Renewing SaaS contracts: what you need to know

Renewing a SaaS contract may seem trivial, but it often comes with surprises. A poorly written clause or insufficient vigilance can lead to unexpected costs or unwanted renewal. The supplier often favors tacit renewal to stabilize its revenues and avoid a break in service, while the customer seeks to maintain control of its commitment, in particular by using an amendment or a renewal order form to adjust contractual conditions. Here are the key things to look out for to avoid pitfalls and secure your interests.

Tacit renewal of the SaaS contract: watch out for the pitfalls

Many SaaS contracts provide for automatic renewal when they expire. This provision avoids service interruptions, but can also commit the customer to a new period without their explicit agreement, which leads to a budgetary risk if this renewal was not planned.

On the client side, check:

• The notification deadlines for opposing the renewal. Some contracts require cancellation several months before the expiry date.
• Price conditions after renewal. An automatic increase can be provided.
• Contractual developments. The supplier can unilaterally change certain conditions.

On the supplier side, anticipate:

• Contractual and legal obligations to inform the customer before renewal.
• If relevant, the alternatives to be proposed (flexible renewal, exit options, adjustment of services).

Express SaaS contract renewal: how does it work?

Some contracts provide for a renewal formalized by an amendment or a renewal order form. This approach makes it possible to adapt contractual conditions and to avoid any ambiguity.

For both parties, provision should be made for:

• A clear list of contract changes.
• A detailed follow-up of the commitments made, in particular on duration and prices.
• Formal validation of the new conditions by amendment.

The parties may also plan to meet a few months before the renewal to discuss these conditions and avoid a hasty renewal or an emergency renewal.

How to secure your SaaS renewal?

On the client side, adopt these best practices:

• Review each clause of the contract well in advance of the deadline to identify possible changes.
• Set up reminders to respect the deadlines for termination or renegotiation.
• Ask for a clear and detailed addendum if the renewal requires contractual changes.

On the supplier side, optimize your contract management:

• Send notifications in advance to remind you of renewal deadlines and conditions.
• Provide a detailed order form with updated terms.
• Facilitate renegotiation by scheduling a formal discussion before the deadline.
• Ensure that the new conditions are validated in writing to avoid any dispute.

I can assist you in auditing, negotiating and securing your SaaS contracts. Contact me to anticipate risks and optimize your contractual commitments.