Subscription Agreement vs Service Agreement
Last updated: February 2025
Quick Comparison
| Aspect | Subscription Agreement | Service Agreement |
|---|---|---|
| Customisation | Standardised for all subscribers | Bespoke to each client's requirements |
| Revenue model | Recurring subscription fees | Project-based, retainer, or milestone payments |
| Scale | Designed for high volume | Typically lower volume with higher value per engagement |
| Delivery | Self-service access to a product or platform | Active delivery of services by people |
| Termination | Cancellation at end of subscription period | Termination per contract terms, often with notice |
What Is a Subscription Agreement?
A contract granting ongoing access to a product or service for a recurring fee, typically with automatic renewal and standard terms for all subscribers.
Key Features
- • Recurring payment for ongoing access
- • Standardised terms applied to all subscribers
- • Auto-renewal with cancellation provisions
- • Self-service onboarding and offboarding
Best For
- • SaaS products, digital platforms, and content services
- • High-volume, standardised offerings
- • Businesses wanting predictable recurring revenue
What Is a Service Agreement?
A contract for the delivery of specific services, typically bespoke to the client's requirements, with defined scope and deliverables.
Key Features
- • Bespoke terms tailored to the client's needs
- • Defined scope of services and deliverables
- • May be one-off or ongoing with periodic review
- • Performance standards and acceptance criteria
Best For
- • Professional services such as consulting, legal, or accounting
- • Bespoke projects requiring tailored solutions
- • Engagements where scope varies significantly between clients
When to Use a Subscription Agreement
Use a subscription agreement for products or platforms offered to many customers on standard terms. Focus on clear cancellation rights, auto-renewal terms, and data portability.
When to Use a Service Agreement
Use a service agreement for bespoke engagements where the scope, deliverables, and terms are tailored to the specific client. This is standard for professional and consulting services.
Which Does Your Business Need?
If you are providing a scalable product with standard features, a subscription agreement is efficient. If you are delivering bespoke services, a service agreement gives you the flexibility to tailor terms. Some businesses use both: a subscription for their platform and a service agreement for implementation or consulting.
FAQ
What are the auto-renewal rules for UK subscription contracts?
For consumer subscriptions, the Consumer Rights Act 2015 and Consumer Contracts Regulations 2013 require clear disclosure of auto-renewal terms. Businesses must make it easy to cancel and must not impose unfair cancellation barriers. The CMA has actively enforced these requirements.
Can a subscription agreement include bespoke terms for enterprise clients?
Yes. Many SaaS businesses offer standard subscription terms for smaller clients and negotiate enterprise agreements with bespoke terms, SLAs, and pricing for larger customers. The enterprise agreement often sits alongside or replaces the standard subscription terms.
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