Contracts should be a catalyst for business, not a barrier. Yet, for many companies, contracts remain a source of friction—slowing down deals, creating uncertainty, inviting lengthy negotiations. The problem isn’t just legal complexity; it’s a lack of visibility into how contract terms compare to the market.
This is where contract benchmarking comes in. By comparing contract terms to industry standards, companies can identify hidden risks, improve fairness, and streamline deal-making. Rather than negotiating in the dark, benchmarking gives businesses a data-driven way to craft contracts that are trusted, balanced, and market-ready.
Contracts are more than just legal documents; they define business relationships, allocate risk, and establish trust. When companies fail to benchmark their contracts, they often face one of two problems.
Overly aggressive contracts slow down deals. Contracts that unfairly shift risk to the other party invite pushback. Legal teams scrutinize the terms, procurement demands changes, and negotiations stretch out for weeks or months. What should be a straightforward deal turns into sales delays and long contract review cycles.
Weak contracts expose businesses to unnecessary risk. On the other end of the spectrum, some companies sign contracts without fully understanding what they’re agreeing to. Without benchmarking, they may accept terms that are far outside industry norms—leaving them vulnerable to liability, compliance issues, or one-sided obligations.
By benchmarking contracts against real-world data, businesses can avoid both extremes. Instead of relying on instinct or guesswork, they can make informed decisions based on objective market comparisons.
At its core, contract benchmarking is about answering two critical questions.
To answer these questions, TermScout takes a data-driven approach to contract benchmarking. Rather than relying on anecdotal experience, we analyze thousands of contracts to establish clear, objective standards.
The first step in benchmarking is gathering data on existing contract terms. TermScout uses proprietary AI to extract over 750 specific data points from each contract, covering key provisions like:
By standardizing contract data across thousands of agreements, TermScout provides apples-to-apples comparisons, allowing companies to see exactly where their contract terms fall on the spectrum.
Once the data is collected, TermScout’s benchmarking engine rates contracts based on fairness and favorability. A contract can fall into one of three categories.
Vendor favorable contracts significantly favor the seller, shifting risk to the buyer.
Balanced contracts fairly allocate risk between both parties.
Customer favorable contracts offer more protections and favorable terms to the buyer.
These ratings provide a clear, objective snapshot of how a contract compares to industry standards. Instead of relying on opinions, businesses can use real-world data to assess their position.
Not all risks are created equal. Even a contract that is mostly balanced can contain deal-breaker clauses—terms that are so one-sided that they can derail negotiations entirely.
Common deal-breakers include total disclaimers of liability, making it impossible for the customer to hold the vendor accountable. Broad data usage rights can give the vendor unrestricted access to customer data. Non-compete or non-solicit clauses may restrict a company’s ability to hire or work with competitors. Auto-renewals with aggressive price hikes can create uncertainty around future costs.
By flagging these deal-breakers upfront, benchmarking helps businesses eliminate unnecessary obstacles before they cause delays.
The final step in benchmarking is optimizing contracts to reduce friction. Once a company understands how its contracts compare to the market, it can:
Remove unnecessary risks that trigger redlines and objections
Align with industry standards to accelerate deal cycles
Proactively address common negotiation points to avoid delays
For companies that want to go further, TermScout Certify™ provides independent certification that a contract is balanced or customer favorable. This certification acts as a trust signal, giving buyers confidence that the contract is fair and ready to sign without the need for endless negotiations.
For businesses that rely on contracts to drive revenue, benchmarking isn’t just a legal exercise—it’s a competitive advantage. Companies that benchmark and certify their contracts can speed up deal cycles by removing redlines and objections, reduce legal costs by cutting down on disputes and revisions, improve customer trust by ensuring contracts align with market standards, and close deals faster with a frictionless contract experience.
At TermScout, we believe contracts should accelerate deals, not slow them down. That’s why we provide businesses with the tools to benchmark, certify, and optimize their contracts for a faster, fairer sales process.
If you’re ready to stop losing deals to contract friction, contract benchmarking is the first step. Reach out to TermScout to see how we can help you turn your contracts into an asset, not an obstacle.