How to negotiate a SaaS contract as a software company?
What should be negotiated in a SaaS contract? Tips and good practices.
Negotiating a SaaS contract is a crucial issue for software publishers. This article will guide you through the key clauses to integrate to protect your interests while offering an attractive value proposition to your customers. Here's how to structure your contracts in the best possible way.
Service levels, or SLAs, are essential in defining expectations for the performance and availability of your service. Ensuring 99.9% availability is a common standard, which means around 8 hours of downtime per year. Make sure these levels are achievable and reflect your technical abilities. Set reasonable penalties for non-compliance, but don't put your bottom line at risk. A well-defined SLA will build customer trust while protecting your interests. You can find more details in this item.
The limitation of liability clause is crucial for minimizing financial risks. In general, liability is limited to the amount paid by the customer for the current contractual period. For example, if the customer pays 10,000 euros per year, this amount could be the limit of your liability. This limitation protects you in the event of a dispute. It is important to clearly specify this clause to avoid any ambiguity. I have detailed this in this item.
The GDPR imposes strict obligations for the processing of personal data. As a SaaS publisher, you are often considered to be a subcontractor. Make sure you follow all regulations and communicate your practices clearly. Offer solid guarantees about data security and confidentiality. If you store data outside of the EU, be sure to have standard contractual clauses or certification mechanisms. Full transparency on these aspects will strengthen the trust of your customers and is required by regulations. These clauses may be included in the appendix.
Payment terms should be clear and flexible. Offer several frequency options—monthly, quarterly, or annual—to meet the different needs of your customers. Provide conditions for price increases at renewal, in order to protect yourself from potential inflation.
Termination procedures are also to be expected. Is the contract renewed tacitly or expressly? In the case of tacit renewal, under what conditions can the customer cancel before the renewal? Generally written notice is required, with a notification period of one to three months.
You must also provide for the conditions of use of the service: conditions of access to user accounts and the extent of the license given on the service. It should correspond to the service and what you are prepared to allow your customer to do with your service.
Negotiating a SaaS contract can be an arduous and time-consuming task and requires reflexes that a lawyer can provide you with. If you wish, I can assist you to save time and better protect your legal and commercial interests.
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I have been supporting software and SaaS companies for more than 10 years, to structure their business, protect their intellectual property and improve their contracts.
