# Benchmarking Clause

Source: https://contracko.com/clause-library/benchmarking

# Benchmarking Clause

Lets a customer periodically test contract pricing or service levels against the wider market.

## What it is

A benchmarking clause gives the customer a right to have an independent expert compare the supplier's prices and service levels against a representative market sample. If the contract is materially out of line, the parties adjust the terms.

## Why it matters

In long outsourcing or managed-service deals, prices set at signing can drift far above market over several years. Benchmarking keeps a long contract competitive without forcing the customer to re-tender.

## How to apply it

- Define the comparison sample, the metrics benchmarked, and how often it may be run.
- Appoint a neutral benchmarker and agree who bears the cost of the exercise.
- Set a materiality threshold that triggers a price or service adjustment.
- State the consequence: automatic adjustment, renegotiation, or a termination right.

## Negotiation tips

- • Suppliers should require a like-for-like comparison reflecting volume and service scope.
- • Customers should secure a binding adjustment rather than a mere obligation to discuss.

## Common pitfalls

- • A vague comparison basis that lets the supplier dismiss any unfavourable result.
- • No consequence attached to the benchmark, making the clause toothless.

### How Contracko helps

Contracko tracks the benchmarking schedule and materiality thresholds across all your managed-service agreements, alerting you when the next review window is approaching. Its AI analysis extracts the adjustment mechanism and the agreed consequence (automatic reduction, renegotiation, or exit), so you enter a benchmark exercise fully briefed on your contractual position.

## Legal references

- [BW 6:248 Reasonableness and fairness Dutch law](https://wetten.overheid.nl/BWBR0005289)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[IT Services](https://contracko.com/industries/it-services)[Managed Service Providers](https://contracko.com/industries/managed-service-providers)[Software & SaaS](https://contracko.com/industries/software-saas)[Consulting](https://contracko.com/industries/consulting)[Financial Services](https://contracko.com/industries/financial-services)

## Related clauses

- [Price Indexation Clause](https://contracko.com/clause-library/price-indexation)
- [Service Level Agreement (SLA)](https://contracko.com/clause-library/service-level-agreement)
- [Service Credits Clause](https://contracko.com/clause-library/service-credits)
- [Audit Rights Clause](https://contracko.com/clause-library/audit)

## Related terms

- [Service level agreement (SLA)](https://contracko.com/glossary/sla)
- [Consideration](https://contracko.com/glossary/consideration)
- [Good faith](https://contracko.com/glossary/good-faith)

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## Frequently asked questions

Common questions about this clause.

- **Q:** How often should benchmarking be allowed?
  **A:** Typically once a year or every two years; too frequent and it becomes disruptive, too rare and the contract drifts off market.

- **Q:** Who pays for the benchmarking exercise?
  **A:** Usually the customer commissions it, but a common compromise is to split costs or shift them to the supplier if a large gap is found.

- **Q:** What qualifies as a like-for-like comparison?
  **A:** The comparison must account for the same service scope, volumes, SLA levels, and support model. A benchmark that ignores customisation or scale will produce a misleading result.

- **Q:** What happens if the supplier disputes the benchmarker's findings?
  **A:** The clause should set an escalation path: discussion within a set period, then referral to an independent expert whose decision is final and binding.

- **Q:** Can the supplier refuse to adjust prices after a benchmark?
  **A:** Only if the clause gives discretion rather than a binding obligation. Customers should insist on automatic adjustment or, at minimum, a clear termination right if the supplier refuses.

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