When you’re selling software support and maintenance, there are many important issues to cover in the software support agreement. However, one of the most commonly overlooked problems is inflation eating away at your profits.
So, how do you deal with that in the software support contract?
The most common way to address the issue is to have rates adjusted annually by some calculation or before a renewal term begins.
Yet sometimes you can’t wait that long because of rising labor and other costs.
So, it may make sense to include a provision that provides for price increases when inflation exceeds X% on a rolling Y months basis.
You can also include a walk-away clause based on inflation too. In other words, it allows either party to terminate early if the costs associated with the support agreement are too much, turning what was a good deal at the time it was signed into an unprofitable one.
Need help with your software support and maintenance contract? It’s time to schedule a phone consultation with Software Lawyer Mike Young.
