Service Level Agreements Explained: How to Write One

Promises don’t scale, but service level agreements (SLAs) do.

When service providers grow, verbal assurances and vague expectations just don’t cut it anymore. That’s especially true for industries such as managed IT services, software as a service (SaaS), field maintenance, and cloud support, where performance issues can escalate rapidly.

That’s why SLAs exist.

Keep reading to learn what service level agreements actually cover, how to write one that works, the most common pitfalls to avoid, and the key metrics every provider should track to stay compliant and competitive. 

Why is a service level agreement important?

SLAs are service performance guardrails. A well-crafted SLA protects both the provider and the client by clearly defining, measuring, and enforcing expectations. Here’s why SLAs matter:

• Sets clear expectations along with service terms and conditions that prevent future misunderstandings between customers and service providers. 
• Provides quality assurance by defining quality standards that a service provider must meet.
• Outlines remedies that can be helpful while addressing events like data loss, downtime, and service disruptions. 
• Facilitates continuous improvement by letting service providers and organizations share feedback and improve opportunities with each other.

Both an organization and a service provider must take part in the SLA draft creation process to fully realize the benefits of an SLA.

Everyone has a different idea about what good service looks like, but an SLA makes the voice of the customer ring loud and clear: that’s the quality standard they expect.

Although a service level agreement allows flexibility for parties to negotiate rights and responsibilities, violating it has consequences similar to breaching a contract. This is why it’s vital that service providers pay just as much attention to keeping their SLA compliance up to date. 

What are the different types of SLAs?

You'll come across three types of SLAs: customer, internal, and multi-level service-level agreements. The structure of your SLA will depend on who it serves and how your services are delivered.

Each type has its place, and in some businesses, particularly those delivering tiered service models, you may need to manage all three simultaneously.

What should a service level agreement include (components)?

Service level agreement components vary depending on the types of services, industries, and vendors. Below are the most common components that you'll come across in an SLA.

• Agreement overview is the first section of an SLA. It introduces both parties, shares details of services to be provided, and the start date.
• Stakeholders refer to the section that clearly defines the details of parties involved in an SLA and their responsibilities.
• Service description outlines the details of every service, including turnaround times. This section also sheds light on how a service provider delivers services, their operation hours, dependency locations, processes, and technologies. A service must also add whether they will offer maintenance services.
• Service performance defines the performance measurement levels and metrics an organization will use to measure the service levels of services provided. A service provider and an organization must agree on this list of levels and metrics before adding them to an SLA.
• Service exclusions specify the services a service provider doesn't offer as part of their services. This section is crucial as it helps organizations avoid confusion in the future.
• Service tracking and reporting section shares the SLA reporting structure, agreement stakeholders, and service tracking intervals.
• Redressing outlines the payment or compensation a customer should receive in case a service provider is unable to fully meet the obligations set in an SLA.
• Security lays out all security measures, including data security, IT security, and nondisclosure agreements, that a service provider will use while fulfilling its obligations.
• Risk management and disaster recovery shares processes and practices a service provider will follow during the active duration of an SLA.
• Periodic process review defines the key performance indicators that both parties will regularly review before making any necessary changes to the SLA.
• Termination lays out the circumstances under which either party can terminate an SLA. Both parties are required to share a notice period after which they may terminate the SLA.
• Signatures require authorized stakeholders from both parties to sign the SLA document, indicating their approval of the service level agreement.

How to write an SLA step‑by‑step

Writing an SLA involves five stages: defining the scope of service, verifying service levels, setting performance metrics, preparing the SLA document, and reviewing the SLA with all relevant stakeholders. 

1. Define the scope of service

This stage involves defining the service clearly to include:

• Details of stakeholders
• Points of contact along with their designations
• Details of services provided by the service provider
• Service exclusions 
• Customer obligations, including payment frequency
• Vendor obligations, including vendor service responsibilities
• SLA termination clauses outlining when either party can terminate the SLA

2. Check service levels

Service levels refer to the service output, measured in terms that may vary and appear different depending on the services a service provider offers. For example, a call center may define service level as the number of calls they answer, whereas a product manufacturing unit may define its service level in terms of the number of units they produce every day. Consider working with stakeholders from both sides to verify service deliverables and their deadlines. 

3. Define service performance metrics

Service performance metrics refer to key indicators companies use to measure the efficiency of a service provided by a service provider. These metrics enable companies to assess whether the service provider is meeting the mutually agreed-upon SLA management metrics. 

