As an entrepreneur in the app startup space, I recently received some disheartening news from Reddit regarding their announced pricing for third-party apps. The proposed price is shockingly close to Twitter's pricing, and my own Apollo would need to pay a staggering $20 million per year just to keep running as-is.
Let me cut to the chase: 50 million requests cost a whopping $12,000 – a figure far more than I ever could have imagined. For context, Apollo made an astonishing 7 billion requests last month alone, which would translate to approximately $1.7 million monthly or $20 million annually. Even if I only kept subscription users, the average Apollo user uses 344 requests per day, which would cost a staggering $2.50 per month – more than double what the current subscription costs, putting me firmly in the red every month.
I'm deeply disappointed by this price hike. Reddit claimed that their new pricing would be "reasonable and based in reality," but it's hard to see how that's true when Twitter's pricing was publicly ridiculed for its exorbitant cost of $42,000 for 50 million tweets. In contrast, Reddit's proposal is still a relatively affordable $12,000 – although that's little comfort considering the significant impact on my own startup.
Reddit iterated that their new pricing would be in line with industry standards, but I'm skeptical. Just two years ago, they announced crossing $100M in quarterly revenue for the first time ever. Assuming they've managed to maintain this level of revenue despite the economic downturn, and factoring in Reddit Premium subscriptions, that's a staggering $600M in annual revenue. Compare that to their estimated monthly active users (430 million) and you get an average revenue per user (ARPU) of just $1.40 – or $0.12 monthly.
For Apollo, our average user uses 344 requests daily, which translates to approximately 10.6K monthly requests. With the proposed API pricing, this would cost a staggering $2.50 per month – an astonishing 20x higher than Reddit's estimated ARPU. The average subscription user currently uses 473 requests, which would cost an equally eye-watering $3.51 or 29x higher.
While I appreciate Reddit's openness and communication throughout the process, I struggle to see how this pricing is in any way reasonable or based in reality. I've asked if they're flexible on this pricing, but unfortunately, it seems like a hard no – and I'm left wondering what options are available for app startups like mine.
(Note: For those new to the world of APIs, think of it as a fancy term for accessing a site's information. Imagine Reddit having a bouncer that used to be friendly, providing data at your request. The proposed changes mean this bouncer will still exist but now demand an exorbitant amount per question.)