Service Credit

A service credit is the remedy an SLA provides when a vendor fails to meet its committed availability or performance target. It is almost always a percentage of the fees for the affected period, applied as a credit against future invoices rather than paid as cash, and it is almost always the sole and exclusive remedy — meaning accepting the credit is the end of your recourse for that outage. A typical structure escalates in bands: fall below the promised monthly uptime and you receive a small percentage of that month's fee; fall much further and the percentage rises, up to a stated ceiling. The gap between what a service credit pays and what an outage costs is the whole point to understand. A day of downtime for a business that transacts online costs a multiple of one day's subscription fee, while the credit returns some fraction of it — and returns it as money you can only spend with the vendor who just failed you. Service credits are best read not as insurance but as a pricing signal: they show what the vendor is willing to put at risk, which is a rough proxy for how seriously it takes the commitment. Three details decide whether a credit is real. Whether it is automatic or claim-based — many require the customer to request it in writing within a short window, and unrequested credits are simply not paid. What the SLA measures: uptime defined by the vendor's own monitoring, excluding scheduled maintenance and third-party dependencies, can stay green through an outage your users clearly experienced. And whether repeated misses give you a termination right, which is the only remedy in the clause with real weight — the ability to leave is worth more than the credit.