Postman is a web application that helps developers create APIs. It provides tools for API design, documentation, testing, deployment, monitoring, and management.
Most of the services offered by Postman are free; however, they have a paid version called Pro. So, why do they offer a free service? And what is their business model? Those are some of the questions we want to address in this article.
Postman uses a freemium business strategy. The basic service is completely free to anyone who wants to download and send emails from their computer. However, paid plans are available for companies that need additional functionality.
Postman offers four different subscription levels for companies looking to draw their business to its service. They range from free to paid.
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About Postman
Postman is a web-based API development tool that allows its users to create, deploy, and manage RESTful APIs.
Postman’s business model is built around charging small groups and businesses for access to their email platforms. They also generate revenue from selling additional call credits to their customers.
Founded in 2014, Postman has grown rapidly since then. Its latest funding round valued the company at $5.6B.
How Postman Works
On August 18, 2020, Postman overtook BrowserStack as the highest valued VC-backed SaaS startup in India after raising $225 million in its 4th funding.
Postman, a startup founded in 2011, has so far received more than $430 million from investors including Accel Partners, Andreessen Horowitz, GV (formerly Google Ventures
If you’re familiar with the business but don’t understand its strategic vision, you may wonder why companies like Nexus Venture Partners and Insight Partners invest in the business.
You may be wondering why these investors were interested in Bond.
This fast-growing company had a market cap of $350 million in 2018, but when its Series D round was announced, it was valued at $5.6B.
Business Model of Postman
The Postman business strategy revolves around offering a simple SaaS that provides a single place for designers, developers, and testers to collaborate on API projects.
Designed for small, medium, and large organizations alike, Postman offers three different plans: Free, Small Business, and Enterprise.
With each additional plan, you get many added benefits, including an increased API usage limit, so you can more easily and quickly test your APIs.
There are three different types of plans available for the service, including free, team, and business; the latter two require an annual fee.
Postman provides an integrated set of APIs for building applications, aiming to save developers from having to buy and install their own software tools.
Popular features include:
- SAML for Developers
- Automatic provisioning and de-provisioning (SCIM)
- Domain capture,
- Pay-as-you-go additional server calls.
ESG published the Postman ROI report which shows its early successes in attracting its targeted audience and their engagements with its product.
After reviewing the Postman platform, we found it to be an advanced tool kit that helps developers create better APIs faster. It speeds up the creation, collaboration, delivery, and resolution of issues related to APIs.
When it comes to its forecasted expenses for 2019, Postman required an influx of funding to expand its team. The fourth funding cycle gave them the resources to hire additional employees.
The business saw unprecedented success and needed to increase its workforce. As they were growing at an incredible rate, they needed funding to grow further.
Postman focuses its main product on providing services for companies who want to grow their teams using cloud technology. It offers three different pricing models, ranging from Free to $10K per month.
It has become one of the most popular tools used by developers to create APIs because it provides the governance needed for them to use.
It certainly makes sense for individuals and businesses to purchase their own servers, set up their own work scopes, and organize themselves however they want. However, by providing developers with an easy way to manage their server environments, we’re able to save them a lot of time and let them spend their energy on developing software instead of managing infrastructure.
Free Starter Plan
If you sign up, you and two colleagues can access the service for free while at school. It lets IT departments test out their API development skills without having to pay anything.
Independent software vendors (ISVs) can develop their own applications using the same programming language used by larger companies. However, they usually don’t get access to the same features and services offered by larger companies.
Team Plan
Postman stays affordable as your teams grow. Its unlimited integration tier lets you test your apps and APIs without worrying about costs. And its monthly pricing starts at just $12 per month per account.
Business Plan
With Postman’s business plan, developers can rapidly develop APIs by increasing platform speeds and usage limits by 100x.
At this stage, the company adds Workflows, which allow you to assign basic roles and permissions, as well as SAML (Single Sign On).
