A software license agreement template is a ready-to-edit contract between the company that owns software (the licensor) and the business that uses it (the licensee). It sets out how the software may be used and protects the owner's rights in it.
It is the contract that gives a business permission to use software it does not own, on stated conditions. The licensor keeps ownership of the code, and the licensee gets defined rights: how many users, on what devices or in which territory, for how long and at what price.
Software vendors use one as their standard terms, and buyers use one to check vendor paper or to set out their own requirements. The same document goes by several names: a software contract, a licensing agreement, or, for hosted products, a SaaS agreement or cloud services agreement.
You do not need contract software to manage one licence, but you do need the terms written down before anyone installs or logs in. Our guide to software license agreements covers licence types in more depth.
Whether the right is exclusive or shared, who may use the software and where or on what it may run.
What the licensee may not do, such as copy, modify, resell or reverse-engineer the software.
The fees, when they are paid and how long the licence lasts.
What the licensor promises about the software and the limits on what it owes if things go wrong.
When and why either side can end the licence, and what happens to access and data afterwards.
Ready to use in Word, Google Docs and PDF. Fill it in, save it, reuse it.
Agree the users, modules, environments and term you need, and the budget.
Get the vendor's quote and check it against what similar buyers pay.
Compare the vendor's agreement with this template and mark the clauses to change.
Agree the order form and agreement, then have authorised people sign both.
Track usage against licensed seats and act before the renewal notice date.
The shortest workable version has six clauses: parties, grant, restrictions, fees and term, liability, termination. Add data, support and IP clauses for any business-critical software.
The first four clauses define what is licensed and on what terms, and the rest cover risk, ownership and exit. Keep commercial details such as seat numbers and prices in the order form, so the agreement can stay the same across renewals. Delete clauses that do not apply, such as data terms for software that never touches your data.
Legal names of licensor and licensee, the effective date and defined terms such as Software, Users and Documentation.
Non-exclusive or exclusive, transferable or not, the number of users or devices, territory and permitted purpose.
No copying beyond backups, modifying, sublicensing, reselling or reverse-engineering the software.
Licence and support fees from the order form, invoicing schedule, payment terms and taxes.
Start date, initial term, renewal rule and the notice needed to stop renewal.
How the software is delivered, support hours and response times, and whether updates are included.
Who owns licensee data, how it is protected and where it is stored.
The licensor keeps ownership of the software; the licensee keeps its own data and outputs.
How each party protects the other's non-public information.
The software will perform materially as documented, and the remedy if it does not.
The cap on each party's liability, usually tied to fees paid, and excluded losses.
The licensor defends the licensee against claims that the software infringes third-party IP.
Termination for breach or insolvency, and what happens to access, data and fees on exit.
Applicable law, disputes, assignment, notices and entire agreement.
Name, title, signature and date for an authorised person at each party.
2. Grant of Licence Subject to payment of the Fees, [Licensor Name] grants [Licensee Name] a non-exclusive, non-transferable licence to use the Software for its internal business purposes, for up to [Number] named Users in [Territory], during the Term. 3. Restrictions [Licensee Name] will not, and will not allow others to: (a) copy the Software except for one backup copy; (b) modify, translate or create derivative works of it; (c) sell, sublicense, rent or lend it; or (d) reverse-engineer or decompile it, except to the extent the law expressly permits. 13. Termination Either party may terminate this Agreement by written notice if the other materially breaches it and does not remedy the breach within [30] days of notice. On termination, [Licensee Name] will stop using the Software, and [Licensor Name] will make [Licensee Name]'s data available for export for [30] days before deleting it.
A SaaS license agreement, sometimes called a SaaS software license agreement or cloud services agreement, covers software you never install. The grant becomes a right to access the service, and the vendor's promises shift to availability and data protection. The table shows what changes from the main template.
| Clause | Installed software | SaaS or cloud |
|---|---|---|
| Grant | Licence to install and use a copy | Right to access the hosted service |
| Fees | Often one-off licence plus annual support | Recurring subscription per user or usage tier |
| Availability | Not usually covered | Uptime commitment with service credits |
| Data | Stays on your systems | Held by the vendor; ownership, location and security set out |
| Updates | Delivered as releases you install | Applied by the vendor, with notice of material changes |
| Exit | Uninstall and certify deletion | Data export window, then deletion |
6. Service Availability [Provider Name] will make the Service available [99.9]% of the time in each calendar month, excluding scheduled maintenance notified at least [48] hours in advance. If availability falls below this level, [Customer Name] will receive a service credit of [10]% of that month's subscription fee for each [0.5]% shortfall, up to [50]% of the monthly fee.
Most licence disputes are about numbers, not legal clauses: how many users, what each costs and how much the price can rise. The order form puts those numbers on one page. Record the renewal notice date in your contract tracker as soon as it is signed.
| Field | What to enter | Example |
|---|---|---|
| Product and modules | Exact names from the vendor's price list | Kestrel Analytics, Core and Reporting |
| Licence type | Named user, concurrent, device or usage-based | Named user |
| Quantity | Number of users, devices or units | 120 users |
| Unit price | Price per unit per year, with currency | 300.00 GBP |
| Annual fee | Quantity multiplied by unit price, less discounts | 36,000.00 GBP |
| Term | Start date and initial term | 1 Jan 2027, 36 months |
| Price uplift cap | Maximum annual increase | 5% a year |
| Renewal notice | Days before term end to stop renewal | 60 days |
| Support level | Hours and response times | Business hours, 4-hour response for critical issues |
| Payment terms | Invoicing and due date | Annually in advance, Net 30 |
Example entries are illustrative.
