There are several penalties that can be incurred by service providers if they fail to uphold their service level agreement (SLA) responsibilities.
Service credits
Service credits, sometimes known as service level credits, are deducted from monies owed under a service level contract. Service credits are deducted when a service provider fails to meet standards set out in the service level agreement. Service providers can regain service level credits in the form of earn backs if agreed upon by both parties in the SLA. Providers are generally eligible for earn backs if they perform at or above the agreed service levels for a period of time.
Financial penalties
A service provider can be hit with a financial penalty for failing to meet its service management obligations. Both parties must agree in the SLA upon the failings needed to bring forward a financial penalty and the amounts required.
License extensions and support
In the event of failing to meet its obligations, a vendor can be required to extend the terms of the license or continue the contract without further charge.