Some companies need more speed than others, so they scale up from the basic plan to the enterprise plan. For example, a company may want to use Google Cloud Spanner at the enterprise level.
Enterprise Plan
Many developers choose Postman because it offers a secure environment for building APIs at an affordable price.
With the Enterprise package, you get access to five additional APIs for free. You can use them without paying any extra fees. Additionally, you can increase your API usage limits up to 1,000x.
Besides secure API development and testing, upgrading to the Enterprise plan adds reporting and analysis tools to the Business plan as well as user group creation, domain capturing, and automated provisioning and de-provisioning (SCIM) capabilities.
Basically, Postman lets developers create APIs without having to pay upfront. As their business grows, so too does the number of users using the service.
An API developer can consistently scale up and down without having to worry about running out of resources. They can also scale up without needing to buy expensive equipment and bandwidth.
How Does Postman Make Money?
It looks like Postman has the potential to be profitable.
Its founder identified a need for an application that every API developer needs no matter their size. He has already attracted most of the Fortune 500 companies to his app.
Subscription Revenue
Postman makes money through a freemium model, which is increasingly popular in the SaaS industry. It has three paid tiers: team, business, and enterprise. These are subscription-only models, meaning that the user pays a monthly fee for each plan.
API Monitoring Add-on
Postman API monitoring enables continuous testing by allowing you to view your responses, availability, response time, and error rates.
To ensure that APIs keep operating properly, you must check them frequently for errors and issues. With this add-on, you can view detailed information and comprehensive reports of your API usage at any time.
Mock API Server Add-on
To create production-ready APIs, you must use lots of tools.
Using Postman’s Mock Servers helps developers quickly design and develop APIs without having to set up a backend server. You can use them for any language, including NodeJS, C#, Java, Go, etc.
Mock APIs allow developers to see their applications’ interfaces through the eyes of actual users. They’re testing their apps directly against real data.
Mock server applications allow developers to simulate API calls without having to set up a full production environment.
Postman Funding, Valuation & Revenue
It has already gained more than 17 million developer accounts, which makes it an attractive choice for any developer looking to get started.
According to their website (https://www.postman.com/), 98% of Fortune 500 corporations already use the Postman platform. Over half a million organizations now use Postman.
Is Postman Profitable?
According to founder and CEO Abhinav Asthana, Postman isn’t profitable yet. He added that investing in the business for growth stops its profitability.
Focused on attracting large companies to its business and corporate subscription plans, the three co-founding members of the company intend to keep the free version of their app in place for life.
Their business has an approximate annual revenue of $53.4 million and more than 17 million developers already use the service.
After raising $1 million from venture capitalists, the feisty startup continues its rapid growth by hiring new employees for engineering, marketing, product, and sales positions.
When companies hire in these four areas they signal a big change in direction. They’re engineering and expanding their products so they can serve the new customer base while hiring marketers and salespeople to put together the right messages to reach them.
If they want to achieve their target of 1 million, then it makes sense for them to set that as their goal.
The company has enjoyed the stability of its three founding members, Abhinav Asthana, Ankit Sobti, and Abhijit Kane.
Asthana started Postman to help developers test APIs better. After the tool became popular, he brought in two ex-colleagues, Sobti and Kane, who had been working at another company.
It has been around for five full calendar years without any major leadership changes. That shows that its leaders prioritize collaboration for the company’s growth over their own egos.
Conclusion: How Does Postman Make Money?
Finally, we’ve reached the end of this article! We hope we were able to help you understand Postman’s business models by looking at their financial statements.
Overall, Postman is doing a good job. They’ve been around for years and have excellent service. Their pricing is very affordable and considering the features they provide, it’s worth every penny. For those who are looking for a cheap alternative, Postman might just fit your needs.
We’ve written this blog post to the best of our ability and we hope it has been helpful to you. If you’d like to learn more about them, you could always visit their website for additional resources.
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