API protocols and architectures, which act as rules and standards the application programming interface follows for integration. Here are some common protocols:

Hypertext Transfer Protocol: Hypertext Transfer Protocol (HTTP) is the most popular protocol for sending information over the internet. A web API will often use HTTP.

Representational State Transfer: Representational State Transfer (REST) determines the rules for web application development. You can use this architecture to create a RESTful API.

Simple Object Access Protocol: Simple Object Access Protocol (SOAP) uses XML to transmit information in web services.

Remote Procedure Call: Remote Procedure Call (RPC) is a protocol that defines the standards for requesting information from remote computers. It's used to create an RPC API.

Differences between custom APIs and pre-built APIs

Custom APIs are those that you create from scratch in house. You'll need an API developer to do this, of course, or perhaps an entire development team. Pre-built APIs, on the other hand, are those that you can purchase on the open market and incorporate into your API development workflows. You can choose from many different Open APIs for your use case, including social media APIs (Twitter API, for example), communication APIs (Slack API), navigation APIs (Google Maps API), and so on.

Here are they key differences between custom API development and buying a third-party API:

Speed

It goes without saying that creating an API from scratch takes longer than buying an API from a third party. Whether you build your application programming interface in-house or use a custom API development service, it can take months to develop an API architecture, define endpoints, test your product, create documentation, and complete other tasks.

Purchasing a pre-built API can save you time and hassle as it's available straight out of the box. You don't need to worry about versioning, testing, documentation, or other jobs associated with API software development.

Cost

Whether a pre-built API or custom API integration is more cost-effective depends on your use case. While creating an API from scratch, you'll need to hire a developer, which costs, on average, $120,000 per year in the United States. However, not just any developer will do. You'll want someone qualified to facilitate seamless API integration. Alternatively, you can outsource development to an API development service, which could work out cheaper than adding professionals to your in-house team.

That said, buying an API can work out expensive, too. Twitter's API Pro, for example, costs $5,000 per month . And that's only the tier for startups. Larger companies will need to pay more for this API integration service. Add these monthly subscription fees up over several years, and custom API development services could be more cost-efficient.

Control

With custom software development, you have more control over your API integration solution. You can tailor-make an application programming interface based on the unique needs of your business, resulting in a more effective finished product. You will also own your software solution and can customize it further if you need to. API development services can help you achieve that goal.

Open APIs don't give you as much control over different software applications. You can't design features that will specifically benefit your business, and you may share the same interface as your competitors. For example, more than 8,000 companies use the Google Maps API, including Lyft, Snapchat, and many smaller businesses. However, you might not mind relinquishing ownership of your API if it means an easier development process. Third-party API integration services take care of API security, automated API testing, and other tasks.

When should you build a custom API?

You could create a custom API in the following scenarios:

You have the resources for API software development

If you are a smaller company that lacks a development team or the budget to assemble one, buying an API might be a good idea. However, if you have lots of resources and access to top talent, either internally or externally, you can create a custom API that benefits your business more than anything available on the market.

You have specific requirements

Perhaps you want to exchange data between a legacy database and an enterprise resource planning (ERP) system or create a gateway to data in an obsolete file format. There might not be a pre-built API that fulfills these purposes, so a custom-built API will serve you better.

You're serious about security

Not all companies care about security as much as you do. Exchanging data through pre-built APIs, therefore, can make your business vulnerable to all kinds of risks. If no application programming interface on the market fulfills your security requirements, create one of your own. 

You want to outrank your rivals

If you don't like the idea of competitors using the same API as you, the only solution is to make your own. In fact, with the right software development team, you can develop an application programming interface that gives you a competitive advantage, resulting in more leads, sales, and revenue.

How to get started with buying or building APIs

Application programming interfaces provide incredible opportunities for performance, productivity, and profitability. While creating an API requires more time and effort than purchasing one, you can develop unique experiences that benefit your business and customers, while not having to outsource control to a third party.

Whether you choose a public API or develop your own, always consider your requirements and select the right team. API integration is always more successful when you plan ahead, review costs, and take into account the needs of end-users. You should also think about digital transformation before starting with APIs. Ask yourself: "What technologies will really help take my business to the next level?"

Codal is a full-stack enterprise design and development consultancy that helps companies customize APIs and drive automation.

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