The "fees paid in the prior 12 months" formula mirrors how many subscription and services businesses measure customer value. It scales with usage, is easy to calculate, and matches how insurers and finance teams model exposure. For multi-year deals, some contracts use the average of the last year or the total fees payable in the first year.
Buyers sometimes push for a higher cap (e.g., 18–24 months) when the solution touches critical systems or when switching costs are high. Vendors may agree if the extra exposure is limited to specific risks like data security, while keeping the general cap at 12 months.
Whatever number you land on, confirm whether the cap resets on renewal, whether it includes credits and refunds, and how it interacts with carve-outs that might be uncapped.
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