The Anatomy of a SaaS Service Level Agreement (SLA)

If you’re running a Software as a Service (SaaS) business, your customers will expect a Service Level Agreement (SLA) from you. This agreement promises your customer support services, offers different tiers of service (Amazon and Microsoft make a TON of money from their support services), and credits to the customer if your product fails to meet required service levels.

This post will give you a high level overview of SaaS Service Level Agreements, and what should be included in them.

  1. Definitions – As with most contracts you sign with clients, a Definitions section should lay out specific meanings of terms used throughout the agreement, specifically those that are exclusive to your company – like product names, unit names, etc.
  2. Support Service Responsibilities – This section lays out what you, as the SaaS provider, are going to do for your customers – including responding to support tickets, support phone calls, tiers of support, access to support portals (like ZenDesk), and fixing defects.
  3. Uptime – You can also specify what kind of uptime you are promising your customer (Amazon promises 99.95% uptime for their AWS instances).
  4. Service Levels – Lay out how response and resolution times will be measured based on the issue your customer is facing. Clearly define the severity level of the issue (1 = business critical, 2 = defects with workaround, 3 = minor error, etc.).
  5. Service Escalation – Lay out under what circumstances the issue your customer is facing would be escalated to another tier of support, perhaps your management team or the CTO.
  6. Remote Services – If your SaaS product offers remote services (such as screen sharing), you should lay out how your support team will handle this – and what kind of security you are promising if this is needed.
  7. Out of Scope Services – Clearly specify what would be out of scope of what your support team can provide your customers.
  8. Fees and Increases in Fees – As mentioned in the introduction, Amazon, Microsoft, and other companies make a ton of money off of support services with dedicated teams. I’ve personally seen bills north of $100,000 a month. If your SaaS offers higher tiered service packages, lay out how much your customer will be charged, and how the fees may increase over time.
  9. Support Requests – Identify how customers should get in touch with you for support – like opening a ticket, phone call, etc.
  10. Technical Contact – For some products, there can be a technical point of contact on both sides (yours and the customers) for easy communication without going through multiple people.
  11. Customer Obligations – Just like you are promising your customer support, the customer has to meet certain obligations as well. Here, lay out what those responsibilities are – including giving direct access, giving remote access, and any other cooperation that is expected of the customer.
  12. Service Credits – A main benefit of having a SLA to the customer is the promise of service credits should you fail to respond to a support request, of have a certain amount of downtime. This section lays out how much in service credits will be given to the customer based on the severity of the issue, and severity of your failure to address the issue. You should also lay out how these credits should be issued – such as credit on the bill, cash, etc.
  13. Additional Remedies for Service Level Failures – If you fail to meet the service levels or resolutions for any issue there may be additional remedies available to your customer. Lay those out here.

Let us Help.

This is a high level overview of what should be in a SaaS Service Level Agreement. There are many other nuances, specific to your company and product offering – and a good SLA should be drafted with the help of an experienced attorney.

Kader Law can help you understand what you need to do, guide you through internal and external company policies with our Outside General Counsel offering. If you’re interested in connecting, 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.