‍How to calculate the costs of API integrations

As your organization looks to improve internal processes or make your product more attractive and valuable, you’ll likely consider API integrations to be a strategic solution. 

But deciding whether and how to approach API integrations isn't so simple. There are various direct and indirect costs associated with developing, maintaining, and managing these integrations over time.

We’ll help simplify your ROI analysis by sharing a rough estimate of how much these integrations cost and by breaking down the various inputs that may influence your expenses. 

How much does an API integration cost?

The cost can range from $50,000 to $150,000 per year. This includes personnel costs and partnership fees.

It’s worth noting that it’s difficult to provide a concise answer, as the cost depends on the application you build to, the specific objects and fields you’re hoping to access and sync, your customer success managers’ (CSMs) and engineers’ salaries, among other factors.

Related: The top challenges of building API integrations

The costs associated with API integrations

Let’s investigate why API integrations are so expensive by exploring the various sources of their costs.

Personnel costs

A given engineer will need to spend tens of hours, if not hundreds of hours, building the API integration. 

But since integrations can break for a wide range of reasons, their involvement doesn’t end there; an engineer typically has to allocate hundreds of hours per year on diagnosing, troubleshooting, and resolving countless integration issues. 

Similarly, if you’re building a product integration(s), your CSMs will need to invest hundreds of hours per year on integration issues. In cases where the issues are on the client’s side, the CSM may be able to help troubleshoot and address them. But in most cases, they’ll act as the middle man between their clients and engineers. 

To make these costs more tangible, let’s use hard numbers.

Say your engineers earn a salary of $150,000 per year (or $72.10 per hour). Let’s also assume that they need to invest 150 hours on building an integration and 300 hours on maintaining it. 

Now, let’s assume that your CSMs earn a salary of $110,000 (or $52.90 per hour). And they have to file and work through 150 tickets per year related to an integration; each of these tickets takes them 2 hours, on average, to resolve. 

Note: Based on our experience, these integration development and maintenance estimates are all reasonable.

When you combine the costs of employing engineering and customer success resources for just a single integration, it ends up amounting to nearly $50,000! 

Here’s how the math works:

Personnel costs for performing integration maintenance

Partnership costs

Many enterprise organizations require you to enter into a formal agreement just to access their API and sandbox account. 

The costs of securing these partnership agreements can vary widely, as they depend on the vendors and the specific terms set in the agreements (e.g. the agreed upon SLA); but they’re likely to be in the range of thousands, or even tens of thousands, of dollars per year. 

Opportunity costs

This cost is naturally difficult to quantify, as you ultimately don’t know how much value your engineers and CSMs can deliver to the business if they don't have to invest so much time on the integrations. 

But at a conceptual level, the costs are enormous: Engineering can’t resolve specific bugs fast enough to prevent churn or build out new features that could attract prospects and open up new markets; all the while, CSMs may not be able to respond to clients quickly and thoughtfully, or have time to reach out to accounts proactively—both of which can lead to churn and fewer upsells/cross-sells.

Related: 9 statistics that can guide your integration strategy

Calculate your API integration costs with our calculator

Integration costs clearly vary at every organization. However, since there’s a universal set of inputs that determine their costs, you can use our API integration calculator to estimate yours.

Simply provide the number of integrations you want to build over the coming 12 months, the number of hours your team spends on integration maintenance-related activities, the software categories you want to build integrations in, among a few other fields, and you’ll receive a specific estimate. 

A screenshot o Merge's cost calculator
Once the expected costs come back, you can personalize the estimate even further by inputting your engineers' and CSMs' salaries.

The tool is free to use and lets you get your estimated expenses in a matter of minutes, so give it a try today to see how much your integrations will cost!