Vendors usually send their own terms, written in their favour. You rarely need to rewrite them, but you should know which clauses to push on. For more detail, see our tips on SaaS contract clauses.
| Clause | Ask for | Watch out for |
|---|---|---|
| Grant of licence | Use by affiliates and contractors | Licences tied to named devices you will replace |
| Fees | Price held for the full term | Fees that rise automatically each year with no cap |
| Renewal | Renewal only by written agreement, or a long notice window | Auto-renewal with a short notice period |
| Liability | Cap of at least 12 months' fees, higher for data breaches | Cap limited to one month's fees |
| Data | Your ownership of data, export on exit | Vendor rights to use your data beyond providing the service |
| Audit | Reasonable notice, once a year, at the vendor's cost | Unlimited audits with penalties at list price |
| Exit | 30-90 days to export data in a standard format | Immediate deletion on termination |
Lumen Retail is licensing an analytics platform from Kestrel Data for its finance and merchandising teams. The table shows how the main clauses read once agreed. All names and figures are illustrative.
| Term | Agreed |
|---|---|
| Parties | Kestrel Data (licensor) and Lumen Retail (licensee) |
| Grant | Non-exclusive, non-transferable access for 120 named users, including affiliates |
| Restrictions | No resale, sublicensing or reverse engineering; no use to build a competing product |
| Fees | 36,000.00 a year, invoiced annually in advance, Net 30 |
| Term and renewal | 36 months; renews for 12 months unless either party gives 60 days' notice |
| Uplift cap | Price increases at renewal capped at 5% |
| Availability | 99.9% monthly uptime with service credits |
| Liability | Capped at fees paid in the previous 12 months; data breaches capped at twice that |
| Termination | For uncured material breach after 30 days; 30-day data export window |
| Governing law | England and Wales |
Illustrative example, not a real agreement.
Check a software quote against Spendflo's pricing benchmarks before you sign the order form.
See pricing benchmarksEach licence belongs to one person. Reassigning it is usually allowed only when someone leaves.
A set number of people can use the software at the same time, from a larger pool.
The licence is tied to a machine or server, whoever uses it.
You pay for consumption, such as API calls, storage or transactions, often with committed minimums.
A one-off fee for indefinite use of a version, usually with separate annual support fees.
Time-limited access paid each period, the standard model for SaaS.
Licence the people who will use it, not the whole department.
Agree the maximum annual increase in the order form, not at renewal time.
A grant that covers group companies avoids buying again after a restructure.
Get a defined window and format for exporting your data on exit.
Add the renewal notice deadline to your contract tracker the day you sign.
Online terms can change without notice; sign a negotiated agreement instead.
Add seats when you need them, at a price agreed now.
Broad audit rights can turn a counting error into a large back-charge.
A 30-day window is easy to miss and locks in another full term.
Licence type, quantity, users, territory and whether affiliates and contractors are covered.
Product, price, term, uplift cap, notice period and payment terms.
Check liability, data, audit and exit against the negotiation table.
Get counsel's sign-off, sign both documents and log the renewal notice date.
Lumen Retail licensed 120 named users of Kestrel Analytics at 300.00 each. Ninety days before the 60-day notice deadline, usage data showed only 96 active users. Lumen renewed at 100 seats, cutting the annual fee from 36,000.00 to 30,000.00, a 6,000.00 saving. Figures are illustrative.
Every part on this page, in Word, Google Docs and PDF, with the examples filled in.
Use the main template with device or named-user licences, delivery and update terms.
Add the SaaS clauses on availability, data, security and exit.
Use the same structure with stronger restrictions and a tighter liability cap, then have counsel tailor it.
Best for negotiation with tracked changes.
Best for drafting with legal and IT together.
The clause table and pre-signing checklist.
$3.7B in software spend processed through Spendflo, at 30% average savings.
See your savingsA good software license agreement makes the grant, price and exit terms clear enough to manage. The other half is paying the right price and catching each renewal before the notice date.
Quick answers to what people ask most about the software license agreement template.
Name the parties, define the software, set the grant and restrictions, then add fees, term, warranties, liability, termination and signatures. Put seats and prices in a separate order form and have counsel review it. You can download the free template on this page to start.
It is a contract in which the software owner grants a business the right to use the software on stated conditions, while keeping ownership. It covers who can use it, for how long, at what price and what happens if it fails. The download includes a full version with sample clauses.
A common example is a three-year subscription to an analytics platform for 120 named users, with an annual fee, a 5% uplift cap and a data export window on exit. The filled example above shows every term, and you can download it with the template.
The grant of licence, restrictions, fees and term, warranties, limitation of liability and termination are the core, with data, IP, indemnity and audit clauses added for business software. The download covers all fifteen clauses in order.
You can download one free from this page in Word, Google Docs or PDF. It includes the full licence agreement, the SaaS clauses on uptime and data, and an order form.
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