How to Draft an Enterprise SaaS Agreement: 3 Don’ts to Avoid

saas enterprise agreement

How to Draft an Enterprise SaaS Agreement: 3 Don’ts to Avoid

If someone were to ask you about your “enterprise” SaaS offering, would you have trouble actually explaining it? There can often be considerable variation and gray area between enterprise-level deals — that’s why it’s important to consider three key “don’ts” before you agree to a deal you’ll live to regret.

1) Don’t Offer Discounts without Getting Something in Return

While most enterprise SaaS customers are looking for some sort of discount, they are usually willing to give you something in return for such a good deal (whether that is a long-term commitment or another promise that may be appealing). Just remember that they need to give you something in return for the discount. Also, try to structure the agreement in a manner that requires them to pay up front for at least one year (which is pretty typical for enterprise SaaS deals) or maybe longer, if you can get it.

2) Lock Capacity, But Don’t Throw Away the Key

In other words, does your SaaS service prohibit the customer (through technological restrictions) from exceeding the capacity they purchased? If your service does have this restriction (and, by the way, I think it should), then providing the customer the ability to exceed the purchased capacity without restriction and pay later (without talking to your sales rep first) is often a very appealing right to give an enterprise SaaS customer. Do yourself a favor and think about it. Ease of administration is often very enticing to them.

3) Don’t Forget that Price and Terms Are Linked

The most basic element of all enterprise SaaS deals is that price and terms should be linked. So a bigger commitment by the customer (ex: duration, upfront payments, minimum spend rates, etc.) should mean a better price. That said, the inverse should also be true — no commitment, no big discount.

Bottom Line

You know that the customer will ask lots of questions while negotiating the terms of an enterprise SaaS deal, so keep these three basic don’ts in mind and figure out your answers beforehand. Your goal is to anticipate customer issues and respond with the right answers. Happy selling!
Here are some additional resources to help you learn more

Price and Terms are Linked 

Enterprise License Agreements

Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.

President and Shareholder

Jeremy Aber consults OpenView portfolio companies on legal and contract matters. Jeremy runs his own IT focused law firm, the Aber Law Firm, and has over 18 years experience in technology and corporate law.
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