Including key terms in your SaaS contract can determine how you generate revenue, manage customer relationships, and protect your position in the market.
Our commercial law solicitors work closely with SaaS providers to ensure their agreements are not only legally sound but also commercially strategic. With legislation such as the Digital Markets, Competition and Consumers Act 2024 now shaping how subscription contracts must operate, there’s no better time to review your terms.
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Key terms every SaaS contract should cover
Well-structured SaaS contracts are essential to the health and growth of your business. Whether you're refining your pricing model, protecting recurring revenue, or responding to changes in law, a few key clauses do most of the heavy lifting.
Our commercial technology solicitors consistently identify five areas where well-drafted terms can make the most significant difference:
- Subscription renewal
- Termination rights
- Licence and user limits
- Price increases
- Charging for new features
Getting key SaaS contract terms right can transform your contract from a fundamental legal safeguard into a commercial advantage, giving you the flexibility to scale, the clarity to manage risk, and the leverage to negotiate effectively.
If you're approaching this from a consumer-facing perspective, it's essential to understand the basics of SaaS contract negotiation to appreciate how transparency and fairness can impact your relationship with end-users.
For broader support, it’s worth considering how regularly updating your commercial contracts can keep your terms aligned with your business objectives, how understanding standard commercial contracts can help you navigate client expectations more confidently, and how strong contract lifecycle management processes can reduce legal risk and improve deal flow across your organisation.
Subscription model and auto-renewal
Your subscription structure is the starting point of your SaaS relationship. You need clear terms around renewal, billing cycles, and how a contract continues unless the customer opts out.
If you are a CRM platform, for example, you should structure your auto-renewal clauses to match your billing cycle – monthly or annually – and specify how and when notice must be given to cancel. Under the DMCCA, you are now required to provide clear, prominent information on auto-renewal terms and make cancellations as easy as the initial sign-up.
If you include a free or concessionary trial period, the DMCCA also obliges you to notify customers before that offer ends, and the first payment is taken. In addition to compliance, this helps avoid disputes and supports client retention.
It is essential to understand what constitutes acceptable and unfair terms in auto-renewal contracts and how this affects the fairness and enforceability of your SaaS agreements.
Termination rights and flexibility
Termination provisions are too often overlooked but are critical to business continuity. While flexibility might appeal to clients, allowing termination “at any time” exposes your revenue to unpredictable churn.
If you're a legaltech provider, you might offer a rolling monthly plan for premium clients but reserve 12-month minimum terms for discounted licences. This structure supports cash flow while providing options at different price points.
You should always include the right to terminate in cases of material breach or non-payment. When price increases are involved, you may consider offering customers a short window, such as seven days after notice of the rise, to cancel, provided they follow the correct cancellation process.
When drafting these clauses, it’s worth considering how to terminate a commercial contract in a way that balances legal protection and client clarity.
Minimum users and base fees
If your revenue model depends on user numbers or usage levels, it’s essential to reflect that in your contract.
If you're running a SaaS tool licensed per user, you should consider whether to set a minimum user number. You can offer discounts for volume increases or require advance notice before any reductions can take effect. Some businesses also combine a minimum base fee with variable usage costs to maintain consistent revenues while supporting client flexibility.
You should also consider how your licence structure affects profitability, client engagement, and product adoption.
Pricing and increases
Few clauses generate more friction than price increases, especially when they’re introduced without clear notice or justification. Customers are far more likely to accept price changes when they’re notified in advance and when those increases follow a predictable structure.
If you’re providing a financial or analytics platform, you could reserve the right to review pricing annually and tie adjustments to a formula, such as the Retail Price Index or the Consumer Price Index, or an IT sector-specific index.
You might also pass through increased overheads from third parties, such as hosting providers or cloud infrastructure vendors, as long as this is disclosed in your contract.
When building this clause, consider how you will handle price escalation in commercial contracts and whether the structure provides sufficient flexibility to remain profitable.
Charging for new features and innovation
New features are both a differentiator and a monetisation opportunity – but only if your contract allows you to charge for them.
If you're a platform building new integrations, reporting tools, or AI features, you should specify that the base subscription covers existing functionality and that new modules may be priced separately. This is especially relevant in specialist markets where user growth is limited and the route to greater profit lies in expanded functionality.
You should review how you approach new features in SaaS contracts and whether your agreement protects your ability to commercialise innovation without renegotiating your whole fee model.
Trial periods and conversion
Offering a trial can ease adoption, but it comes with compliance responsibilities, especially under the DMCCA.
If you provide a 14-day free trial, your contract must explain when and how it transitions into a paid plan, and your client must receive a reminder before payment begins. Automatic continuation is only lawful where the customer gives explicit and active consent.
To reduce disputes, many SaaS providers also limit trial access to core features and prompt users to upgrade once value is demonstrated.
Put your contract to work
A firm SaaS contract is not just a legal safeguard – it’s a tool that supports growth, protects your recurring revenue, and builds trust with clients from the outset.
The arrival of the Digital Markets, Competition and Consumers Act 2024 means your agreements need to do more than function commercially – they must also comply with new consumer-focused rules. Your ability to manage renewals, trial conversions and cancellations fairly is now a legal obligation as well as a commercial one.
Our commercial law solicitors help SaaS businesses across the UK review and redesign their contracts to meet both legal and commercial goals. Whether you’re updating for compliance or scaling your pricing model, we can help you ensure your SaaS agreements are future-proof, compliant and built for commercial success.
