SHORT-Term or LONG-Term Commitments

Should I Make Short-Term or Long-Term Commitments to My SaaS Customers?

Short answer: in SaaS, keep your substantive commitments (functionality, features, support, pricing) short, a year or less, because the model is built to change. The customer’s subscription term is the one thing that is genuinely time-bound by design.

Have you thought about which parts of your SaaS customer commitments should be short-term and which should be long-term?

What Should Be Short-Term?

SaaS models are not perpetual (unlike a traditional perpetual software license). Functionality and features change along the way. That is expected. Keep your commitments on functionality, features, support, and pricing short in duration, a year or less, not multiple years. Things change, and if you commit contractually and then do not perform, that is a breach.

• Examples of long-term commitments customers request: price caps, support commitments, and feature or functionality commitments.

What Should Be Long-Term?

In the SaaS model there really are not many long-term commitments. The customer is buying a subscription, something time-bound by design. Do not make many long-term commitments; that is not the model. If you do, think it through, because things will change.

How to phrase the short ones.

You can still give the customer comfort without locking yourself in. A few drafting habits: commit to the function the customer is buying today rather than a roadmap; describe support and security in a policy you can update, referenced by the contract; and if you grant a price cap, scope it to a defined term and a defined percentage. That way the customer gets predictability where it matters, and you keep the flexibility the SaaS model depends on.

Think short-term in your SaaS contracts and keep the flexibility in your model. That is what SaaS is all about.

For the foundational distinction that drives every SaaS contract dispute, see SaaS Indemnity vs. Breach of Contract: What’s the Difference? And on what belongs in a policy vs. the contract, see Contract or Policy?

Disclaimer: This post is for educational and informational purposes only and does not constitute legal advice.