Basics of SaaS (Software as a Service) Agreements

The abbreviation “SaaS” refers to ‘software as a service’. Agreements for software as a service are also commonly referred to as software subscriptions or software-on-demand agreements. All of these agreements involve contracts for software use via the internet. Read on to learn some basic information about SaaS agreements.

What are SaaS agreements?

SaaS agreements are contracts between software companies and end users that allow users to access software products via the internet. The SaaS agreement sets out certain terms for use of the software, and through the agreement, the end user will access the product online. A SaaS agreement usually involves repeated online access, rather than a downloaded or physical product sent to the end user.

How are SaaS agreements different from standard software licensing agreements?

Instead of a standard software licensing agreement, where the licensee would traditionally receive a physical product or download the product onto the licensee’s server, whereas with SaaS, the user does not need to download or install anything.

SaaS provides for on-demand user access via the Internet, freeing up server space and allows manufacturers to address updates, bugs, fixes, and other troubleshooting items seamlessly on an on-going basis. SaaS agreements can be for a specified time, perpetual upon payment of renewal fees, for a specified number of users, traditionally called “seats”, or some combination of those factors. SaaS agreements are generally subscription-based, which means the end user has the option periodically to renew the contract for another fee.

What is included in SaaS agreements?

SaaS agreements will usually have several sections, including but not limited to: Terms and Conditions or Terms of Service, Warranties, Restrictions, Service Level Agreement, Billing, Privacy, and Termination.

A primary feature of SaaS, attractive to most customers is the customer service. Beyond facilitating fixes of all customer complaints, questions, and issues into an on-going, up-to-date product offering, thereby addressing some customer concerns before they happen, many customers benefit from a specific Service Level Agreement, where the software company adheres to a tier system of very short response times, based on level of product failure. In healthcare, such product resolution response times can be critical to patient care.

Is SaaS right for your company?

There are numerous advantages to SaaS agreements, but these arrangements are not right for every company. It is important to weigh all your options before deciding how to license your product, under the guidance of a qualified professional. Hiring a licensing attorney who has experience in both standard software licensing and SaaS agreements is paramount to your success.

To begin learning about the ways SaaS agreements or software licensing can help your business, contact Larsen Law Offices, LLC, today. You can reach our office to schedule a consultation by calling (303) 520-6030.