SaaS Contract terms: what to look out for and how to set them up correctly

Do you have a business based on a mobile or web application and are confused about how to set up the contract terms? You are not alone. Good SaaS contract terms are the key to transparent client relationships, protecting your business and leading to satisfaction on both sides. You should take the utmost care with the contract terms, especially if you offer the app for a fee, as pricing and payment terms are of the most interest to users.

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What makes the contract terms really good?

Simply put: good terms are those that everyone understands and that are mutually beneficial. 🧐

When a customer reads your terms, they should know at a glance:

• If the subscription automatically renews.
• Under what conditions may they cancel the renewal.
• Whether you as the provider can adjust the price during the subscription.
• What are the rules in the event of a service outage.
• How the customer’s data is protected.

This is not a formality - clear and fair contract terms are a competitive advantage, especially with corporate clients who are price-sensitive. Plus, well-set contract terms prevent unnecessary user frustration, negative reviews, and damage to your reputation, which spreads at lightning speed in today's social media age. And you do not want that.

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Corporate clients want clear rules, users want peace of mind

Try presenting a contract to a corporation where the price guarantee ends after the first year, and they will probably turn you down. Corporate clients plan their IT budgets well in advance and don't want any surprises.

While ordinary end users usually don't worry so much about the contract terms to begin with, the problem can arise when renewing or cancelling a subscription - then it often doesn't have to end with just a negative review.

So how can we adapt the contract terms to different customers?

• Corporates: expect SLAs, security guarantees, price stability, and clear rules.
• Ordinary users: they want clear contract terms and the ability to easily cancel the service.
• Global markets: here, remember to base terms on international standards and not to indulge in local specifics.

The benefits of balanced conditions and the risks of poorly set ones

Well-set conditions bring benefits to both parties:

• Predictability - both parties know exactly what to expect.
• Fewer disputes - clear rules minimise the potential for misunderstandings.
• Building trust - fairness builds long-term relationships.
• Positive reviews and references - satisfied customers are the best advertising.
• Less time spent on problem-solving - clear terms save time for both parties.

Well-set contract terms are not only fair but also protect the legitimate interests of the provider:

• Flexibility - your SaaS evolves, legislation changes. Take this into account and set rules for modifying the contract terms.
• Rules of use - what activities are prohibited? And is there a "fair use policy"?
• Limitation of liability - exclude liability for lost profits and set a maximum amount of damage compensation.

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Other key areas not to be overlooked

Bear in mind that good contract terms must also cover these essential areas, so you're in the clear on all fronts.

⚙️ Service Level Agreement (SLA) 

• If you want to guarantee the availability of the service, define the availability parameters as precisely as possible (e.g., 99.9 % of the time in a year).
• Specify the process and compensation for service interruptions or specify that compensation is not provided.
• Alternatively, include a disclaimer of possible outages and operation of the service "as is". 

🛡️ Data protection and GDPR

• Clearly define the roles of the administrator and the processor.
• Implement and describe the security measures.
• Define the process for a security incident.

©️ Intellectual property rights

• Who owns the data entered into the system?
• What are the licenses to use the software?
• How is the data export handled when the contract is terminated? 

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Contract terms are not just a legal formality, but a key tool to protect your business and ensure smooth collaboration with your users. Well-set contract terms minimise risk, prevent unnecessary disputes and build trust in your service. If you're not sure how to set the terms, get in touch - we can help you find the right balance between protecting your SaaS and customer expectations.