7 Steps To Write A SaaS Agreement Successfully With Pro Tips
You got it; you put in the time, resources, and money to create your new SaaS (Software-as-a-Service) product. Now as the procedure is done, it’s time to advertise your business and start to see a return ROI. You have all the signs of a strong business: openness, support, and guidance on how your freshly developed product might better serve your customers. While servicing your consumers is essential, you must therefore protect yourself. Do you want to establish long-term client connections and grow your SaaS business? If this is the case, you should aim for openness and keep your consumers up to date on your service. Most significantly, you should develop and maintain a detailed SaaS agreement.
We’ll go through all there is to know about SaaS agreements, why you should get one, as well as how to analyze and create your own. This procedure might be confusing if you’ve never completed or thought of a SaaS deal before. But don’t worry, after this article, you’ll have the experience and awareness to establish your service-level agreements. While you may always employ a lawyer to accomplish this for you, not all of us have the financial means to do so.
What Is A SaaS Agreement?
SaaS, or (Software-as-a-Service), is a rapidly gaining popularity business concept. SaaS companies provide software on a subscription-based model, frequently with price levels, rather than offering a one-time installation. To maintain their subscription service, these businesses must employ contracts. A SaaS agreement is comparable to a license agreement. SaaS firms, unlike license agreements, do not deliver a tangible product or installation. A SaaS purchase agreement, rather than offering a physical CD or downloading a product, licenses the right of another firm to utilize the program over the cloud. The client is only permitted to use the program following the conditions of their subscription. The SaaS agreement also specifies three sorts of users:
1. The people who utilize the Websites are referred to as “Site Visitors.”
2. The individuals who utilize the Asana Service’s free version are “Free Users”.
3. Those who access the Service through a paid subscription strategy are “Subscribers”.
The Purpose of A SaaS Agreement
A SaaS Agreement specifies the specific software accessibility that clients will have for the duration of their subscription to the service. Many SaaS firms provide many subscription levels at various pricing ranges. Each tier contains additional software functionality or user accounts. The contract specifies the group the consumer has selected, as well as their specific rights and obligations and subscription price.
SaaS agreements also secure the organization whose products are being used. They specify how clients cannot utilize their licensed software. They may, for example, ban the client from exchanging it with others or using it to support unlawful acts. They can include terms limiting responsibility in the event of a security breach. These provisions shield the corporation from losing consumers and income as a result of piracy or hacking.
Contracts for SaaS vary depending on the organization and the service. Some businesses, such as Adobe, provide monthly and yearly memberships. Other Software-as-a-Service agreements allow consumers to pay when they go, investing only for the software they use.
Different Types Of SaaS Agreements
Below are the different types of SaaS agreements or SaaS software reseller agreement:
- Permissive Agreement
- Public Domain License
- Proprietary License
- Lesser General Public License
Variation Between A SaaS Agreement & A Licensing Agreement?
A SaaS deal is not the same as a license arrangement. A license agreement typically requires a corporation to supply the right software for usage in exchange for a one-time or monthly charge. Physical installation of software and associated hardware is required. Customers in a SaaS deal, on the other hand, have access to the software and other technologies via the cloud, but no actual assets are traded. A SaaS arrangement will give end customers online access to the items involved. As a result, the form of a SaaS agreement concentrates on enabling the usage of a product rather than allowing the use of a product as a service. It is always better to create a SaaS service agreement template.
When Is A SaaS Agreement Required?
A SaaS agreement is a legally binding contract between your organization and your customer. The agreement specifies the terms you agree to supply your software-as-a-service, and your client decides to utilize it. The contract is intended to safeguard both parties’ rights while also outlining their duties. Writing and signing a SaaS agreement benefits both your clients and your organization. With this contract in place, you will be able to improve communication with your consumers, eliminate misunderstandings, and avoid legal difficulties.
Limitations Of SaaS Contracts
As previously noted, SaaS contracts are intended to protect both you and the client; nevertheless, this does not absolve you of all duties. Assume a customer is using your product for unlawful purposes, such as stealing customer data. Because you are the supplier, you may be held accountable irrespective of the SaaS contract. You should also consider the prospect of being sued by customers if there is a significant loss of connection for a lengthy period. Or you, as a firm, are not executing software maintenance services, resulting in security flaws that can lead to data breaches. We described the restriction of the legal liability earlier, and yes, it is meant to protect you in most cases. Depending on the jurisdiction, they may occasionally be waived.
Clauses Of SaaS Agreements
Each SaaS Agreement Must Have 4 Key Clauses and you can also search for SaaS service agreement samples online. This is a checklist of the main clauses that any Software-as-a-Service (SaaS) provider should include in its user agreements. It applies to both B2C & B2B SaaS products. The following clauses are not exhaustive, but they cover the most significant ones as the basics of software contracts:
1. The license or accessibility clause specifies how users may use your product.
2. You have your customer’s license (necessary for all those SaaS products that are receiving & using customer data)
3. Product warranties differ significantly between B2B and B2C items.
4. Liability clauses allow you to sell things without fear of being sued.
What Should Be Included In A SaaS Agreement?
