What is SaaS Contract Negotiation?
A SaaS (Software as a Service) contract is an agreement signed by a customer and software provider. It defines the terms of their working relationship, such as how the software is allowed to be used, how much it costs, and both parties’ rights and obligations.
Instead of quickly accepting all the contract’s terms and signing on the dotted line, it’s in your best interests to negotiate it. This has various benefits, such as reducing your costs and ensuring the document is aligned with your business requirements. However, you want to do it effectively so that you achieve your goals.
Read the rest of this article to learn about SaaS contract negotiation and what it involves. We’ll cover how you can benefit from SaaS negotiations, key terms in your SaaS contract, what to remember when approaching a negotiation, and how a lawyer can help you through the process.
How Can You Benefit From SaaS Negotiations?
There are many ways in which negotiating your SaaS contract can help you, such as:
- You can benefit from better cost control. By taking a closer look at SaaS pricing structures, you can choose one that matches your usage and is aligned with your current budget.
- You can minimize your risks. Contract terms such as breaches, liability, and compliance need careful review. If you spot anything vague or unsatisfactory, you can discuss having thorough clauses that reduce your risks.
- You’ll gain clarity on usage. You want to know that how the software is used won’t hamper business continuity, which can result in financial losses or lengthy disputes.
What are Key Terms in Your SaaS Contract Negotiation?
When preparing yourself to negotiate a SaaS contract, you should consider its following terms, as they will help you think about your requirements and concerns.
- Think about who the “licensee” is. You’ll want to ensure that there’s clarity in the contract about who will use the software. It might be one person or multiple people. Not having this clearly defined can cause issues in the future.
- Consider the license scope. You want to ensure that you’re comfortable with all the limitations and restrictions.
- Take a closer look at the pricing. All costs to be clearly defined, such as annual costs, charges, and fees, so there are no hidden surprises in the future.
- What type of license do you need? Make sure that the license from the vendor is beneficial for your requirements. Check if it’s for a year or more than one year, and how it will renew. You might be able to negotiate lower costs for a license with a longer duration.
- Don’t forget about included support. If the license doesn’t contain information about the vendor’s support duties, you’ll want to ask if they are provided in a different document.
- Check the liability clause. This section prevents you from taking on too much responsibility for risks. There are direct liabilities (with breach of contract being a prime example) and indirect liabilities (which are more incidental and can be more challenging to predict).
To ensure you don’t miss anything important in your SaaS contract, you should get it reviewed by a lawyer from ContractsCounsel, an online marketplace that connects clients with vetted, experienced lawyers.
You can request a SaaS contract review by posting your project on the ContractsCounsel marketplace. Include some details about your requirements. Lawyers will send you multiple bids and you can review the lawyers’ profiles according to factors such as their years of experience, credentials, and client ratings.
What are Things to Remember When Negotiating a SaaS Contract?
When negotiating your SaaS contract, you should consider some tips so that you make the discussion productive.
- Challenge automatic renewals. These usually hamper your chance to negotiate renewal terms.
- Check support costs. When asking for clarity about support services, you should ensure that you don’t have to pay extra or hidden costs for them.
- Consider a longer term. If it’s beneficial for your business, you should consider a multi-year SaaS contract so that you can achieve better pricing.
- Talk about scalability. You want the SaaS agreement to enable your business to grow without unfair costs being added on or risking operation disruptions.
- Avoid disclosing your budget. While you want to be transparent during contract negotiation, you want to avoid a situation in which vendors insist on your stated amount. This doesn’t enable you to negotiate for lower prices.
- Don’t ignore the overages. Overages are costs that you’ll have to pay if you exceed usage limits.
- Ensure there’s an exit clause. You want to check that the exit clause is favorable to you to prevent you from being locked into an agreement that isn’t right for you. Discuss termination notice periods and post-termination obligations.
- Research other companies’ charges. Research what other vendors are charging for the same product, as this will ensure you have a strong stance during negotiations.
- Get the agreement in writing. If you and the other party agree on changes to your contract, make sure you get them down in writing to prevent misunderstandings or failed duties at a later stage.
Do You Need a Lawyer for a SaaS Negotiation?
Although you don’t always need to hire a lawyer for a SaaS negotiation, it can be beneficial. Here’s how a lawyer will help you:
- Your lawyer will help by reviewing your SaaS contract. They’ll identify any vague or unfair terms so you can minimize your risks.
- They’ll help you navigate complex terms. These include information about breaches.
- They’ll ensure you can exit the contract. They can help you remember your termination rights.
- They’ll help you determine what is and isn’t negotiable. Even what’s considered a standard contract can be negotiated.
- They have the negotiation skills to help you prioritize your needs. They’ll negotiate based on your requirements and business goals.
- They’ll prevent you from making mistakes. An example includes accepting the first offer.
Do you need to hire a lawyer for a SaaS contract?
Work with a lawyer on ContractsCounsel. You’ll find an experienced, vetted lawyer who will help you negotiate your SaaS contract so that you remain legally compliant, with less risk and more favorable terms.
