SaaS Agreement Cost

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What does a SaaS agreement cost? This is a question that many software companies may ask. Let’s explore this question and review some general information about SaaS agreements .

How Much Does a SaaS Agreement Cost?

SaaS agreements, or “software-as-a-service” agreements, are legal contracts that detail the terms and conditions of a software delivery model. Typically, when software is sold as a service, the software and data will be centrally hosted allowing users to access the software and data over the internet.

Many software companies will choose to seek the help of a technology lawyer to draft their SaaS agreement. SaaS agreements can be very complicated, and you may require agreements at various levels like company level agreements, customer facing agreements, and third-party agreements.

Only an experienced technology lawyer can ensure that your SaaS agreement is legally binding and includes all necessary terms to protect your company and your intellectual property rights. Based on ContractsCounsel’s marketplace data, the average cost of a project involving a SaaS agreement is $1,119 .

The cost of a SaaS agreement depends on several variables, which includes the complexity of the contract, the level of contract required, and the software licensing model.

What’s Typically Included in a SaaS Agreement?

SaaS agreements will vary based on the software company, the needs of the company, and the model used to license the software. Some agreements may contain a lot of service elements while others may simply give users access to products that can be licensed in a traditional way.

Although SaaS agreements will vary, most will include the following essential elements:

  • Access Right and Users. The agreement will typically have a limit on users or data that can be used. The agreement should specify the limit and the penalty for exceeding the limit
  • Customer Service and Support. Many agreements will detail how the software company will provide support services and what guarantees the company makes about the services provided.
  • Data Ownership. The SaaS agreement should specify which party owns the rights to data on the software platform.
  • Data Security. Security measures that many software companies take can include encryption, data back-up, and how entered data will be secured.
  • License Scope. The license scope defines the limits and rights given to users of the software.
  • Limitation of Liability. A SaaS agreement should specifically cap contractual liability to protect the software company in the event of a lawsuit.
  • Pricing. One very important aspect of a SaaS agreement is how the software company will charge for their services. Pricing should be clearly established especially if a subscription model is being used.
  • Term, Termination and Renewal. This provision establishes the term of the agreement and the process to either renew or terminate the agreement at the end of the term.

Examples of SaaS Agreement Projects

SaaS Agreement Drafting

Many people who need a SaaS agreement will hire a knowledgeable technology lawyer to draft the contract. After an initial consult to find out what the software company wants included in the contract, the lawyer will draft a comprehensive agreement that protects the company and is legally enforceable.

SaaS Agreement Review

In some circumstances, a software company may have an existing SaaS agreement that they want reviewed by a lawyer. Laws are frequently changing in the technology industry, so it is vital that a software company’s SaaS agreement is up to date with all relevant laws.

An experienced lawyer will review your SaaS agreement to make sure the contract lays out the rights and obligations of each party, includes all pertinent terms and conditions, protects the company’s rights and is legally enforceable.

SaaS Agreement Disputes

Disputes are common with all contracts, and this is true for SaaS agreements. To avoid expensive litigation, many SaaS agreements will include an alternative dispute resolution clause.

An ADR clause avoids timely and costly trials and instead resolves the contract dispute using a third-party arbitrator to act as a mediator.

If your SaaS agreement does not include an ADR clause, you will have to hire an attorney to represent you in court for a breach of contract lawsuit.

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Drafting SaaS Agreement Cost

Drafting SaaS agreements comes with costs because it requires the time of a licensed technology lawyer to complete the project.

ContractsCounsel’s marketplace data shows the average SaaS agreement drafting costs to be $1,156 across all states and industries.

Reviewing SaaS Agreement Cost

Although less than drafting costs, hiring a lawyer to review a SaaS agreement will also come with fees. The attorney will need to take their time reading over the provisions to ensure they are fair and adhere to all relevant laws.

ContractsCounsel’s marketplace data shows the average SaaS agreement review costs to be $750 across all states and industries.

How Do Lawyers Charge for SaaS Agreements?

Technology lawyers charge for services in two common ways: an hourly rate or a flat fee for service.

Hourly Rates for SaaS Agreements

Hourly rates are usually the most common way that attorneys charge for their time. In this fee arrangement, the lawyer will charge the client a set hourly rate for the time spent completing the project.

This method of billing has both positives and negatives. Attorneys benefit from ensuring they are compensated for every minute of their time; however, they usually aren’t paid until the project is completed.

The negative for clients, is although they are informed of the hourly rate, they don’t know the full cost of their legal fees until the completion of the project which can sometimes cause some sticker shock.

ContractsCounsel’s marketplace data shows the average hourly rate for a technology lawyer ranges from $250 - $400 per hour.

Flat Fee Rates for SaaS Agreements

Some lawyers choose to use a flat fee rate billing method for contract drafting. In this fee arrangement, the lawyer will quote a lump sum rate, usually to be paid up front, for the cost of the project.

From the client’s perspective, a flat fee billing structure is usually more desirable because they know exactly what they are being charged for legal services.

It is important to make sure the client knows what’s included with the fee before starting the project, as it may not include rounds of revisions or consultations.

ContractsCounsel’s marketplace data shows the average flat fee rate for SaaS agreements costs to be $1,119 .

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