Multi-year contract
A software agreement that commits you for longer than a year, usually in exchange for a lower price than an equivalent annual deal would carry.
Also known as: Multi-year deal, Multi-year agreement
A multi-year contract commits you to a product for more than a single year, most often two or three, in return for a rate an annual customer does not get. The commitment is the whole trade: the vendor gets predictable revenue, and you get the discount that buys.
What decides whether the trade is a good one is rarely the headline discount. It is the clauses around it: whether any annual uplift is capped, whether seats can be reduced part way through, and how much notice the agreement needs at the end of the full term. A three-year deal with an uncapped yearly increase and no right to shrink is a fixed obligation with a variable cost, so the discount is worth reading against the whole term rather than the first invoice.
Related terms
- Co-terminationAligning several contracts with the same vendor onto one shared end date, so they renew together and are negotiated once rather than piecemeal through the year.
- Perpetual licenceA licence bought once that lets you use a specific software version indefinitely, often with a separate optional support fee.
- OverageA charge for going beyond what a plan includes, such as extra storage, API calls or seats, applied on top of the subscription you already pay for.