Why SLAs are redundant, but Zencoder offers one anyway.
A few weeks ago, Zencoder published a new SLA. By SLA standards, we think it's pretty good: if our service isn't available 99.9% of a given month, we issue a service credit of 10%, and for every additional 1% of downtime, we issue another 10% credit, up to 100% of your monthly bill. Frankly, though, we feel a little ambivalent about offering an SLA. Most SLAs are worthless. They often have so many caveats and carve-outs that no one will ever see a single dime. And even when they're strong, they're marginally beneficial at best; for most people, service uptime is far more valuable than the money paid for the service. Think about it this way. If you're paying Rackspace $500/month for a server, and your server is down for 7 days, how much does that cost you? $500? Obviously not. The downtime might cost you $10,000, or even run you out of business. A service credit for downtime is a weak remedy at best. SLAs are redundant too. It would be odd for a service provider to be motivated to stay up by an uptime SLA, because with or without an SLA, an unreliable service provider is in trouble. So at least when it comes to uptime and availability, SLAs aren't a big motivator. So why offer an SLA at all?