Clause guide
Benchmarking Clause clause: meaning, risks, and what to negotiate
Allows one party to compare the contract’s price or performance against market standards.
What it means
Benchmarking clauses can create renegotiation pressure if pricing or service levels are found to be out of line with the market.
Common risks
- • Benchmarks may be based on poor comparisons.
- • The process may create frequent renegotiation pressure.
- • It may be unclear what happens if benchmarking shows a gap.
What to check before signing
- • How is the benchmark performed?
- • What comparables are used?
- • What happens if the benchmark result is unfavorable?
Negotiation ideas
- • Limit how often benchmarking can occur.
- • Define neutral comparables and methodology.
- • Cap required pricing or service adjustments.
Example clause
“Client may conduct a market benchmark once per contract year using an independent third party to assess whether fees remain commercially competitive.”
Frequently asked questions
What is a benchmarking clause?
It is a clause allowing comparison of contract pricing or performance against market standards.
Related clauses
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