Your software as a service (SaaS) contract can either speed up deals—or kill them before they start. A confusing, jargon-heavy agreement leads to endless back-and-forth, stalled approvals, and lost momentum.
And the data backs this up—72% of respondents in a Harvard Business Review (HBR) survey agreed that simpler contracts don’t just reduce negotiation time, they also improve understanding and speed up deal closures.
In this guide, you’ll learn how to structure your SaaS contract to shorten your SaaS sales cycles and close more deals while maintaining prospect trust.
What is a software as a service (SaaS) contract?
A SaaS sales contract is a legal document between a software services provider and a customer that outlines the terms for using cloud-based software applications. Unlike traditional software licenses, this cloud agreement grants access rights rather than ownership on a subscription basis.
Think of it like renting vs. buying a car.
A traditional software license is like purchasing a vehicle—you own that version forever. A SaaS agreement is more like a lease. You're paying for access, and if you stop, the keys get taken away.
SaaS agreements exist at every level:
- Individual contracts: If you sign up for a SaaS company's Business plan as a solo consultant, you agree to a standardized SaaS contract with fixed terms.
- Team/SMB contracts: A 15-person marketing agency might sign a subscription tier that locks in terms around user seats, content permissions, and brand customization at a set monthly rate.
- Enterprise SaaS/custom contracts: A software provider may enter a comprehensive enterprise SaaS agreement, enabling its 100+ global sales team to share proposals at scale—with customized pricing, CRM integrations, service level agreements (SLAs), and enhanced security obligations.
Why do you need a SaaS contract?
Without a contract, you're one misunderstanding away from lost revenue, scope creep, or worse: the customer who expects unlimited technical support services for their $50/month subscription.
Take Adobe, for example. In June 2024, the FTC recently took action against the company for hiding early termination fees and making cancellations difficult. The result? Lawsuits, regulatory fines, and a wave of angry customers.
SaaS agreements remove uncertainty by creating clear expectations between software providers and their end users. A solid SaaS agreement:
- Prevents "that's not what we agreed to" scenarios by documenting exactly what software applications and features you're providing
- Sets usage limits that stop customers from overloading your servers or sharing access
- Locks in pricing and subscription period terms
- Establishes service availability expectations during potential service interruptions
- Creates legal recourse for protecting intellectual property rights
6 SaaS contract terms that protect your business (no matter what the customer asks for)
When you're dealing with enterprises, they're going to want changes to your standard contract to fit their needs. That's just how it works.
But no matter how much you bend to make the deal happen, there are some parts of your SaaS agreement you really can't afford to drop if you want to protect your business and keep things clear.
1. Scope of software services and usage rights
The scope of services defines what customers access and what they can do with your software applications. Without clear boundaries, customers might assume unlimited usage or even attempt to resell your product.
While writing your contract, outline:
- User access: Number of licenses, authentication rules
- Feature entitlements: Which features/modules are included
- Usage limits: API call limits, storage caps
- Prohibited activities: Reselling, reverse engineering
Defining these boundaries upfront prevents disputes, protects your infrastructure, and ensures customers know exactly what they’re paying for.
2. Customer data ownership
Customer data ownership clauses establish who can access, use, and control sensitive customer data processed through your platform. Every time customers use your software, they generate such data—from usage patterns to uploaded content.
Data ownership is a major concern for enterprise buyers. Without explicit terms, misunderstandings can delay deals or derail trust.
That’s exactly what Sam Wright, Head of Operations and Partnership at Huntr, an AI job tracker and resume builder platform, discovered when structuring contracts:
"Customers want explicit assurances about data privacy and ownership. We approach these discussions by clarifying that customers maintain full ownership of their data, with Huntr only using aggregated and anonymized data for service improvement."
Clear boundaries around data usage create customer confidence, which leads to faster SaaS contract approvals.
3. Data security
A data breach doesn’t just put customer information at risk—it can cost millions. AppOmni’s 2024 report found that one-third of SaaS organizations suffered a data breach last year. Beyond financial loss, breaches lead to lawsuits, lost trust, and regulatory fines.
