Service Level Agreement: Types, What's Included
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What Is a Service-Level Agreement?
A service-level agreement (SLA) is a contract between a provider and the end user that states the level of service that the customer should expect from that service provider. That said, they also serve a company's internal operations as well. They're frequently used when a company is signing up new customers for a service.
In the event that the service-level agreement is between the marketing and sales departments, the SLA will detail the company's sales and marketing goals, such as the number of leads it intends to generate monthly and the action that the sales department will take to support the marketing department's efforts.
Why Service-Level Agreements Are Important?
A service-level agreement is important because it:
- Protects both parties: The SLA sets standards for the service, ensuring both the service provider and end user are on the same page with expectations. By creating clear, measurable guidelines, the end user knows exactly what to expect and what the responsibilities are for everyone involved.
- Provides recourse for unmet expectations: The SLA provides specific consequences for what will happen if a service provider fails to meet its obligations to the end user. Without the SLA, it's unclear what will happen if one or both parties fail to meet expectations. With a service-level agreement in place, there is transparency about what the targets are for each of the service levels and what will happen if they're unmet.
- Gives peace of mind: The SLA gives the end user peace of mind knowing they can hold their service provider accountable for the service they committed to at the time of the agreement.
Types of Service-Level Agreements
There are three basic types of service-level agreements:
Customer Service-Level Agreement
This type of SLA is between a business and a customer. It's also referred to as an external service agreement. It includes:
- Specifics of the service the customer will receive
- Conditions of the service availability
- Standards for the time windows of each service level, if applicable
- Responsibilities of each of the parties
- Escalation procedures
- Cancellation terms
Internal Service-Level Agreement
This is when a company has a service-level agreement in place internally, between its marketing and sales departments. For example, the sales team may have a goal of earning $10,000 in sales per month. If they know that each sale is worth $500 and they know that they have a closing rate of 20%, then they know they need to receive at least 100 qualified leads per month from the marketing department.
The two departments could put an SLA in place where the marketing department commits to delivering a minimum of 100 leads each month by a certain date. Part of the agreement could include sending weekly reports to the sales department to ensure the teams are on pace to hit their monthly goals.
Multi-Level Service-Level Agreement
This type of SLA outlines what's expected of the different parties when there is more than just one end user or one service provider. You could use this as a way to support customers or as part of an operations strategy. For example, your marketing and sales departments could also include the customer service team as part of the SLA to incorporate customer retention into the agreement.
What Is Included in a Service-Level Agreement?
Here is a look at the different information that goes into a service-level agreement:
- Summary of agreement : Your SLA typically contains a summary of the service, who is receiving the service, and how the success of the service is going to be measured.
- Goals of the parties: For an external SLA between a business and customer, the goals that are included in the agreement will typically be those of the customer. Your company should include measurable goals that it can regularly attain for its customer. If the SLA is internal, then the goals for all parties should be outlined.
- Description of what's needed to reach goals: The SLA should include descriptions of what each of the parties in the agreement need to achieve their goals. This could include things like technical maintenance, consulting, or reporting. If you're putting together an internal SLA, it should describe what the different departments need from one another to reach their goals.
- Reporting procedure: The SLA should include how and to whom any problems should be reported and what the reporting process should be.
- Consequences: The SLA should always state what the consequence will be if the specified goal isn't met. As an example, your company could issue service credits or other forms of compensation.
- Termination circumstances: Finally, the SLA should contain formal conditions for which the parties could terminate the agreement in pursuit of a better one. This could happen to an internal SLA, for example, if the SLA you put together isn't getting the buy-in you need from all parties involved or if you're frequently missing those goals.

Image via Unsplash by chrisliverani
Service-Level Agreement vs. Key Performance Indicator
A key performance indicator (KPI) is a tool for measuring how well a business is performing in light of its strategic goals. A KPI can help a business identify areas where the organization is veering off track from its primary objectives.
The SLA outlines what the customer will receive and what they should expect from their service provider. It does, however, include measurements for evaluating the service provider's performance, which is where there can be overlaps between KPIs and SLAs. A service-level agreement defines KPIs in order to measure service performance. This means that, in the end, the metrics provided by the SLA become KPIs that the business will monitor and report on as measurements of success.
Choosing Metrics for a Service-Level Agreement
It can be challenging to choose metrics that are fair for all parties involved. However, it's best to choose performance metrics that:
- Are within the control of the service provider.
- Can be collected easily and accurately.
- Can be collected automatically, if possible.
It's also important to specify a reasonable baseline for the metrics, or a number that the company commits to hitting at the very least. This baseline can be shifted as more data is collected, and the service provider better understands what's possible for the client.
Service-Level Agreement Templates
Here are some service-level agreement templates that you can use to define the service you will offer end users:
- Small business service-level agreement
- Business analysis service-level agreement
- Business cloud service-level agreement
- HR business service-level agreement
- PandaDoc service-level agreement
A service-level agreement is essential for protecting a company and ensuring it maintains a good relationship with end users. By reaching a clear understanding of what standards are important and what the consequences will be if those standards aren't met, you can ensure that the relationship will be positive for all parties involved.