You must understand how to include this in a SaaS agreement after learning the processes to take when developing a SaaS agreement. Therefore, what should be included in a SaaS Contract varies depending on your company and the SaaS product. Nonetheless, the following components should be included in every SaaS contract by the different types of saas companies and can be added in as the software license agreement checklist:
(a) Start & End Dates: The launch date would be when the SaaS agreement goes into force and your product subscription starts actively. The expiration date is the opposite.
(b) Billings & Payments: Invoicing and payment terms inform your users of the costs they should pay, when they must pay, and how they must pay.
(c) Licensing Conditions: These are the terms under which your clients will be using your SaaS product. A software license protects you from consumers who may seek to benefit from your efforts.
(d) Warranties: Includes warranties, as well as other limitations that must be specified. This demonstrates that you acknowledge that your SaaS product cannot always be error-free while also refusing to accept liability for any improper usage of your service.
(e) Terms And Conditions Of Privacy: Inform your clients on how and where their data will be utilized and how the information they supply to use a SaaS product will be secured.
(f) Service-Level Agreement (SLA) for SaaS: An SLA specifies your services and how your clients should utilize them. This covers the software license, hosting terms and conditions, software maintenance and support services, etc.
How SaaS Contracts Are Created?
This section focuses on the best methods for developing your individual SaaS contract. The theory usually comes before practice, so in this situation, we have covered the fundamentals of what constitutes a SaaS agreement. Also included are the best methods to look for. It is now time to find out how to make them. Please remember that we will not go into the legal jargon because it is not a legal opinion. Let’s begin.
How To Write A SaaS Agreement?
The first and best choice for creating an entirely new SaaS enterprise agreement would be to employ or consult with the legal team. They are legal professionals and the most reliable source for crafting proper legal language. The ideal approach to a SaaS agreement is to create a template that allows you to alter the names of each customer. This will save you significant time and money when onboarding new consumers.
Another option is to use online SaaS contract builders. The internet is a fantastic resource; if you’re comfortable enough, you may utilize an online builder to create a design for you to use when getting started. If you grow more known in your field, you may be able to produce an updated version with the help of a competent lawyer. Below mentioned pointers will enable you to understand
(1) Determine the Terms of Your Agreement
The first stage in creating a SaaS agreement is deciding whether the terms will be fixed or monthly. A set term is protected by an advance payment or debit card arrangement. In contrast, the latter is monthly, with service curtailed anytime a customer declines to pay for the following month’s bids. Your fundamental business model is essential when establishing the appropriate terms for your SaaS contract.
(2) Effectively Describe Your Services
Your clients have a right to know about the SaaS solutions they will use. Consider the target market and the degree of detail they require to validate their knowledge. One method is to refer your consumers to the services described on the website. You can also add a thorough description in the contract itself. Regardless, you must guarantee that your customer knows the products you will offer and consent to them by subscribing to them.
(3) Make Allowances For Maintenance & Support
There will undoubtedly be times when you need to address issues or bugs or do regular maintenance. While they must be completed on schedule, your consumers have the right to know how you intend to do so. When expressing to your consumers the definite duration for maintenance, keep time zones in mind, mainly if you and your clients are in various countries.
(4) Describe How You Intend To Use User Data
Establishing a SaaS agreement must indicate how your organization intends to use your clients’ data. These include information concerning client data custody, data protection, data backups, the host of the service, retrieval of data, and other topics. Consultation with data privacy attorneys will assist you in knowing what you may and cannot gather or keep, as well as your duties to your product’s users.
(5) Keep Your Intellectual & Proprietary Rights
With your SaaS agreement, ensure that you keep the intellectual and personal property rights to the software service you’re offering. When establishing a SaaS agreement, make sure to explain any changes or upgrades made to your program that result in new intellectual property. Aside from describing, be sure you own the rights.
(6) Reduce Your Liability
Make sure your SaaS contract contains a language that restricts your obligation to customers. This section should address concerns such as the amount of responsibility, the losses your organization covers, consumer protection regulations, third-party website liability, and others.
(7) Select A Governing Law
The SaaS agreement, as a legal contract governing consumer use of the SaaS product, also extends to all your customers globally. To prevent defending litigation in countries where your customers are based, make sure the SaaS Agreement is controlled by the laws of the nation in which you live. Finally, choose the applicable law for a SaaS Agreement and add it to a final and binding provision.
What Did We Learn About SaaS Agreements?
Salespeople at SaaS firms are or should be the primary developers of SaaS agreements. While SaaS agreements involve several parties, the legally enforceable responsibilities created by these contracts are often specified and regulated by law. A SaaS deal may include an order application with an attached MSA, bespoke licensing agreement, or business package. SaaS agreements impose ongoing duties on SaaS companies and end-users, which can last for years and have far-reaching repercussions. As a result, a company’s in-house legal staff will often maintain approval powers, particularly if normal conditions have deviated. Customer success teams, as well as product and technical teams, may seek approval powers over SaaS agreements. Don’t forget to read our latest piece titled – 5 Tips To Engage A Successful Virtual Software Development Team. You can email us your requirements to define what scope of work needs to be established. Our expert programmers, developers, and engineers love to solve complex projects and offer the best solutions.