Increase in renewal prices in BtoB SaaS contracts: how to draft these clauses?
How to write a price increase clause in a SaaS contract?
In SaaS contracts in BtoB, the price increase clause at the time of renewal is a strategic subject that must be clearly framed. Without care, SaaS companies can find themselves stuck with outdated and unprofitable rates, while customers risk unexpected increases. Here is how to clearly structure this clause in order to avoid disputes and maintain a balanced commercial relationship.
When it comes to SaaS, operating costs (hosting, maintenance, maintenance, salaries, expenses) naturally increase over time. Monetary inflation is also a topic when contracts last for a long time. An absence of a price increase clause often leads to complex situations during successive renewals: the SaaS company may find itself stuck with a fixed price that no longer reflects its real costs, impacting the profitability of the contract.
Conversely, an uncontrolled price increase can surprise customers who did not anticipate the budget to be expected, and damage the commercial relationship. Hence the interest of a transparent and anticipated clause from the initial contract.
It is common, in SaaS contracts in BtoB, to insert from the beginning a clause allowing a price revision at the time of renewal. This revision can be:
The clause must specify the conditions and framework of the increase in order to avoid any subsequent dispute.
The most frequent and simple method is to provide a ceiling expressed as a percentage of the previous price, with, for example, an annual increase capped at 5% or 10% of the initial contract amount.
This approach is transparent, reassuring for the customer and simple to manage for the SaaS company.
If a fixed percentage increase is not possible, the use of a recognized index is an effective and objective solution. In France, for example, the SYNTEC index is frequently used in the technology sector. Abroad, an index based on general inflation or consumer prices (CPI) may be chosen.
Such a clause can be written clearly:
“The prices will be revised annually according to the change in the SYNTEC index published on the day the contract expires” by integrating the formula for calculating the index.
This solution reassures customers and effectively protects the SaaS company.
A total absence of clause on price increases upon renewal is absolutely to be avoided. Here are the concrete risks:
To avoid any ambiguity or tension during renewal, here are the best practices to include in your pricing clause:
In some cases, it is useful to explicitly provide for the procedure to be followed in case of refusal by the customer:
This type of arrangement guarantees commercial flexibility while protecting the interests of each of the parties. However, this is not always possible if the indexation is calculated on a capped and reasonable basis. The downside to this limitation is that the increase is automatic.
The increase in prices when renewing a SaaS contract in BtoB must be anticipated and precisely managed. A clear clause makes it possible to secure both the economic interests of the SaaS company and the commercial relationship with its customers.
I can assist you in drafting and negotiating adapted pricing clauses that comply with market standards.
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