4. Prepare the SLA document

With all the foundational pieces in place, you can begin structuring the agreement. Organize it into clear sections: agreement overview, service scope, metrics and performance targets, monitoring and reporting methods, escalation paths, and clauses for revision, termination, and review. Use precise language. Terms like “promptly” or “as soon as possible” introduce ambiguity; replace them with time-based expectations, such as “within four business hours” or “by close of next business day.”

5. Review the service level agreement

This stage involves inviting all stakeholders to review the SLA you created and gather feedback from them. Once stakeholders of both parties agree to the document's terms and conditions, you can gather final signatures and distribute the SLA document. 

What are the common mistakes when writing SLAs?

If there’s one mistake that derails SLAs more than any other, it’s scheduling.

On the surface, it sounds easy: just set a few calendar appointments and move on. But for service providers juggling multiple contracts, priorities, and emergency work orders, scheduling can become hectic. This is mainly true in industries like field services and managed IT, where SLAs often include strict timeframes for issue resolution.

The challenge is managing proactive work (like routine inspections or preventive maintenance) alongside reactive work (emergency fixes with time-to-resolution clauses). If a critical issue arises and you can’t dispatch quickly enough, you risk breaching the SLA and damaging the client relationship.

Take asset downtime clauses, for example. If your IT provider fails to fix a security outage for several days, the cost isn’t just operational; it’s contractual. The same applies to safety systems, HVAC failures, or malfunctions in field equipment. In each case, poor scheduling can lead directly to SLA violations.

Scheduling SLA appointments used to be a challenging task, involving multiple calendars and spreadsheets, but nowadays, there are planned preventive maintenance software that can help fast-forward the task. 

But scheduling is just the start. Here are some of the other common mistakes companies make when drafting or managing SLAs:

• Vague language: Terms like “as needed” or “reasonable time” leave too much room for misinterpretation.
• Unrealistic targets: Promising 100% uptime or 15-minute resolutions without the necessary infrastructure to support them is a recipe for failure.
• No clear accountability: If no one owns the SLA internally, it quickly becomes a forgotten document.
• No review process: Services evolve, SLAs that don’t evolve with them eventually fall out of sync with reality.

Frequently asked questions about service level agreement

Got more questions? We have the answers.

Q1. What is the difference between SLA, SLO, SLI, and OLA?

An SLA is a formal agreement between a provider and a customer that outlines the services and expectations. An SLO is a performance goal within the SLA, while an SLI is the metric used to measure performance, like uptime or resolution. An operational level agreement (OLA) is an internal agreement between teams to support SLA commitments.

Q2. What happens if an SLA is breached?

The SLA should clearly outline consequences for non-compliance. These may include service credits, penalty fees, or escalation to senior support. In some cases, repeated or severe breaches may trigger termination clauses or impact future contract renewals.

Q3. Can SLAs be used internally?

Yes. Internal SLAs are often used between departments, for example, IT support and HR, or marketing and sales. They help ensure cross-functional alignment and accountability, even within the same organization.

Q4. Are SLAs legally binding?

SLAs become legally binding when they are included in or referenced by a signed contract. If either party fails to meet the agreed terms, the SLA can be enforced under the same legal framework as the broader agreement.

Q5. How often should an SLA be reviewed or updated?

SLAs should be reviewed at least once a year, or whenever there is a change in services, technology, or client requirements. Regular reviews help ensure that performance targets remain relevant and achievable.

Q6. What are good practices when creating an SLA?

Use clear, specific language. Define measurable performance targets and include only metrics that can be tracked reliably and accurately. Align expectations through stakeholder collaboration, and include processes for monitoring, reporting, and regular review.

Q7. How to choose realistic SLA metrics?

Focus on metrics that directly impact the customer experience and can be accurately measured. Avoid overly ambitious goals that are difficult to sustain. Instead, base targets on historical performance data, available resources, and system capabilities.

Build SLAs that work

The most effective SLAs are clear, realistic, and regularly reviewed. They align teams, protect relationships, and give both parties a shared framework for success. View your SLA as an operational blueprint rather than a static document.

Whether you're creating your first SLA or revising an existing agreement, follow the frameworks and best practices in this guide to make sure your service commitments go beyond promises and they demonstrate measurable performance.

Want to automate SLA tracking and speed up support? Explore the top customer service automation tools on G2 to boost response times and stay ahead of every deadline. 

This article was originally published in 2019. It has been updated with new information.