SaaS Contract Negotiations: Key Things to Consider

SAAS information on a laptop

The beginning of your relationship with a SaaS vendor is crucial. This however all boils down to fair and effective contract negotiations, with all parties ideally getting what they want. So before signing on the dotted line, make sure to consider these first:

Price and Discounts

Most vendors price services on a subscription basis, with either monthly or yearly payments, but you could negotiate custom prices if you feel that’s what you need. They usually offer bigger discounts for bigger deals. See if they offer special features and how much these would cost.

The Term

Terms typically last a month or several years. If your SaaS provider is pushing for a longer-term subscription, ask why and deliberate if what they’re offering is worth it. At the very least, put an “out clause” in the contract.

Support

Ask how they’ll provide support—phone, email, chat, or the web? Could you reach them only during business hours or 24/7? What about response times?

Contract Renewals

Mainly, check if they stipulated an “evergreen renewal clause”. This would renew your term automatically, typically 30 days before your contract expires. Put simply, SaaS providers that provide quality services are confident that you’ll renew your term based on their stellar services and not simply because you forgot to cancel on time.

Service Level Agreements

This is your provider’s commitment to keeping their systems functioning at all times. In your SaaS contracts, stipulate penalties, in the form pricing discounts, in case a vendor breaks the SLA.

Data Backups and Recovery

Majority of SaaS vendors typically do backups daily or weekly. If you do backups daily, request that they backup your data daily as well. Likewise, ask whether backup data and make sure it’s secure.

Exporting Data

Key things to note—ensure that you retain data ownership and that you know how you could export it if you don’t opt to renew your contract and if the provider goes out of business.

Negotiating SaaS contracts is a prime chance to engage SaaS vendors in an open and thorough discussion concerning the services they provide, what you expect from them, and vice versa. Before starting negotiations, however, make certain that you know what your business needs and negotiate fairly, ideally with help from your lawyer, before signing anything.