Software EULA or Software as a Service Agreement

What does your software EULA or Software as a Service agreement say about your company?

Short answer: the agreement you send to close a deal telegraphs how serious and sophisticated your company is, before anyone reads a word about your product. A long, confusing one says “amateur”; a short, clear, fair one says “we do this all the time.”

When a software, SaaS, or other IT company sends its written software EULA or SaaS agreement to a customer to close a deal, it telegraphs a message about the company and its sophistication. As a software attorney, I think about this stuff.

The Wrong Message.

1. Is this company for real?
2. This contract seems too complex.
3. I don’t understand what they are providing and what we are responsible for.
4. I need to send this to legal or outside counsel.
5. I’ll read this later, maybe Friday.
6. It looks like they bought this on the web for $29.
7. I think they wrote it themselves.
8. I am not sure this company knows what they are doing.
9. Is this their first sale?

What Your EULA or SaaS Contract Should Telegraph.

1. They are serious about this.
2. I understand their pricing, licensing, and services model. It is very simple.
3. They are transparent about how they work and their revenue model.
4. Looks like they know what they are doing.
5. I bet they sell a lot of this.
6. Looks like they have vetted this agreement and will stand behind it.
7. This looks fair, and I am going to approve and sign it.
8. I don’t see any tricks.

Read your agreement and find out what it says before your customer does.

How to Fix the Message Your Paper Sends.

If you read your own agreement and hear the wrong message, the fixes are the same handful every time:

• Cut the length. A 25-page document for a straightforward subscription says “we don’t know what matters.” Most SaaS deals do not need it.
• Lead with the model. Make the pricing, licensing, and services model understandable in the first read: what they get, what they pay, for how long.
• Write in plain English. If the buyer’s procurement person cannot follow a clause without a lawyer, it goes to legal and your deal slows down.
• Be visibly fair. One-sided “gotcha” terms invite redlines and distrust; a balanced agreement gets signed.

Take This Quick Test.

Pull up your own customer-facing agreement and read it the way a buyer would. IBM and Oracle famously stripped their customer agreements down to a couple of plain-English pages because length and complexity were costing them deals. Ask the same question about your paper: would a buyer read this and think “simple and fair,” or reach for their lawyer? If it is the latter, that is what to fix.

For the foundational decision between an EULA structure and a SaaS subscription structure, see SaaS Agreement vs. Software EULA: Which Template Do You Need? And if you would rather have a clean, sophisticated SaaS agreement drafted than risk telegraphing the wrong message, that is exactly what our SaaS contract practice does.

Disclaimer:

This post is for informational and educational purposes only, and is not legal advice.