10 SaaS Contract Red Flags Buyers Should Reject
SaaS vendors send the same hostile MSA to every customer. Enterprise buyers negotiate it. Small customers often don't realize they can. Here's what to fight.
Auto-renewal with 90-day Notice
You will forget. Push for 30 days or remove auto-renewal. Make them earn your renewal.
Uncapped Liability
Standard SaaS liability cap is fees paid in prior 12 months. Uncapped is a non-starter for any deal of meaningful size.
No SLA Credits
An uptime promise without financial penalties is marketing. Push for 99.9% availability with progressive credits: 10% refund at 99.5%, 25% at 99%.
Vendor Keeps Your Data
On termination, your data should be returned in usable format and permanently deleted. Vendors love to keep "aggregated" or "anonymized" data — narrow or eliminate that.
One-way Indemnification
They should indemnify you for their IP infringement and data breaches too. Make it mutual. PRICE ESCALATION OVER 7% PER YEAR — Cap renewal increases at CPI or 5-7%. Unchecked, your $50K contract becomes $75K in three years. VAGUE "FAIR USE" — If the vendor has sole discretion to define abuse, they can throttle or terminate whenever. Get specific thresholds.
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Decode My LeaseFrequently asked questions
Can I negotiate as a small customer?
Less leverage on price, but legal terms are usually negotiable regardless of deal size. Worst they can say is no.