Cap-and-floor pricing clause: Copy, customize, and use instantly
Introduction
A cap-and-floor pricing clause sets minimum (floor) and maximum (cap) price limits for goods or services under a contract. This clause provides pricing stability and protects both parties from extreme market fluctuations. It is especially useful in long-term agreements where market conditions are unpredictable.
Below are cap-and-floor pricing clause templates tailored to various scenarios. Copy the one you need, customize it, and add it to your contract.
Standard cap-and-floor pricing clause
This clause establishes basic price boundaries.
The price for [goods/services] under this agreement will not exceed [insert maximum price] per [unit] (cap) and will not fall below [insert minimum price] per [unit] (floor). Prices will be reviewed on [insert frequency, e.g., "an annual basis"] to ensure compliance with these limits.
Indexed adjustment cap-and-floor clause
This clause ties pricing to an external index.
The price of [goods/services] will be adjusted based on the [insert index, e.g., "Consumer Price Index"] but will not exceed [insert maximum price] (cap) or fall below [insert minimum price] (floor). Adjustments will occur every [insert period] and are subject to mutual agreement.
Market-driven cap-and-floor clause
This clause adjusts limits based on market conditions.
The price of [goods/services] will fluctuate with market rates but will remain between [insert floor price] and [insert cap price]. Market rates will be determined by [insert source, e.g., "average industry benchmark"] on [insert frequency].
Cap-and-floor for multi-tier pricing clause
This clause applies limits to different pricing tiers.
For Tier 1 [goods/services], prices will range between [insert floor price] and [insert cap price]. For Tier 2, prices will range between [insert floor price] and [insert cap price]. Pricing tiers will be reviewed every [insert time period].
Conditional cap-and-floor pricing clause
This clause applies price limits only under specific conditions.
The price of [goods/services] will be capped at [insert maximum price] and floored at [insert minimum price] during [specific conditions, e.g., "supply shortages or surpluses"]. Outside of these conditions, standard market rates will apply.
Sliding scale cap-and-floor clause
This clause allows flexible limits based on volume or performance.
For volumes up to [insert threshold], the price will be capped at [insert maximum price] and floored at [insert minimum price]. For higher volumes, the cap will increase to [insert adjusted cap], and the floor will decrease to [insert adjusted floor].
Seasonal cap-and-floor pricing clause
This clause adjusts limits based on seasonal demand.
During [high-demand season], the price of [goods/services] will range from [insert floor price] to [insert cap price]. During [low-demand season], prices will range from [insert alternate floor price] to [insert alternate cap price]. Seasonal periods are defined as [insert details].
Cost-plus cap-and-floor pricing clause
This clause includes limits based on production costs.
The price of [goods/services] will be calculated as [insert percentage] above production costs, subject to a minimum of [insert floor price] and a maximum of [insert cap price]. Production costs will be audited quarterly to ensure accurate pricing.
Renewable cap-and-floor clause
This clause includes automatic price reviews for contract extensions.
Upon renewal of this agreement, the cap and floor prices will be reviewed and adjusted based on [insert criteria, e.g., "inflation rates or market conditions"]. The adjusted prices will not exceed [insert cap] or fall below [insert floor].
Dynamic cap-and-floor pricing clause
This clause adjusts limits based on specific performance metrics.
The price of [goods/services] will range between [insert floor price] and [insert cap price], subject to adjustment based on [performance metric, e.g., "delivery speed or quality benchmarks"]. Adjustments will be reviewed quarterly.
Multi-currency cap-and-floor pricing clause
This clause sets limits for pricing in multiple currencies.
The price of [goods/services] will not exceed [insert cap in currency] or fall below [insert floor in currency]. These limits will apply across all transactions in [list applicable currencies, e.g., "USD, EUR, GBP"] and will be adjusted for currency fluctuations annually.
Industry-standard cap-and-floor clause
This clause ties limits to standard industry pricing practices.
The price of [goods/services] will adhere to industry standards, with a cap of [insert maximum price] and a floor of [insert minimum price]. These boundaries will align with the [industry standard or report] published by [insert authority, e.g., "Trade Association"].
Emergency cap-and-floor pricing clause
This clause establishes special limits for emergencies.