It's also a good idea to review your SLA as your business changes and grows, as the SLA should reflect its evolving needs and capabilities. If you need help creating a service-level agreement or would like to revisit one that you currently have in place, Contracts Counsel can help. We are happy to connect you with a fully-vetted lawyer who can help you create or review your service-level agreement. Contact us today to get started.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our Service Level Agreement Lawyers
Michael M.
www.linkedin/in/michaelbmiller I am an experienced contracts professional having practiced nearly 3 decades in the areas of corporate, mergers and acquisitions, technology, start-up, intellectual property, real estate, employment law as well as informal dispute resolution. I enjoy providing a cost effective, high quality, timely solution with patience and empathy regarding client needs. I graduated from NYU Law School and attended Rutgers College and the London School of Economics as an undergraduate. I have worked at top Wall Street firms, top regional firms and have long term experience in my own practice. I would welcome the opportunity to be of service to you as a trusted fiduciary. In 2022 and 2023, I was the top ranked attorney on the Contract Counsel site based upon number of clients, quality of work and number of 5 Star reviews.
"Working with Michael has been fantastic. You'll be hard-pressed to find someone more knowledgeable and honest than him!"
Samuel R.
My career interests are to practice Transactional Corporate Law, including Business Start Up, as well as Real Estate Law, Estate Planning Law, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I currently serve as General Counsel for a bioengineering company. I handle everything from their Business Transactional Agreements, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing expert specialized legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the Super Lawyers Southwest Rising Stars list for 2024 - 2026. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, and also trademark registration and licensing.
"Everything went very quick, I am very satisfied with the results."
Jeffrey W.
Jeffrey W.
I am a business, transactions, contracts attorney. I was the sole in-house attorney for a good-sized staffing company. I can review and create nearly any type of document you need. I enjoy writing, reading, and editing contracts. I want to read your contract. If I cannot do it, I won't take the job and I won't charge you for what I cannot do. However, in reality, unless you need a 225 page financing agreement, is has never been an issue.
Danny J.
I have had my own law practice since 2014 and I enjoy solving my clients’ problems. That’s why I constantly stay on top of the latest developments in the law and business of startups, entertainment, art, intellectual property, and commercial enterprise. I constantly keep learning because everything I learn helps me make my client’s life better. I assist clients in all aspects of copyright, trademark, contract, trade secret, business, nonprofit, employment, mediation, art, fashion, and entertainment law. Even though I am licensed to practice law in NY, I have worked for clients all over the country and even in Europe, Africa, and Latin America. No matter the client, I always look for ways to protect their assets, artworks, businesses, and brands with strategies to help them grow. I am a fluent bilingual legal professional who can analyze complex legal and business problems and solve them creatively for the benefit of my clients. I am detail-oriented and attentive which makes me excellent at negotiating, drafting, and revising all types of agreements and deals. I advise creatives and companies on intellectual property issues, risk management, and strategic planning. My clients love what I do for them because I employ a practical, client-tailored, and results-oriented approach to their case, no matter how small.
"Danny always pays lots of attention to the points I ask about. Highly recommended."
Ryenne S.
My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.
"Very quick turnaround and offered good advice. I had a good experience working with Ryenne!"
September 30, 2022
Gregory D.
Gregory S. Davis is a native of New York and is a graduate of the Norman Adrian Wiggins School of Law at Campbell University. He also holds an undergraduate degree in Economics from the Wharton School at the University of Pennsylvania and an MBA from Bowie State University. Prior to entering the practice of law, Greg was a Trust officer for one of the largest U.S. Banks, an adjunct professor of finance at Meredith College and a Series 7 licensed financial advisor. Greg is currently the owner of The Law Office of Gregory S. Davis, PLLC (gsdavislaw.com) focusing on Estate Planning, Real Estate and Business Law. Greg is also an adjunct professor of Business Law at Wake Tech.
October 14, 2022
Jingjing L.
I am a dual qualified (Illinois; England & Wales) transactional lawyer with about 6 years of legal experience. I'm very commercial and pragmatic in my approach, and I provide clear and timely service. I have worked in two of the top international "big law" firms focusing on corporate, private equity, insurance and financial services work. I'm now working in-house at a Fortune 500 company and have a wide range of experience with commercial and corporate contracts as well as legal and regulatory research.
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Can a company be held liable for not meeting the service level agreement outlined in a contract?
I recently entered into a contract with a software development company to build a custom application for my business. The contract included a service level agreement (SLA) that outlined specific performance metrics and guarantees for the software. However, since the project started, the company has consistently failed to meet these performance metrics, causing significant delays and impacting the functionality of the application. I want to understand if the company can be held legally liable for not meeting the SLA and if I have any recourse to seek compensation or terminate the contract due to their failure to meet the agreed-upon terms.
Jeff G.
Yes. A SLA in a written contract is part of that contract. And even without a specifically-stated remedy, you may be able to sue for breach. It's not all cut-and-dried, however, as there can be a multitude of other contractual limitations or considerations that would need to be considered after a thorough review of the agreement, the documentation of the work that's been done and any type of waivers provided for missing the SLAs.
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SLA for ERP Software Development
Location: New York
Turnaround: Over a week
Service: Drafting
Doc Type: Service Level Agreement
Number of Bids: 6
Bid Range: $750 - $2,000
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