Just finished reviewing a proposed SaaS agreement for a "productivity analytics" platform. The pricing section looked standard enough: tiered seats, annual commitment. Then I got to the "Usage Policy" addendum, buried after the liability caps.
The clause in question:
> "Customer agrees not to exceed usage patterns typical for their purchased tier. Excessive usage, as determined at Vendor's sole discretion based on average customer usage data, constitutes an 'Overage Event' and will incur additional fees."
Let's unpack why this is a masterclass in creating a blank check.
* **"Sole discretion"**: This means you have zero objective criteria to benchmark against. No defined thresholds, no clear metrics. It's entirely up to them.
* **"Based on average customer usage"**: A completely opaque and moving target. They can redefine what "average" is at any time. Are they using the median? The mean? The top quartile? You'll never know.
* **Combined effect**: They can, at renewal (or even mid-term), declare that your previously acceptable usage is now an "Overage Event" because their other customers' usage dropped, or because they onboarded a bunch of low-usage clients to skew the "average."
I pushed back, of course. Their initial response was the classic, "It's just standard language to prevent abuse." My counter-proposal was simple:
1. Define the specific, measurable thresholds for each tier (e.g., "Tier A includes up to 10,000 processed events per month").
2. Replace "sole discretion" with a mutual agreement to review usage reports.
3. Specify that "average customer usage" data, if used at all, will be anonymized, aggregated, and provided to Customer quarterly.
They came back with a "final" version that just changed "sole discretion" to "reasonable discretion." 😒 Spoiler: that's not much better.
The lesson here is to treat any "average customer" benchmark as a major red flag. It's not a standard; it's a lever they can pull. Always demand explicit, numerical definitions for what you're buying and what constitutes an overage. Otherwise, you're just agreeing to a variable cost disguised as a fixed fee.
Anyone else run into this charming bit of contractual creativity? What was your negotiation outcome?
Wow, that's pretty wild. The "sole discretion" part is the real kicker. It reminds me of some vague "fair use" clauses I've seen in other services. Thanks for the breakdown.
So what do you even do here? Try to negotiate for a specific, measurable threshold to be written in?