Statement of work
ess-oh-DUB-ul-yoo (or rhymes with cow)
A document specifying what the vendor will deliver, the timeline, pricing, and acceptance criteria for a specific engagement.
A SOW defines the specifics of what you are selling. The MSA covers the legal relationship. The SOW covers the work. What are you delivering? By when? How much does it cost? What does 'done' look like?
For SaaS companies, the SOW (or order form) typically specifies: the product or plan purchased, the number of seats or usage tier, the subscription period, the price, and any professional services included. For services-heavy deals, the SOW details deliverables, milestones, and acceptance criteria.
A clear SOW prevents disputes later. If the customer says 'I thought you were going to do X,' and the SOW says otherwise, the SOW wins. Write it precisely. Ambiguity in a SOW always benefits the customer and costs the vendor. It is worth having deal desk review non-standard SOWs.
Examples
A straightforward SaaS order form.
Product: Enterprise plan, 200 seats. Term: January 1 to December 31. Price: $150,000. Payment: net-30 invoice upon execution. Includes: 40 hours of onboarding support. That is the entire order form, attached to the existing MSA.
A SOW with professional services.
In addition to the $100k software subscription, the deal includes a $40k implementation project. The SOW specifies four milestones: discovery, configuration, testing, and go-live. Each milestone has deliverables and acceptance criteria. Payment is tied to milestone completion.
A vague SOW causes a dispute.
The SOW says 'vendor will provide integration support.' The customer interprets that as the vendor building the integration. The vendor interprets it as documentation and office hours. The dispute takes three weeks to resolve and damages the relationship.
In practice
Read more on the blog
Frequently asked questions
What should a SaaS SOW include?
Product or plan name, number of seats or usage tier, subscription term, pricing, payment terms, any included professional services with scope and deliverables, and renewal terms. Keep it simple. The MSA handles the legal complexity.
What is the difference between an SOW and an order form?
Functionally similar. An order form is typically shorter and covers just the subscription purchase. An SOW is more detailed and includes professional services, custom deliverables, or complex multi-phase engagements. Many SaaS companies use order forms for standard deals and SOWs for custom ones.
Related terms
The umbrella contract between a vendor and customer that governs the overall relationship, terms, and legal obligations.
The conditions in a sales agreement: length, auto-renewal, termination rights, payment schedule, and SLA commitments.
The department responsible for negotiating vendor contracts, terms, and pricing. The last stop before a signed deal.
A cross-functional team that reviews and approves non-standard deal terms, pricing, and contract structures.
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