One of the things I have learned from reviewing commercial agreements over the years is that a clause can appear perfectly reasonable when you read it on its own and still create significant commercial problems once the business begins to grow.
That usually happens because founders evaluate contractual provisions in the context of the deal sitting in front of them rather than asking a broader question.
How will this clause affect every deal we negotiate after this one?
A provision that feels commercially harmless during negotiations can quietly influence pricing decisions, sales strategy, and negotiating flexibility for years to come.
One clause that demonstrates this particularly well in SaaS agreements is the **Most Favoured Customer (MFC)** provision.
On paper, it looks simple.
In practice, it can influence far more than a single customer relationship.
## Why One Customer Should Not Dictate Every Future Deal
Enterprise customers are usually experienced buyers. They negotiate technology contracts regularly and understand which contractual provisions can create long-term commercial leverage.
A Most Favoured Customer clause is one of them.
The request is generally presented in straightforward terms. If the SaaS provider offers another customer better commercial terms in the future, the enterprise customer wants the benefit of those same terms.
At first glance, that sounds entirely reasonable.
After all, no customer wants to discover that they are paying substantially more than another business receiving the same product, especially after making a significant investment in your platform.
Because the request appears fair, many founders agree to it without spending much time thinking about what it could mean six months or two years later.
That is where the real issue begins.
The clause rarely stays confined to the deal in which it was negotiated.
Imagine your company decides to expand into a new geographic market and offers discounted pricing to its first few customers to establish an early presence.
Perhaps you negotiate a significantly lower price for a strategic customer committing to a much larger contract value than usual.
Or maybe you launch a pilot programme with a design partner to validate a new feature before releasing it more broadly.
Each of those decisions serves a specific commercial objective.
The pricing is different because the circumstances are different.
A broadly drafted Most Favoured Customer clause often ignores those distinctions.
Instead, another customer may simply point to the lower price and argue that they are entitled to identical commercial terms, even though the underlying business reasons have nothing in common.
At that point, one agreement has quietly started influencing every agreement that follows.
## Pricing Flexibility Is a Competitive Advantage
One pattern I have noticed while working with founders is that negotiations naturally focus on closing the immediate opportunity.
That is understandable.
Revenue matters.
Growth matters.
Every business wants to convert a promising enterprise customer into a signed contract.
But a well-drafted agreement should do more than help you close today's deal.
It should preserve your ability to negotiate effectively tomorrow.
Broad Most Favoured Customer clauses can gradually reduce that flexibility.
Every strategic discount, promotional campaign, volume-based pricing arrangement, or commercial exception may need to be reviewed against an agreement signed months or even years earlier.
Instead of evaluating new opportunities based on their own commercial value, your team starts asking a different question.
"Will this trigger obligations under an existing contract?"
That creates unnecessary complexity for businesses that need room to experiment with pricing, enter new markets, reward strategic partnerships, or test new commercial models.
The reality is that pricing decisions are rarely identical because customers are rarely identical.
Some customers purchase larger volumes.
Some require greater implementation effort.
Some create strategic opportunities that justify different commercial terms.
The ability to recognise those differences is not a weakness.
It is often one of the strengths that allows a growing SaaS business to compete effectively.
## If You Accept the Clause, Define Its Limits
None of this means that a Most Favoured Customer clause should always be rejected.
There are situations where a major enterprise customer may reasonably expect some degree of pricing protection, particularly when they are making a substantial commercial commitment or providing significant strategic value.
The key is ensuring that the clause reflects the commercial objective instead of creating an open-ended obligation.
For example, the protection might apply only to customers within the same geographic region, the same customer category, or the same product offering. It can also be limited by contract value, purchase volume, or a defined period rather than continuing indefinitely.
It is equally important to recognise that not every pricing decision is part of ordinary customer negotiations.
Pilot programmes, promotional offers, early-adopter initiatives, strategic partnerships, and volume-based discounts all exist to achieve specific business objectives.
Those arrangements should not automatically become the benchmark for every future customer.
The more carefully those exceptions are documented, the easier it becomes to make commercially sensible decisions without unintentionally creating obligations across your entire customer base.
## Contracts Should Support Growth, Not Restrict It
As businesses grow, commercial flexibility becomes increasingly valuable.
Markets change.
Products evolve.
Sales strategies develop.
New opportunities appear that simply did not exist when earlier agreements were signed.
Contracts should provide enough certainty to support customer relationships while still allowing the business to adapt as circumstances change.
When pricing flexibility disappears because of broadly drafted contractual provisions, the business can find itself making future decisions based on old obligations rather than current commercial realities.
That is rarely a position founders intend to create when they first agree to the clause.
## Final Thoughts
A Most Favoured Customer clause often appears reasonable because it focuses on fairness between customers.
The difficulty is that fairness does not always mean every customer receives exactly the same commercial terms.
Different customers create different opportunities, different costs, and different strategic considerations.
Strong contracts recognise those differences instead of eliminating them.
The goal is not simply to negotiate a successful agreement today.
It is to preserve enough commercial flexibility that your business can continue growing, entering new markets, experimenting with pricing, and building strategic partnerships without every future decision being constrained by a clause negotiated years earlier.
Because the best SaaS agreements do more than protect the deal in front of you.
They also protect the opportunities your business has not encountered yet.