Some precautionary clauses you can include are:
- Specifying SOC 2 or ISO 27001 compliance, AES-256 encryption for data at rest, and TLS 1.2+ for data in transit
- Defining physical security measures like 24/7 monitored data centers with biometric access controls.
- Outlining breach responsibilities, including who must notify affected users, response timeframes (e.g., 72-hour disclosure under GDPR), and liability for damages
- Clarifying intellectual property rights to prevent customers from claiming ownership of your proprietary encryption algorithms, fraud detection models, or internal security protocols.
Most importantly, make these legally binding contract clauses—not just security policies—so compliance is enforceable and your company is protected against liability.
4. Payment terms and pricing structure
Payment terms set clear expectations about the financial relationship between you and your customer.
Research shows it’s the most negotiated part of any contract, and for good reason: it directly impacts budgets, ROI, and your bottom line.
There are different types of pricing models to pick from:
| Pricing Model | Description |
|---|---|
Flat-rate subscription | One product, one set of features, one price for all customers. |
Tiered pricing | Multiple packages at different price points with increasing features or capabilities per tier. |
Per-user pricing | Cost scales directly with the number of people using the software. |
Feature-based pricing | Base package with additional costs for premium features or modules. |
Enterprise pricing | Custom pricing packages for large organizations with specific requirements and volumes. |
Choosing the right model depends on your product’s value proposition and how your customers prefer to pay. Subscription-based models work well for predictable revenue, while feature-based pricing lets you monetize premium capabilities.
Beyond choosing a subscription model, clearly define:
- Term length (monthly or yearly subscriptions) and renewal conditions
- Upgrade/downgrade policies and their financial implications
- Late payment consequences and grace periods
- Refund policies and conditions
Flexible payment structures can give you a competitive edge. Instead of sticking to a fixed price, create a negotiation range. Besnik Vrellaku, Founder and CEO of the LinkedIn automation tool Salesflow, considers this tactical approach essential to successful contract negotiations:
"Having a 'delta'—the difference between your starting price and your target price—is a vital part of the negotiation strategy. By starting higher, you ensure there's room to compromise without losing the overall value of the deal. This is fundamental to successful negotiations, and it's a simple yet powerful tactic that works well for us."
Some SaaS founders also tie pricing to customer success:
Yechiel Gartenhaus, founder of loyalty and payment app Clavaa, uses tiered pricing to align with customer success: "For our white-label loyalty customers, pricing flexibility is key—we structure tiered SaaS agreements where higher usage unlocks better rates, ensuring alignment with their growth."
Structuring pricing to align with customer success can be a powerful differentiator. A well-designed pricing model—whether tiered, usage-based, or custom for enterprises—can boost customer satisfaction and drive long-term revenue.
5. Service Level Agreements (SLAs) and uptime guarantees
SLAs set minimum performance standards for software reliability.
Tanya Van Gastel, Founder of AI Sheets, a platform that brings GPT formulas into Google Sheets, noticed how SLAs are often the most in-demand terms. "Enterprises often push for stronger SLAs or compensation if there's downtime."
Common Paper’s Contract Benchmark report also highlights that 39% of contracts include an SLA.
Based on how important it is, highlight the following:
- Service availability guarantees (typically 99.9%)
- Problem response times
- Minimum performance standards
- Service credits for potential service interruptions
Be careful not to overpromise. State what counts as "downtime," when scheduled maintenance will happen, how serious different problems are, and what kind of make-good (like account credits) customers receive if your service falls short.
6. Termination and exit strategy
Every relationship needs clear rules about how it can end. Your termination clause outlines when and how either party can walk away from the agreement.
According to Tanya's experience: "Some customers want flexibility on termination, asking for shorter contracts or opt-out clauses."
Cover:
- Rights to terminate
- Notice periods
- Data migration support
- Automatic renewal clauses
- Post-termination data handling
Avoid vague termination clauses like:
❌ 'Either party may terminate with notice.'
