Sales · B2B sales

Sales contract or MPA/MSA for B2B SaaS sales?

John Sturdivant CEO, Founder at WorkforceAlpha

May 25th, 2016

I'm starting to sell a B2B SaaS product, and wondering if I should go through the expense of drawing up my own custom sales contract to try and use for all sales, or if I should go with a reviewed/modified Master Purchase/Sales Agreement from my customer each time?

My concern is most of my customers (>1000 employees) will already have their own MPA/MSA that I'll have to sign anyway, so is it redundant and wasteful to create my own sales contract? On the other hand, it could get expensive if I have to alter MPA/MSAs each sale.

Curious if anyone else has run into this before. Thanks!

Will Nankivell Sales Consultant at Fixt Inc.

May 25th, 2016

You will need your own MSA eventually.  For now, use the large enterprises MSAs, it will be much faster to get it through their legal teams.  Write your SaaS offering as an SOW under their MSA.  Statements of Work templates are readily available. Keep your SOWs as short as possible, include term, Service Description, Deliverables, Roles and Responsibilities and of course Pricing.  A helpful tip, add an invoicing schedule under the pricing module, your finance folks will be able to recognize revenue and understand cash flow much better.  They might actually thank you for it!

Robert Honeyman Financial Consultant at Michigan Small Business Development Center

May 25th, 2016

Create your own so that you have a clear understanding of you baseline terms and conditions. Expect to negotiate each large contract. But the negotiation should start with your contract. As a large end-user, I would expect to work off your document, not mine. After all, it's your business and you understand what elements need to be in the document. My sales group has their own agreement form that specifies the T&Cs unique to my own business. 

You will certainly have to expect to respond to proposed changes from a large number of your prospective customers. It's just the nature of the beast.

William Sarine VP, Business Development

May 25th, 2016

Having run many "sales for hire" companies, I suggest you have you own contract prepared. Most good business lawyers will have boilerplate You can use. William Sarine wsarine@gmail.com 919-604-5457

Kevin HIRING! President and CEO at Taptera, Inc.

May 25th, 2016

You should definitely draw up your own MSA. We sell to the F1000 and in many cases (~60%) customers will leverage our contract to streamline procurement. In those instances the red lining tends to be much easier and less expensive. Even if most of your customers require their own MSA (which would surprise me), the cost savings on the ones that don't will outweigh any initial investment in drafting your own. Sent from my iPhone

Dina Moskowitz

May 25th, 2016

This is a great string.  I agree with most of the responders that you do need your own agreement.  Oftentimes the buyers/end-users you are selling to will need to review your T&Cs and pricing structures during the sales/decision process, even before it goes to the contract/MSA/legal team.  

Don Rector

May 25th, 2016

Hi John, You need your own T&Cs. The customer's T&Cs will give you NO protections. In most cases, the customer will have legal review the document. Be guaranteed legal will red line parts of it. That's what legal gets paid to do. I once gave a customer their own T&Cs and their legal returned them marked "totally unacceptable". You also need to budget legal review of your own. Part of cost of doing SaaS business. Don Rector Pls excuse my typos this was tapped one character a a time on my iPhone

Lisa Pomerantz Business and Employment Attorney, Arbitrator, Mediator and Trainer

May 25th, 2016

I strongly urge vendors to have their own agreements. If they are comprehensive and fair, it is not always the case that the customer will require their own agreement to be signed. It is much better to have an agreement that reflects how the vendor wants to do business.

Rob G

May 25th, 2016

It's your product. you need to dictate the terms of sale/use. Big companies tend to expect to be able to negotiate licensing agreements, but that gets time consuming and expensive (legal bills) and a chore to manage. It's in your best interest to put together an agreement that fits most situations - a master agreement, and if you must make contractual concessions then put those terms in an addendum/supplement to the master.  

John Sturdivant CEO, Founder at WorkforceAlpha

May 25th, 2016

Thanks all - these are GREAT points and I think I have a pretty clear answer: draft the contract and at least use it for baseline negotiation terms for the customer's MSA, and at best use it to expedite the purchasing process where there is no MSA.

Cynthia - great advice about ONE solution. However, I'm not quite at the scale where I have the leverage of a Salesforce against the likes of Cisco :-)

Lisa Pomerantz Business and Employment Attorney, Arbitrator, Mediator and Trainer

May 25th, 2016

Dina makes a good point.  Reviewing a vendor's standard contract should be part of doing due diligence on potential vendors.