SaaS agreement checklist: Essential clauses and best practices

A software as a service (SaaS) agreement is a contract between a vendor and a customer that defines how cloud-based software will be delivered and supported. Using a checklist helps you surface hidden fees, unclear responsibilities, and security gaps before you commit to a subscription.

Signing without a structured review can lead to unexpected costs, weak data protections, and renewal terms that are difficult to escape. A clear SaaS agreement checklist helps you avoid these issues and ensures the contract supports your operational, financial, and compliance needs from day one.

What is a SaaS agreement?

A SaaS agreement is a contract that grants customers access to cloud-hosted software through a recurring subscription. Unlike traditional software licenses that rely on local installation and one-time purchases, SaaS agreements provide access to applications hosted on the vendor’s servers and supported through ongoing service.

This subscription model shifts software from a capital expense to an operating expense and typically includes updates, maintenance, and support as part of the service. SaaS contracts also differ from on-premise software agreements because you receive usage rights rather than ownership, and access ends if you stop paying. As the global SaaS market grows, these agreements play a critical role in defining responsibilities, protections, and service expectations for both parties.

Key parties involved

Every SaaS agreement involves several stakeholders who each play a distinct role in how the software is delivered and used.

• Service provider: The vendor that develops, hosts, and maintains the software. They’re responsible for uptime, security, updates, and support according to agreed service levels.
• Customer: The business subscribing to the software service. They manage user access, maintain data accuracy, comply with acceptable use policies, and pay subscription fees on time.
• Third parties: External entities such as integration partners, payment processors, or data sub-processors. Agreements should clarify how these parties access customer data and who is responsible for their actions.

Essential components of a SaaS agreement checklist

A SaaS agreement checklist helps ensure the contract covers the terms that matter most—what the service includes, how much it costs, the protections you can expect, and the vendor’s responsibilities. Reviewing these components in advance reduces the risk of gaps, hidden fees, or unclear obligations that could affect your operations later.

Service description and scope

Your agreement should clearly outline what the vendor will provide and what falls outside the basic subscription.

• Detailed service specifications: A comprehensive list of functionalities, technical capabilities, and performance standards the software will deliver throughout the contract term
• Features included vs. add-ons: Clear delineation between base subscription features and premium capabilities that require additional fees or upgraded tiers
• User limitations and scalability options: Restrictions on the number of users, data storage, API calls, or transactions, plus how you can expand capacity as your needs grow

These details help prevent confusion about what you're actually paying for and reduce the risk of unexpected charges.

Pricing and payment terms

Payment clauses determine your total costs and how the vendor can change pricing over time.

• Subscription tiers and pricing models: Plan levels, what each includes, and whether pricing is per user, per feature, or usage-based
• Payment schedules and methods: How often you'll be billed, acceptable payment methods, and any discounts for longer commitments
• Auto-renewal clauses: Whether your subscription renews automatically and how much notice you must provide to cancel
• Price increase notifications: How far in advance the vendor must notify you of rate changes and whether you can cancel without penalty if prices rise

Understanding these terms helps you budget accurately and protects you from unexpected financial obligations.

Service level agreements (SLAs)

Service level agreements (SLAs) define the performance standards you can expect and what happens when the vendor falls short.

• Uptime guarantees and availability metrics: The minimum percentage of time the service must operate reliably, often expressed as 99.9% uptime
• Performance benchmarks: Targets for response times, load speeds, processing capacity, and other measurable performance indicators
• Support response times: How quickly the vendor acknowledges and addresses issues, often tied to issue severity
• Remedies for SLA breaches: Service credits, refunds, or other compensation you'll receive if the vendor fails to meet agreed performance levels

Strong SLAs give you leverage when service quality drops and help you quantify the vendor’s accountability.

How to use a SaaS agreement checklist

While it's not a replacement for reading the contract itself, a SaaS agreement checklist helps ensure all critical terms are fully documented and mutually understood before you commit. It’s a practical tool for surfacing gaps, aligning expectations, and reducing the risk of disputes later.

