When negotiating a deal to sell your Software-as-a-Service (SaaS) product to an Enterprise company, you must keep some key considerations in mind. The Enterprise will likely push their weight against your smaller company in negotiating terms – but if you go in prepared with what to expect, you’ll have a better chance of closing the deal in a quicker timeline. This post will outline 6 key considerations in Enterprise SaaS Sales Deals.
1. You’ll be negotiating their Master Services Agreement (MSA)
Enterprise companies have defined procurement systems, and they have a host of MSA’s for different types of services they procure. It’s (highly) unlikely that an Enterprise will agree to your paper. Go in expecting that they’ll be sending you an MSA, and you’ll have to add your most important Terms in as an Exhibit to the document.
2. Expect Strict Data Privacy Requirements (and Agreements to Sign)
Data Privacy is an increasingly important topic, and Enterprise companies don’t want to deal with heavy fines or violations. The chain of liability nature of Data Privacy regulations (where a breach by you is a breach by them) means that your Enterprise customer will require you to sign a strict Data Privacy Agreement, along with specific instructions on how they want you to handle their data. Review these carefully, and DO NOT sign if you can’t do what you’re saying you’re doing.
3. Expect Negotiations in Indemnification, Limitation of Liability, and Termination Provisions
Enterprise companies know that you want their money, and so they’ll likely request you that you indemnify them entirely for third-party infringement claims (without doing the same back for you), set no limitation of liability for specific carve-outs, and allow them to terminate for convenience while getting a full refund back. Negotiate these terms – some of the asks are far reached, and if you push back with a sound case – you can come to a mutual agreement.
5. Expect Strict Service Level Agreement (SLA) Requirements
Enterprise’s demand 99.9% uptime, and they’ll often send over a standard SLA as part of the MSA they send over to you. Do not commit to anything you can’t commit to. These are sometimes negotiable, and you must be able to lay out and define what your actual service level commitments are.
6. Expect a Longer Sales Cycle
Enterprise customers are working on a bunch of different sales and vendor deals at the same time. Their Legal team may not always be as quick as yours, so expect a longer sales cycle – more often held up by Legal. Mitigate this by finalizing all business terms ahead of time, before you get into the MSA negotiations. That way, business review is done – it’s up to Legal to close the deal.
Let us Help
This post is just a high level overview of some key considerations in an Enterprise SaaS deal.
Kader Law regularly negotiates with Enterprise customers on behalf of our Clients. There are many more nuances and specifics around these types of negotiations, and you should have an experienced attorney help you through drafting the right one to make sure you and your customers are protected.
If you need assistance negotiating Enterprise SaaS deals, feel free to contact us.
This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader.