Learn the standard formulas and step-by-step processes for calculating SLA breach penalties and service credits.
Service Level Agreements define contractual minimums. When a vendor misses them, a formula in your contract determines what's owed. Most teams calculate this manually — inconsistently, and often wrong.
Compare actual performance against the contracted SLA target — uptime percentage, response hours, or delivery date. Even a small shortfall can trigger penalties.
Your contract specifies a penalty rate: a percentage of monthly fees, a flat rate per incident, or a sliding scale based on breach severity.
Most contracts include a maximum credit cap — often 30% of monthly fees. This calculator applies your cap automatically so you don't overclaim.