During negotiations, you can walk through each item on the checklist to confirm it appears in the agreement and that both parties agree on how it will work in practice. This gives the provider a chance to explain their processes and gives you space to request adjustments based on your operational needs.

Data security and privacy provisions

Data protection clauses determine how your information is handled, who controls it, and what happens if something goes wrong. Clear terms help you maintain ownership of your data, navigate transitions between vendors, and safeguard sensitive information throughout the relationship.

Data ownership and control

Your agreement should explicitly state that you retain ownership of all data you upload, create, or store in the platform. Vendors sometimes claim broad rights to customer data for analytics or product improvement, so clear ownership language helps protect your intellectual property and sensitive information.

Data portability rights let you export your information in usable formats if you switch providers or need backups. The contract should specify file formats, export timeframes, and any fees. Without these provisions, you risk vendor lock-in or limited access to your own records.

Data deletion requirements outline what happens to your information when the contract ends. The vendor should commit to removing your data from all systems within an agreed timeframe, including backups and archives, rather than only deleting production files.

Security measures and regulatory compliance

Encryption standards protect your data both in transit and at rest. Look for agreements that specify encryption protocols such as AES-256 for stored data and TLS 1.2 or higher for transmitted data. The vendor should also outline access controls, authentication requirements, and other technical safeguards.

Vendor compliance certifications demonstrate that the vendor follows recognized security frameworks. SOC 2 Type II reports validate security controls, while ISO 27001 and similar standards indicate a broader information security program. If you work with sensitive data, confirm any required compliance (such as HIPAA or GDPR) is supported.

Breach notification procedures detail how quickly the vendor must alert you to a security incident and what information they will provide. Many regulations require notification within specific windows, and your contract should reflect those expectations. Audit rights allow you or an approved third party to verify that the vendor adheres to the agreed-upon security practices.

Legal and risk management considerations

Legal protections clarify who is responsible for what and determine your recourse when something goes wrong. These provisions help you understand your rights, define the vendor’s obligations, and limit exposure to financial or operational risks.

Liability and indemnification

Limitation of liability clauses cap how much the vendor will pay if their service causes damage to your business. Many vendors limit liability to the fees you paid in the previous 12 months or less, which may not reflect the potential impact of an outage or breach.

Indemnification provisions specify who pays legal costs and damages if a third party brings a claim related to the software. Vendors should indemnify you for intellectual property infringement claims tied to their platform, while you may indemnify them for issues related to how your team uses the service.

Insurance requirements outline what coverage the vendor must maintain for errors and omissions, cyber incidents, and other risks. Requesting proof of insurance helps ensure the vendor has resources to support these obligations.

Intellectual property (IP) rights

IP ownership terms clarify what belongs to you and what belongs to the vendor. You retain ownership of your data, custom configurations, and content you create in the platform, while the vendor owns its underlying software and infrastructure.

License grants define exactly how you can use the software, including user limits and restrictions on activities such as reverse engineering or reselling access. Understanding these terms helps you avoid unintentional misuse.

Confidentiality obligations protect sensitive information exchanged during the relationship. Vendors must safeguard your business data and technical details, while you may be required to keep proprietary vendor information confidential as well.

SaaS agreement pitfall scenarios

To illustrate why a SaaS agreement checklist matters, here are two scenarios where unclear or unfavorable terms created avoidable issues:

Scenario 1: The hidden price increase

A marketing agency signed a three-year contract with a project management platform without closely reviewing the pricing terms. The agreement allowed annual price increases of up to 15% with just 30 days’ notice. In year two, the vendor raised rates by 12%, adding $8,400 to the agency’s annual costs.

Canceling wasn’t practical because the contract imposed an early termination fee equal to the remaining contract value. The agency absorbed the unexpected increase, cut other software expenses, and delayed a planned hire. They eventually negotiated a compromise by extending the contract at the original rate, though this committed them to the platform for five total years.