This can lead to disputes over refunds, liability, or post-termination support. Instead, use clear terms:
✅ 'Either party may terminate with 30 days' notice. Customer data will be available for export for 60 days post-termination.'
While it might seem counterintuitive, making it easier for customers to leave can actually improve retention rates and customer trust. When prospects don't feel locked in, they're often more comfortable signing longer-term agreements.
Besnik emphasizes the importance of relationship-based retention over contractual lock-in:
"Offering reasonable exit options, whether through short notice periods, non-auto-renew clauses, or monthly contracts, demonstrates confidence in the product's value. Customers should stay because they see results, not because they feel trapped."
This philosophy of "earn your customers every day" creates stronger, more honest vendor relationships and can reduce friction during the initial contract negotiation.
Lastly, address what happens post-termination: How long will data be retained? Will customers get export tools? Are there fees for data extraction services?
Best practices of SaaS contracts for higher success rates
The following best practices come from SaaS founders and sales leaders who send contracts daily. Through real-world deals, legal pushback, and sales objections, they’ve developed proven strategies to keep contracts smooth and revenue steady.
Tailor the contract to customer size and industry needs
A one-size-fits-all SaaS contract slows deals down. A $99/month SaaS subscription doesn’t need the same legal scrutiny as a $500K enterprise deployment—so why structure contracts the same way?
Tanya has refined this approach through hundreds of customer agreements:
- For SMBs: Keep SaaS contracts simple—short, clear, and easy to accept. Sometimes, a click-to-accept SaaS agreement is all that’s needed.
- For enterprises: Expect sales negotiations. Custom SLAs, legal reviews, and compliance clauses are standard.
- For regulated industries: Healthcare, finance, and similar sectors require extra data security, audit, and data protection language.
A flexible approach lets you close deals faster with smaller clients while still meeting the rigorous requirements of enterprise customers. Create a tiered contract system with increasing levels of customization based on deal size and customer industry.
Be creative about overcoming customer objections
Standard SaaS contract negotiations often default to binary choices—grant the client’s request or push back. But the best negotiators look for structural solutions that balance short-term wins with long-term scalability.
Take Yechiel’s experience:
“One enterprise client wanted exclusive industry rights to our white-label loyalty platform, which would have restricted our market. Instead, we structured a first-mover advantage agreement—giving them a 6-month exclusivity period in their region before opening it to competitors. This gave them a competitive edge while ensuring we could scale.”
Rather than a hard “no,” he reframed exclusivity as a temporary advantage, preserving his growth runway while still offering the client a market differentiator.
Pro tip: build negotiation buffers directly into their pricing strategy. Besnik takes a similar approach:
“If a customer is particularly difficult or negotiable, we sometimes add more terms to the contract than we originally planned. This could involve increasing the number of clauses or conditions, creating additional flexibility for the customer, or offering more to balance out a negotiation. For example, if we know a customer wants to negotiate a specific price, say, $30 per seat, we might initially propose a higher price, like $40, knowing that we can settle somewhere in the middle, such as $35. This creates room for negotiation and ensures we don't lose margin unnecessarily.”
When prospects present rigid demands, explore phased rollouts, revenue-sharing tiers, or region-specific adaptations—turning potential deal-breakers into deal-makers.
Make the contract customer-friendly without sacrificing legal protection
Prospects hesitate to sign not because of price but because of uncertainty. A customer-friendly contract minimizes friction by using clear language, fair terms, and flexibility while still protecting the business.
Tanya also prioritizes clarity:
“No one likes reading long, complicated contracts, so I try to keep them as clear and fair as possible. Plain language helps—there’s no need for excessive legal jargon. I also make sure the terms aren’t too one-sided. If we need special clauses for a customer, we add them as an appendix rather than cluttering the main agreement. The goal is to protect the business while making sure customers feel comfortable signing.”
