Software Development

Your Guide to API Development: Types, Tools and Costs





Software Development


Your Guide to API Development: Types, Tools and Costs

Published: 2024/04/17

6 min read

There’s no growth without communication

You don’t need to go over lengthy reports and market research to realize that effective communication among employees can significantly boost productivity. It’s a lesson ingrained in us from school: teamwork and brainstorming yield better results. It’s no surprise then, that when seeking avenues for further business growth, some have wondered: “What if programs could communicate too? How could that benefit us?”

Considering that the vast majority of white-collar workers rely on multiple programs on a daily basis, enabling these programs to communicate seemed like a logical step. This would, for example, eliminate the need for time-consuming data transfers between programs or the hassle of tracking changes across platforms. However, the challenge lay in how to enable this communication — the answer: an API.

What is an API, and how does an API work?

From a technical standpoint, an API (Application Programming Interface) is a set of routines, protocols and tools facilitating communication and interaction among various software applications.

Put simply, it’s a mechanism that enables developers to access the functionality of one application from another. You can think of an API as a bridge that facilitates the transfer of requests and responses between the applications on either side of it.

The way an API works is that it helps establish rules for how two different pieces of software can communicate with each other. This process involves defining endpoints, which are specific URLs that correspond to different functionalities or resources within the application. When a request is made to an endpoint, the API interprets it, performs the necessary actions and returns the results to the requesting application.

What types of APIs are there?

In today’s programming landscape, we commonly rely on four main types of APIs to facilitate communication between programs. Each type offers its own set of pros and cons, making it crucial to choose the right one based on factors like the specific use case, requirements and preferences of the developers and organizations involved. These four types are:

1. Public API (Open API)

Open APIs are interfaces that enable external developers to access services or data provided by a given company. They’re called ‘open’ because developers can use them without special permissions, which makes them easy to integrate. By offering open access to their APIs, companies can promote innovation and broaden the use of their services.

In banking, for example, open banking APIs are mechanisms that enable third-party developers to access the financial services and data of a specific bank. With these APIs, developers can build apps featuring functions like account aggregation and payment processing, which ultimately improve the banking experience for consumers.

2. Private API (Internal API)

Private APIs, in contrast to open APIs, are restricted to internal use within an organization. In other words, these APIs are not accessible to external developers without specific permissions in force. Private APIs are therefore primarily used to facilitate communication between internal systems, services, or applications in a company.
By restricting access to these APIs, organizations can maintain a high level of security, compliance and confidentiality of their proprietary data and processes. In custom software development services, for instance, private APIs are often leveraged to integrate tailored solutions aligned with the unique requirements of businesses.

3. Partner API

As you can probably guess, partner APIs are communication protocols accessible to specific partners or developers who have established relationships with a company. This means that they facilitate collaboration, integration and data sharing between the company and its trusted partners, enabling them to securely leverage each other’s resources.

By offering partner access to these APIs, companies can strengthen their partnerships, streamline their workflows and extend the value of their services outside their internal ecosystem.

4. Composite API

Last but not least, composite APIs are a bit different from the previous three as their function is to take data or functionalities from multiple sources or services and make them available via a single API endpoint.

In other words, composite APIs simplify complex operations by consolidating information from disparate systems or services. By providing one unified interface for accessing various resources, they streamline development efforts and enhance efficiency for client applications.

How do you secure an API?

Securing an API involves a few essential steps to ensure its safety and protect data integrity. First, you authenticate users using methods like API keys or OAuth tokens. Then, you encrypt data with HTTPS to prevent unauthorized access during transmission. Finally, you enforce access controls such as rate limiting and IP whitelisting to regulate resource access and prevent misuse.

What is API development?

API development involves creating application programming interfaces that allow different software applications to communicate with each other. It entails defining the rules and protocols for integrating diverse systems and facilitating data exchange and functionality sharing.

Tools used in API development

As you can imagine, there’s a plethora of tools available to IT engineers for API development – far too many to cover in one article. However, we’ll highlight a few essential solutions that are widely used in API development. They are:


One of the most – if not the most – popular API development tools, Postman is a solution that allows developers to design, test and document APIs. It comes with a user-friendly interface for sending requests, inspecting responses and automating API testing workflows, which makes it an indispensable tool for developers working on API projects of any scale or complexity.


Even under its new name, OpenAPI, Swagger remains a popular choice for designing and documenting APIs. It offers specialized tools for defining API specifications, covering endpoints, request and response formats and authentication methods. What sets Swagger apart is its ability to generate interactive API documentation based on these specifications, greatly appreciated by developers and API consumers for its clarity and user-friendly interface.


Insomnia is a versatile API development tool that provides a range of features for designing, testing and debugging APIs. Like the other tools mentioned, it boasts a user-friendly interface for creating and sending requests, checking responses and managing API workflows. Notably, Insomnia excels in supporting various authentication methods, simplifying the testing of APIs with diverse authentication needs. Moreover, it facilitates collaboration among developers by enabling them to work together on API projects and sync changes in real time.

What are microservices in API development?

In API development, the term ‘microservices’ refers to the architectural approach, where complex applications are built as a collection of small services, each of which is deployed independently.

Each microservice is dedicated to a specific function and communicates with others through lightweight APIs, leading to increased agility, scalability and resilience in software development.

What about API development costs?

As you might expect, the cost of API development isn’t set in stone. It varies for each project, influenced by factors like complexity, customization and the expertise of developers involved. Typically, a significant portion of the costs comes from development time, covering tasks like design, testing and deployment.

Hiring experienced developers might also mean higher hourly rates, while infrastructure costs, such as hosting and maintenance, will fluctuate based on scalability and performance needs.

Also, bear in mind that ensuring the API’s usability requires investments in security, documentation and ongoing support, all of which can elevate the overall development costs.

Need help with API development?

The reason companies are drawn to APIs is that they offer a host of benefits, such as improved business efficiency. However, before organizations can reap these benefits, they need to establish API connections, which can be tricky, especially without the right resources.

Luckily, these days you can outsource API development to experts who can connect your systems and applications for you. For example, you can get the support of a dedicated software development team from Software Mind to handle all your API needs. So, if you need any help with developing API frameworks, we’re ready to assist you every step of the way.

About the authorSoftware Mind

Software Mind provides companies with autonomous development teams who manage software life cycles from ideation to release and beyond. For over 20 years we’ve been enriching organizations with the talent they need to boost scalability, drive dynamic growth and bring disruptive ideas to life. Our top-notch engineering teams combine ownership with leading technologies, including cloud, AI, data science and embedded software to accelerate digital transformations and boost software delivery. A culture that embraces openness, craves more and acts with respect enables our bold and passionate people to create evolutive solutions that support scale-ups, unicorns and enterprise-level companies around the world. 

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