This scenario could have been avoided by negotiating a price lock for the contract term or capping annual increases at a lower percentage.

Scenario 2: The data hostage situation

A healthcare startup used a patient scheduling platform for two years before deciding to switch providers. When they requested their data, they discovered the contract guaranteed exports only in the vendor’s proprietary format, which would require costly custom work to convert.

The vendor offered to provide standard CSV exports for a $5,000 fee, leaving the startup to choose between paying the fee or manually rebuilding years of data. They paid the fee to avoid disrupting patient operations but later negotiated a partial credit and filed a complaint with their state attorney general.

This situation underscores the importance of confirming data portability, export formats, and associated costs before signing any SaaS agreement.

SaaS contract management best practices

Managing the full lifecycle of your SaaS agreement helps you avoid implementation delays, stay ahead of renewal deadlines, and make future transitions smoother. These best practices strengthen your oversight and support clearer communication with vendors throughout the relationship.

Implementation and onboarding

Your contract should outline how the vendor will help you get up and running after you sign.

• Timeline expectations: Define milestones for account setup, data migration, configuration, and go-live dates. Including penalties for missed deadlines can help prevent delays.
• Training and support provisions: Negotiate for a set number of training sessions in formats your team prefers. The contract should also guarantee documentation and define support availability during onboarding.
• Integration requirements: Identify systems that must connect before signing. The agreement should specify who builds and maintains integrations, what API access you’ll receive, and the support available for troubleshooting issues.

Clear implementation terms reduce friction during setup and help ensure the software meets operational needs from day one.

Termination and exit strategy

Planning your exit before you begin protects you from getting locked into an unworkable relationship.

• Termination conditions and notice periods: Review the circumstances that allow you to exit early without penalties, such as repeated SLA breaches or significant price increases. Standard notice periods range from 30 to 90 days, but you may be able to negotiate shorter windows for cause-based termination.
• Data retrieval and transition assistance: Request your data in standard formats such as CSV or JSON. The vendor should provide limited access during your transition and support your migration to another platform.
• Post-termination obligations: Confirm when the vendor must permanently delete your data from all systems, including backups. Some obligations, such as confidentiality, should continue after the contract ends.

A clear exit plan strengthens your negotiating position and prevents disruption when the relationship ends.

Red flags to watch for

Some contract terms should prompt a closer look before you sign. These red flags often signal that a vendor is prioritizing their interests over yours.

Unfavorable auto-renewal terms

Difficult cancellation windows or long renewal cycles can trap you in extended commitments. Watch for clauses that require notice far in advance of renewal dates or automatically extend the contract for multiple years.

Excessive limitation of liability

Some agreements cap the vendor’s financial responsibility at very low amounts, such as a single month of fees. If a major outage or breach causes real business harm, this level of protection may not be sufficient.

Unclear data ownership provisions

Vague terms can leave room for broad vendor rights to analyze, share, or reuse your data. Make sure the agreement states clearly that you own the information you input and create.

Missing SLA remedies

Without defined consequences for poor vendor performance, uptime commitments carry little weight. A reliable vendor should offer service credits, refunds, or paths to termination if they repeatedly fail to meet service levels.

Use Ramp to streamline SaaS contract management

Ramp offers tools that help you control spending, simplify SaaS procurement, and maintain visibility into all your software agreements.

With Ramp, you can:

• Consolidate the request and approval process: Keep contractual commitments visible and manageable from one platform
• See savings opportunities: Gain visibility into spending to uncover unused subscriptions, licenses, and memberships
• Automate approval workflows: Build automated workflows that integrate with your existing tools
• Get the best deals: Benchmark quotes against anonymized transactions to negotiate pricing confidently
• Integrate seamlessly: Connect Ramp with your ERP and finance systems to unify supplier data and reduce manual work

Explore Ramp Procurement to see how it can help you optimize your SaaS investments and get more value from your software subscriptions.