For SMBs, restrictive terms like auto-renewal traps or excessive penalties can kill deals because they create hesitation. A founder or CFO scanning the contract sees red flags—hidden fees, unclear cancellation terms, or legalese that suggests a long-term commitment they might not be able to escape. The result? They delay signing, request legal reviews, or walk away entirely.
Yechiel avoids this entirely:
“A major focus for us is avoiding lock-in clauses that hurt small businesses—instead, we emphasize value-based retention, meaning merchants stay because they see results, not because they’re stuck in restrictive contracts.”
Instead of forcing commitment, design contracts that earn retention—removing unnecessary friction while reinforcing trust.
Turn contract negotiations into a positive, productive conversation
When handled correctly, SaaS contract negotiations strengthen trust and reinforce the value of your offering. Instead of taking a defensive stance, approach negotiations as a collaborative process where both sides align on goals rather than argue over terms.
As Sam puts it:
“To handle difficult negotiations positively, we:
- Listen actively to customer concerns, clearly explaining reasons behind specific terms.
- Remain open to reasonable adjustments without compromising essential protections.
- Emphasize partnership and mutual benefit, highlighting how terms protect both parties’ interests.
- Keep discussions solution-focused, always looking for creative ways to satisfy customer needs without sacrificing our core terms.”
Framing contract discussions around shared success turns potential deal-breakers into opportunities for alignment—closing contracts faster while keeping relationships strong.
Design contract provisions that naturally lead to upsell opportunities
Instead of forcing upsells through aggressive sales tactics, build in natural upgrade paths that incentivize growth. The key is to align pricing and contract provisions with customer success so that scaling their business also means deepening their relationship with your product.
Usage-based pricing, expansion clauses, and premium support upgrades all create pathways for upselling. Yechiel applies this principle at Clavaa:
“A key upsell mechanism in Clavaa’s contracts is our ‘Growth Bonus’ pricing tier—as businesses increase customer engagement through our loyalty program, they unlock additional marketing features and reduced transaction fees. This encourages merchants to actively drive customer participation, which not only benefits them but also expands our platform’s usage. This structured incentive has led to 30%+ of our merchants upgrading within six months.”
Create a contract template to streamline deals
Starting every SaaS contract from scratch is inefficient. A contract template eliminates redundant work, ensures consistency, and reduces legal bottlenecks—so you can close deals faster.
Qwilr’s free SaaS contract template gives your team a reliable and customizable foundation, with key provisions to get you started.
If you’re looking for something a little more formal, Qwilr has you covered. Use the Agreements feature to attach a plain-text and formal contract alongside your engaging SaaS proposal. You can create a contract from scratch or use one of the Qwilr agreement templates.
Buyers can then accept your proposal, sign the contract and make payment all on one document.
No more scrambling to rewrite terms or double-check compliance every time a new deal comes in.
Instead, tailor key details—like pricing, service levels, or optional add-ons—without risking contract inconsistencies.
Close deals faster by automating SaaS contract management
A contract is a part of your sales engine. That’s where Qwilr goes beyond PDFs. Organize and track multiple SaaS contracts in one place, so nothing gets lost in email threads.
Qwilr lets you:
- View real-time analytics—see when a prospect opens, views, and engages with the contract
- Collect e-signatures instantly, eliminating delays
- Take payments on acceptance with QwilrPay powered by Stripe—so customers can sign and pay in one seamless step
With Qwilr, every deal is structured for speed—reducing admin work and helping sales teams close faster while ensuring compliance.
Every extra day a contract sits unsigned is revenue left on the table. Don’t let legal bottlenecks slow you down—simplify your sales process with Qwilr today.
About the author
Kiran Shahid|Content Marketing Strategist
Kiran is a content marketing strategist with over nine years of experience creating research-driven content for B2B SaaS companies like HubSpot, Sprout Social, and Zapier. Her expertise in SEO, in-depth research, and data analysis allow her to create thought leadership for topics like AI, sales, productivity, content marketing, and ecommerce. When not writing, you can find her trying new foods and booking her next travel adventure."
