Don’t Miss These 4 Key Terms When Reviewing SaaS License Agreements

If you’re a CFO or COO at a growing company, you’ve probably seen an uptick in the number of SaaS (software as a service) tools used by your company, as the prevalence of those tools has exploded. With that uptick also comes an increase in the number of License Agreements entered for those tools. Those agreements can quickly pile up, deals slow down, and you’re left wondering which terms actually matter enough to push back on, particularly when the vendor states that they are “non-negotiable.” 

Here is what most mid-market companies don’t realize: when vendors say their terms are “non-negotiable,” they usually mean “please don’t send us a 47-point redline.” What they’ll actually consider? Two or three targeted changes that address your biggest risks. 

After negotiating thousands of vendor agreements for private equity firms and their portfolio companies, we’ve learned which battles are worth fighting and how to tactfully approach them. Let us walk you through some of the terms that consistently move the needle. 

1. Confidentiality/Data Protection 

This is an area where we often see a big gap between what companies need and what vendors offer. Many SaaS license agreements include barebones confidentiality and data protection terms, or worse, none at all. 

If the vendor is handling your customer data, employee information, or other sensitive information, the agreement needs to spell out exactly how that information is stored, secured, accessed, and used. You also need clear answers on data ownership (including any AI-generated outputs) and what happens to your information when the relationship ends. Push for clear deletion timelines upon termination and explicit limitations on how the vendor can use your information. 

Why does this matter? Beyond the obvious compliance and security risks you’re trying to address (and costs involved if issues arise), the vendor’s response to your data protection requests tells you everything about their actual security posture. If they push back on reasonable protections, that’s a red flag about their internal capabilities and whether they can actually comply with what you are asking for contractually.  

These aren’t unreasonable asks – they’re standard practice for vendors who take confidentiality and data protection seriously. 

2. Autorenewal Traps 

Here’s a clause that catches finance teams off guard every year: automatic renewal provisions that lock you into another 12-month term with full upfront payment and no refund rights. 

The scenario plays out like this: your team is lukewarm on a vendor’s service. You’re planning to evaluate alternatives, but renewal dates slip through the cracks during a busy quarter. Suddenly, you’re locked into another year of fees for a tool that isn’t delivering value. 

If the vendor won’t remove auto-renewal entirely (and many won’t), negotiate better exit terms for periods beyond the initial commitment. At minimum, secure the right to terminate with 30-60 days’ notice and obtain a prorated refund. This gives you flexibility without accidentally leaving thousands of dollars on the table. 

3. Limitation of Liability 

This is where standard SaaS agreements get truly one-sided. Most vendors cap their liability at 12 months of subscription fees and completely exclude indirect or consequential damages. 

Let’s illustrate what this means: if you’re paying $50,000 annually for a tool and the vendor’s data breach costs you $500,000 in customer notifications, legal fees, and lost business, you’re on the hook for at least $450,000. That’s the reality of accepting boilerplate limitation of liability terms. 

You don’t need to fight for unlimited liability coverage broadly (and vendors won’t agree to that anyway), but you should carve out specific exceptions for the risks that matter most. For example, we typically push for the vendor to have uncapped liability exposure for intellectual property infringement claims related to their tool. We also push for higher caps for breaches of the data protection terms. Depending on how you’re using the tool, you might need additional carve-outs for specific situations. 

4. Payment Terms  

Often, vendors include unbalanced payment terms, requiring things like full payment up-front, no refunds (even if the vendor breaches or terminates early), and large predetermined price increases upon renewal. Customers can get so focused on the dollar amount listed in the order form that they overlook these payment term issues that are quite costly in their own right.  

The Bottom Line on SaaS License Agreements

You don’t need to negotiate every term in a SaaS license agreement – that’s a recipe for deal fatigue and vendor frustration. However, you also can’t afford to blindly accept whatever lands in your inbox, especially when you’re processing 10, 20, or more agreements each month. 

The key is knowing which two or three terms create real risk for your business given how you’ll use the tool and what data your team will share. Get those protections in place, and you can move deals forward without leaving your company exposed. 

If you’re finding that contract review is becoming a bottleneck, or if you’re just not sure which battles are worth fighting, that’s exactly the kind of challenge we solve for mid-market, PE-backed companies every day. We’ve negotiated thousands of vendor agreements, and we know how to get vendors to “yes” on the terms that actually matter.

Discover The GTX Advantage 

Are you ready for faster deal cycles, fewer internal bottlenecks, and predictable legal spend? 

GTX Legal is a tech-enabled law firm that builds and runs the contracting engine for high-growth and PE-backed companies. We combine legal rigor, operational discipline, and flat-fee predictability to handle customer agreements, vendor contracts, and NDAs at scale. 

Modern business demands modern legal infrastructure. Talk to our team today to build yours.

This content is for informational purposes only and should not be construed as legal advice. For advice on your specific situation, please reach out to our firm to discuss.