1. What is a managed services contract?

A managed services contract is a written agreement between a business and a managed service provider that outlines the terms and conditions under which the provider will deliver IT services. These agreements typically cover aspects such as service levels, responsibilities, payment terms, and liability. By clearly defining expectations, managed services contracts help both parties avoid misunderstandings and disputes.

Docue has a fully-customisable managed services contract template and comprehensive guide to managed services contracts which can be accessed here.

2. How are service levels defined in a managed services contract?

Service Level Agreements (SLAs) are a critical component of Managed services contracts. SLAs define the expected performance and response times for the services provided. Key elements often include:

• Uptime guarantees (e.g., 99.9% availability)

• Response times for support requests

• Resolution times for various types of issues

• Performance metrics

By outlining these expectations, businesses can hold MSPs accountable for their performance and ensure a higher level of service. You can find out more about SLAs by reading these FAQs.

3. Can MSPs increase their prices if the managed services contract is already signed?

Yes, MSPs can increase their prices after the managed services contract is signed, however, your managed services contract should include this right.

Many managed services contracts include provisions for price adjustments, which may specify conditions under which price increases are allowed. For example, the contract might stipulate that prices can be adjusted annually based on inflation or changes in the scope of services provided.

If the contract does not contain a clause addressing price increases, the MSP generally cannot unilaterally raise prices without the client's consent. In such cases, the MSP would need to discuss the proposed increase with the client and negotiate any changes to the contract.

By including the right to increase prices, this prevents any unwanted surprises from the client, while allowing MSPs to factor in any additional labour costs or inflation increases within their pricing structure as time goes on.

4. What should be considered when drafting payment terms in managed services contracts?

Payment terms in managed services contracts can vary widely depending on the services offered and the pricing model of the managed services provider. When negotiating these terms, consider the following key elements:

• Pricing structure: Will the fees be fixed, variable, or based on usage? Clearly outline how charges are calculated, especially if additional services or resources are required.

• Billing frequency: Decide on a billing cycle - whether payments will be due monthly, quarterly, or annually—and ensure it aligns with your cash flow and budget.

• Late payments: Define the consequences of late payments. Will interest be charged, and if so, at what rate? Consider including a clause that allows suspension of services if payment is overdue beyond a certain period.

• Price adjustments: Include provisions for adjusting prices over time. Whether it’s an annual increase linked to inflation or rising operational costs, ensure there’s a clear process and notice period for any price changes.

By addressing these factors in your payment terms, you create a transparent, fair, and well-structured agreement that benefits both the MSP and the client. Get insights into best practices when creating your own managed services contract with these top tips.

5. Can managed services contracts be amended after they are signed?

Yes, managed services contracts can be amended after they are signed. Both parties must agree to the amendments, which typically involve discussions between the business and the managed service provider to identify necessary changes and negotiate the terms. It is essential that any amendments are documented in writing, as verbal agreements or informal changes are not legally binding. The written amendment should clearly outline the changes being made, the reasons for the amendments, and the effective date. Additionally, the amendment should reference the original managed services contract to ensure clarity, including mentioning the specific sections being amended.

To facilitate the amendment process, you can use our variation agreement template, which each party will sign to document the changes. This template provides a structured format to effectively outline the amendments, ensuring clarity and compliance.

Conclusion

Understanding managed services contracts is vital for businesses looking to leverage the benefits of managed services. With these frequently asked questions, you can better navigate the complexities of managed services contracts and ensure that you’re well-equipped to draft and negotiate this type of contract to protect your business.

Ready to create your own managed services contract? Use Docue’s fully customisable managed services contract template to simplify the process and protect your business,

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