Contracts

You can use contract settings to define subscription terms when you add and edit editions (see Add recurring editions and Add tiered editions). For example, you can define:

• subscription cancellation terms
• automatic renewal options at the end of the contract (start another contract, continue the subscription without a contract, or cancel the subscription)
• subscription change restrictions

Contracts and subscriptions

When customers buy products and subscriptions are created, and when customers change their subscriptions, all the contract terms that are configured for the products (the product contract terms) are copied and saved with the subscriptions (the subscription contract terms). When contract terms for the products are copied and saved with subscriptions:

• The defined contract terms when customers buy or change subscriptions stay in effect until their subscriptions are changed or end.
• When Marketplace Managers or Developers change the product contract terms, the changes do not affect existing subscriptions.

Contracts and billing

Contracts affect fees and invoices in several ways, depending on the configuration:

• When a 100% discount is applied, it also applies to the contract fees.
• When you cancel a contract that has a termination fee, billing stops immediately and the only remaining invoice is the termination fee.
• When you cancel a contract that does not have a termination fee, billing stops after the last generated invoice date if all invoices are paid.
• When a contract does not have a termination fee, you can only cancel that contract at the end of the contract period.
• If a subscription is canceled after the contract ends, you can report metered usage until the end of the last billing period.

Automatically renew a contract

Your subscription continues at the end of a contract term if one of the following conditions is true:

• Auto renew by default after the end of the contract period is set to Yes.
• Auto renew by default after the end of the contract period is set to No and you select Continue subscription without contract.

End-of-contract grace period

If no auto renew options are enabled, the subscription is canceled at the end of the contract period if any of the following are true:

• End of contract grace period is not set. The subscription is suspended indefinitely.
• End of contract grace period is set to 0. The contract is canceled at the end of the contract date.
• End of contract grace period is greater than 0. The contract is suspended for the specified number of days after the contract end date, after which the contract is canceled.

Contract configuration options

Option	Description	Example
Minimum contract duration	This number determines the number of billing cycles that a customer is under contract. During this period the contract specifications are in effect. The Minimum contract duration number is based on the number of billing periods. If you have a monthly plan, the number is in months. If you have a yearly plan, the number is in years.	For example, If you have a minimum contract duration of 6 months, and you enter a flat contract fee of $10 per month, the customer must pay $10 per month for six months.
Contract fee	The contract fee is a one-time fee that is charged at the start and renewal of a contract.	$10 per month with a three-month contract with automatic renewal and a $50 contract fee. With this plan, the customer pays $10 per month but $60 on every third billing cycle.
Grace period	A period of time after the start of a contract during which the user can cancel the subscription.	The customer starts a subscription with a one-year contract and a 15-day grace period. On day 10 they cancel the subscription without any additional charge. No termination fee: There is no charge for cancellation. You can cancel the contract only at the end of the contract period. Percentage of the remaining subscription: For example, the termination fee percentage is 50% on a 12-month contract that costs $10 per month. You cancel during month 4. You have 8 months remaining at $10 per month ($80). Fifty percent of the remaining fee is $80 x 50% = $40. The cancellation feel is $40. Flat termination fee: A customer is charged the amount set for the flat fee field, for example $50.
Termination fee	A fee to cancel an edition before the end of the contract. You can set it to a percentage of the remaining cost or a flat fee. If set to No termination fee, then the subscription cannot be canceled early. When you select a percentage or flat termination fee, an additional field appears, where you must enter the amount and description. The description you enter here is visible on the customer's invoice.	No termination fee: There is no charge to cancel a contract. Percentage of the remaining subscription: For example, the termination fee percentage is 50% on a 12-month contract that costs $10 per month. You cancel during month 4. You have 8 months remaining at $10 per month ($80). Fifty percent of the remaining fee is $80 x 50% = $40. The cancellation feel is $40. Flat termination fee: a customer is charged the amount set for the flat fee field, for example $50.
Auto renew by default after the end of the contract period	When enabled, the contract is automatically renewed when it ends. When disabled, the subscription is canceled after the end of the contract. The Auto renew by default after the end of the contract period options appear only after an amount is added to the Minimum contract duration field. This option you select is displayed to the customer as the default option for what happens at the end of the contract period. The customer can override this default.	When you select No, you have the following options: Cancel contract: The subscription is canceled. Continue subscription with no contract: The subscription continues without the contract terms. The customer is free to cancel at any time without contract restrictions. When you select Yes, you can renew the contract for the number of months defined in the Minimum Contract Duration field.
Cancellation period limit	When automatic renewal is enabled, this setting determines the number of days before the end of the contract that the request to cancel the subscription must be made. Otherwise, the contract is automatically renewed.	If you entered 20 days in the Cancellation period field, the customer must cancel the contract at least 20 days before the automatic renewal date. Otherwise, the contract is renewed.
End of contract grace period	When automatic renewal is disabled, this setting gives the user a number of days before the subscription is canceled in which to select a new contract or edition. The End of contract grace period option appears only after an amount is added to the Minimum contract duration field.	If the End of contract grace period is set to 10 days, the customer has until 10 days after their contract ends to start a new contract.
Restriction settings	For information about the following restriction settings, see Edition, unit, and contract restrictions: Block edition upgrades for subscriptions with active contracts Block edition downgrades for subscriptions with active contracts Block switch to shorter contract
Keep the remaining contract duration when updating to a contract of the same length	If set to true, the setting preserves the remaining duration of a contract on updating to a new pricing plan with the same contract length. For example, updating a monthly contract to another monthly contract.	You have made a subscription update from Edition A(monthly) to Edition B(monthly) on 19/2/2023 with a contract end date of 1/3/2023. If set to true, new contract end date after the subscription update will be 1/3/2023. On 1/3/2023, it renews to 1/4/2023 (one month). If set to false, new contract end date after the subscription update will be 18/3/2023.
Keep the remaining contract duration when updating to a contract of a different length	If set to true, the setting preserves the remaining duration of a contract on updating to a new pricing plan with a different contract length. For example, updating a monthly contract to a yearly contract.	You have made a subscription update from Edition A(monthly) to Edition B(yearly) on 19/2/2023 with a contract end date of 1/3/2023. If set to true, new contract end date after the subscription update will be 1/3/2023. On 1/3/2023, it renews to 1/3/2024 (one year). If set to false, new contract end date after the subscription update will be 18/2/2024.
Enable Marketplace Managers to set roles for bypassing contract restrictions	When enabled, Marketplace Managers can bypass contract restrictions when they update subscriptions mid-contract for customers. When enabled and Marketplace Managers enable role settings for Sales Support Representatives (SSRs) and Resellers, SSRs and Resellers can also bypass contract restrictions when they update subscriptions mid-contract for customers. For more information, see Bypass mid-contract subscription change restrictions.

Additional contract configuration options appear, depending on marketplace settings, and the revenue model and contract terms configured for a product.