3 Types of Service Level Agreements
By Ron Avignone
What Is a Service Level Agreement?
A Service Level Agreement (SLA) is a contract between a service provider and a customer that spells out the specific, measurable performance standards each side agrees to meet, along with what happens if those standards aren't met.
The types of SLAs an organization can use depend on several factors, from how many customers a service covers to how much customization it needs. This is because the needs of one user differ from those of another. For a closer look at what belongs in a well-built SLA, see 6 Key Components of a Service Level Agreement (SLA).
Types of Service Level Agreements
Below are the three main types of SLAs used by businesses today, and how each one applies to specific situations:
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Customer-Based SLA
This type of agreement is used for individual customers and comprises all relevant services that a client may need, while leveraging only one contract. It contains details regarding the type and quality of service that has been agreed upon. For example, a telecommunication service includes voice calls, messaging and internet services, but that all exists under a single contract.
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Service-Based SLA
This SLA is a contract that includes one identical type of service for all of its customers. Because the service is limited to one unchanging standard, it's more straightforward and convenient for vendors to manage. A cloud hosting provider might promise 99.9% uptime to every customer on a given plan, or a support line might commit to a 2-hour response window for anyone who signs up, with no custom terms per account.
A common way to structure a service-based SLA is with priority tiers, so response and resolution times scale with how serious an issue is instead of treating every request the same way. IT help desks often use a P1 through P4 model: a P1 (a critical, company-wide outage) might carry a 30-minute response target, while a P4 (a minor cosmetic issue) might allow 48 hours or more. For a full breakdown of how these tiers work, see Prioritizing IT Tickets When Everything Is Urgent: The 3-Layer Framework.
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Multi-Level SLA
This agreement is customized according to the needs of the end-user company. It allows the user to integrate several conditions into the same system to create a more suitable service. It addresses contracts at the following levels:
- Corporate level: This SLA does not require frequent updates since its issues are typically unchanging. It includes a comprehensive discussion of all the relevant aspects of the agreement, and is applicable to all customers in the end-user organization.
- Customer level: This contract discusses all service issues that are associated with a specific group of customers. However, it does not take into consideration the type of user services. An example of this is when an organization requests that the security level in one of its departments is strengthened. The entire company is secured by one security provider, but one customer in the company needs to be more secure for certain reasons.
- Service level: In this agreement, all aspects that are attributed to a particular service with regard to a customer group are included.
Other Common SLA Variations: Internal SLA and OLA
Not every agreement that governs service expectations is a customer-facing SLA. Two related terms come up often enough to be worth knowing:
- An Internal SLA sets expectations between departments or teams within the same company, rather than between a business and an outside customer
- An Operational-Level Agreement (OLA) is the internal backing agreement that defines how different IT teams need to work together behind the scenes so the organization can actually meet the customer-facing SLA it promised
For a further discussion of how OLAs support SLAs, see Operational Level Agreements (OLAs): The Foundation to Every Service Level Agreement (SLA).
SLA Types at a Glance
Type |
Scope |
Best For |
Example |
|---|---|---|---|
Customer-Based SLA |
One customer, covers all their services |
Clients who need multiple services bundled under one agreement |
A telecom bundle covering voice, messaging, and internet under a single contract |
Service-Based SLA |
One service, same terms for every customer |
Vendors offering a standardized service at scale |
A help desk applying the same P1-P4 response targets to every ticket |
Multi-Level SLA |
Layered: corporate, customer, and service levels |
Organizations with varied departments or customer tiers |
A company-wide corporate SLA layered with a stricter customer-level SLA for one high-security department |
Once you've settled on the right SLA type, the next step is deciding how you'll measure it. SLA Formula: How to Calculate and Improve Service Level Agreement Scores and What SLA Metrics Are Worth Watching? 8 Key Metrics for Measuring Service Level Agreement Performance cover the specific formulas and metrics to build into your agreement.
If you're already gathering that data, Service Level Agreements: What Are SLA Compliance Reports and How to Measure Success shows how to turn it into a report leadership can actually use.
And if an SLA does get missed, Managing an SLA Breach: A Guide to Resolution and Prevention walks through how to handle it.
Categories: Business
