What should a SaaS service level agreement include?
Written by For Founders Law, a Toronto firm licensed by the Law Society of Ontario. About us
Short answer
A SaaS service level agreement sets measurable commitments for uptime and support, says how they're measured, and says what the customer gets if you miss them, usually service credits. A workable SLA defines downtime, excludes scheduled maintenance and causes outside your control, sets support response times by severity, and states that credits are the customer's main remedy for missing the targets.
A service level agreement turns “the service will be reliable” into numbers. Business customers ask for one in procurement, and it’s usually an exhibit to your SaaS agreement.
What are the core parts?
| Part | What it says |
|---|---|
| Availability target | The percentage of time the service will be available in each month |
| Measurement | How availability is measured, by whom, and over what period |
| Exclusions | What doesn’t count as downtime |
| Support levels | Response times by severity, and support hours |
| Service credits | What the customer receives for a miss, and how to claim it |
| Exclusive remedy | Whether credits are the customer’s only remedy for missing the target |
How much uptime should I promise?
Only what your infrastructure and team can actually deliver and measure. Each extra “nine” cuts allowed downtime sharply: 99.9% allows roughly 43 minutes a month, while 99.99% allows about 4 minutes. If your cloud provider’s own commitment is lower than the one you give customers, you carry the gap.
What should be excluded from downtime?
Common exclusions: scheduled maintenance with notice, emergency security maintenance, problems caused by the customer’s systems or misuse, third-party services outside your control, beta features, and events covered by your force majeure clause. Define “downtime” precisely, for example as the core service being unavailable to all users, not one slow feature.
How do service credits work?
Credits are a percentage of the monthly fee, rising with the size of the miss, and applied against future invoices. Typical terms: the customer must claim within a set period, credits are capped at a portion of the monthly fee, and there’s no cash refund. Large enterprise customers may also ask for a right to terminate after repeated misses.
Say whether credits are the sole and exclusive remedy for missing the availability target. If you don’t, a customer may argue for damages as well. Credits should sit inside your limitation of liability.
What about support response times?
Commit to response times, not resolution times. Set severity levels with clear definitions, for example a full outage versus a minor bug, and say which hours and channels each level covers.
Can my marketing page promise more than the SLA?
Be careful. Uptime and performance claims in marketing are representations to the public, and the Competition Act prohibits false or misleading ones. A statement about a product’s performance that isn’t based on an adequate and proper test is also reviewable conduct under section 74.01(1)(b). Keep your status page, website and SLA consistent. For consumer products, Ontario’s Consumer Protection Act, 2002 also applies.
What to do next
We draft SaaS agreements with SLA terms, and review customers’ SLA requests as a contract review, at fixed fees on our fees page.
This guide is general information about Ontario and Canadian law, not legal advice for your situation. To talk through what to commit to, book a free 15-minute consult.