You’ve likely heard the term “rate limit” thrown around if your business is operating on software that connects through APIs (application programming interfaces). While the concept is somewhat technical, understanding API rate limits is important for business leaders as well as developers.

Why? Rate limits can influence how well your systems scale when your customer base grows, your operations expand, and you increase API usage and automation. They can support your growth if you know how to manage them right, so they don’t become a bottleneck.

In this article, we’ll break down how API rate limiting works, how it affects your scalability, and what you should consider when choosing an API partner.

What is API rate limiting?

API rate limiting, at its core, is all about controlling how many requests a user or system can make to an API within a given timeframe. For a few examples, it could be something like a maximum number of requests over a period of time, say 1,000 per hour or 10 per second.

So, what’s the purpose? To make sure there is fair use and your system stays stable. Say you have a sudden surge in traffic (whether legitimate app usage or by a malicious factor)—without set limits, this could completely overload the API, leading to poor performance for everyone using it.

That’s why every integration, from CRMs, payment processors, or document management platforms, should implement API rate limiting.

When you understand them, you can improve your plan for growth.

See more: What is API-first? Benefits, use cases, and why it matters.

How API rate limits impact scalability

Say your business is booming, you’re processing more transactions, onboarding more customers, and even running more automations. All of this is great, but it also means that your software is sending more API calls.

So, if you hit an API rate limit during a critical process like sending contract data to a CRM or pulling payment status from a processor, it can create slowdowns, errors, or even interrupt your service. If that happens across your entire tech stack, your growth will likely strain your systems.

When we think of scalability, it’s important to think of it beyond handling more customers. You need to make sure your operations can keep running efficiently as that load increases, and API rate limits are key to making sure that happens.

The role of API connect rate limits

API connect rate limits refer to how many connection requests can be made to an API, rather than the total volume of data sent or received.

When your business scales, having connection limits can help manage traffic between systems by capping the number of calls you can make with an API during a set time period. This keeps high-traffic environments stable.

Here’s an example: a sales automation tool could try to connect to your document API hundreds of times per hour. But if those connection attempts exceed your rate limit, they will get blocked.

The bottom line is that smart traffic management through rate limits is essential.

Types of rate limiting

Just as there are many different types of APIs, there are different options for rate limiting as well.

Some of the most common API rate limits include:

• User rate limits. Rate limits are set based on the number of requests a user makes. This can be determined by tracking a user’s IP address or API key.
• Server rate limits. Rate limits are set at the server level. This gives developers more flexibility to increase rate limits if needed.
• Geographic rate limits. Developers set rate limits for specific regions and timeframes.

There are also different types of rate-limiting algorithms.

• Fixed window. Requests are limited to a specific timeframe or window. For example, a platform will not serve more than 250 requests between 10 pm and 10:05 pm. The window resets at the end of the timeframe to accommodate more requests.
• Leaky bucket. Requests are handled on a first-come, first-served basis. New requests are added to the “bucket” and processed at a constant, pre-determined rate.
• Sliding window. Rather than setting a specific window, the timeframe starts when a user makes a request.

API rate limits best practices for scaling your business

As your system demand grows, you need tactics to help your business continue operating smoothly.

Here are some best practices you can adopt to stay ahead of rate limit issues:

• Monitor your usage: It’s important to track how your systems use API calls over time. A lot of platforms have dashboards or logs that help you find trends and potential bottlenecks.
• Adjust when needed: You don’t want to be frequently brushing up against limits. You might need to talk to your provider about adjusting your rate plan if this happens, or look into architectural changes to reduce load.
• Optimize your API calls: Make sure to avoid redundant or unnecessary calls. For example, you can make batch updates rather than sending multiple single-record updates.
• Distribute traffic: Using multiple API keys or endpoints can help spread traffic evenly, which can help avoid triggering rate limits in specific areas.
• Use caching where possible: You can store frequently accessed data locally instead of calling the API repeatedly for the same information. It’s all about efficiency!

What API rate limits tell you about your system’s scalability

Rate limits are indicators, so paying attention to them can show you how well your system is built for growth, and that’s an important detail to know.

They can help you:

• Predict future demand: By monitoring how close you come to hitting rate limits, you’ll get information on how quickly your usage is growing.
• Spot weak points: It might seem obvious, but if certain processes are consistently pushing your API limits, they could need optimization.
• Test your architecture: You can intentionally simulate high-volume traffic to see how your systems respond. This helps you identify bottlenecks before they become real problems.

API rate limits tell you where to invest in infrastructure, where to streamline operations, and where to scale smartly.

How to choose the right API with consideration of rate limiting

Are you ready to choose an API solution for your business? Then rate limits should be on your checklist.

Here are some key things to consider:

• Transparency: Does the provider clearly document their rate limits? Do they offer flexible tiers?
• Support for growth: Can you easily upgrade your plan or request higher limits as your needs evolve?
• Monitoring tools: Are you given access to usage analytics, alerts, or logs?
• Resilience: Does the API handle rate-limiting errors well (e.g., via retry logic or error messaging)?

A scalable API should always have your growth in mind. If their rate limits feel too restrictive or ambiguous, it might create friction later on.

PandaDoc, for example, offers a developer-friendly API so you can integrate document workflows directly into your system—plus, our solution is scalable with embedded editing, sending, and signing capabilities, making your doc management that much easier.

What’s even better? PandaDoc has all the features you need when looking for an API that keeps rate limits in mind, including our sandbox and developer dashboard, allowing you to explore how our solution can fit into your workflows.

“Since switching to PandaDoc, our leases are better formatted, contain fewer errors, and are far easier for our teams to work with. The API sandbox allowed me to see that this is exactly what we need, so I didn’t go any further with my research with other API solutions.”

– Sam Hales, Software Engineer at Saratoga Group

Balancing growth with API rate limiting

Remember, API rate limits can help you scale in a sustainable way without overwhelming your systems. When you understand them, you’ll be able to choose the right tools to avoid costly downtime and keep your ops running smoothly.

Want to see how PandaDoc API can work for you? Request a free demo today.