During periods of [emergency or market disruption], the price of [goods/services] will remain within a range of [insert floor price] and [insert cap price]. These limits will be reassessed after [insert duration].
Regional cap-and-floor clause
This clause varies limits based on regional markets.
For sales within [Region A], prices will range between [floor price] and [cap price]. For [Region B], prices will range between [alternate floor price] and [alternate cap price]. Regional pricing will be evaluated bi-annually.
Collaborative cap-and-floor clause
This clause requires mutual agreement for limit adjustments.
The price of [goods/services] will remain between [insert floor price] and [insert cap price]. Any adjustments to these limits must be mutually agreed upon by both parties in writing and reviewed annually.
Volume-based cap-and-floor clause
This clause ties price limits to purchase volumes.
For orders exceeding [insert volume threshold], the price will not exceed [cap price] and will not fall below [floor price]. For smaller orders, pricing will follow standard rates outside these limits.
Promotional cap-and-floor clause
This clause sets temporary limits during promotional periods.
During the promotional period of [insert dates], the price of [goods/services] will range between [floor price] and [cap price]. After the promotional period, standard rates will apply.
Indexed cap-and-floor clause with review
This clause ensures periodic reviews tied to an index.
The price of [goods/services] will align with the [insert index] but remain within a cap of [maximum price] and a floor of [minimum price]. Pricing will be reviewed semi-annually for index-based adjustments.
Buyer-protection cap-and-floor clause
This clause prioritizes buyer protection against excessive pricing.
The price of [goods/services] will not exceed [cap price] to protect the buyer from market surges and will not fall below [floor price] to ensure fair compensation for the seller. Price reviews will occur every [insert frequency].
Seasonal cap-and-floor pricing clause
This clause adjusts price limits for seasonal fluctuations.
The price of [goods/services] will range between [floor price] and [cap price], with adjustments allowed during peak seasons to account for demand changes. Seasonal reviews will occur each quarter.
Performance-based cap-and-floor clause
This clause links pricing limits to the seller's performance.
The price of [goods/services] will be subject to a cap of [maximum price] and a floor of [minimum price], contingent on meeting agreed performance metrics such as [delivery time, quality, etc.].
Risk-sharing cap-and-floor clause
This clause allocates risk between the parties within specified limits.
The price of [goods/services] will range between [floor price] and [cap price]. Any deviations caused by unforeseen risks, such as [market disruption or supply chain issues], will be shared equally by both parties within this range.
Duration-based cap-and-floor clause
This clause applies limits based on the contract duration.
For the first [insert duration, e.g., "12 months"], the price of [goods/services] will range between [floor price] and [cap price]. After this period, the limits will be renegotiated based on market conditions.
Energy market cap-and-floor clause
This clause is tailored for energy or utility pricing.
The price of [energy supply/service] will not exceed [maximum price per unit] or fall below [minimum price per unit], adjusted quarterly based on [energy index or regulatory guidance].
Subscription cap-and-floor clause
This clause applies to subscription-based pricing models.
Subscription fees for [services] will remain between [floor price] and [cap price], with reviews conducted annually based on usage and customer feedback.
Fixed-period cap-and-floor clause
This clause establishes limits for a fixed time frame.
The price of [goods/services] will be capped at [maximum price] and floored at [minimum price] for the initial [insert duration]. Any revisions will require a minimum notice period of [insert time frame].
Regulatory cap-and-floor clause
This clause adheres to regulatory-imposed limits.
The price of [goods/services] will comply with regulatory pricing guidelines, with a cap of [maximum price] and a floor of [minimum price]. Adjustments will align with changes in relevant regulations.
Multi-tiered cap-and-floor clause
This clause sets different limits for various transaction tiers.
For orders below [volume threshold], the price will range from [floor price] to [cap price]. For orders above this threshold, a new range of [adjusted floor price] to [adjusted cap price] will apply.
Penalty-adjusted cap-and-floor clause
This clause adjusts limits based on penalty clauses.
The price of [goods/services] will range between [floor price] and [cap price]. Penalties for non-compliance or delays will be calculated separately but will not affect these established limits.
Dynamic adjustment cap-and-floor clause
This clause allows real-time price adjustments based on predefined triggers.
The price of [goods/services] will fluctuate between [floor price] and [cap price], with dynamic adjustments triggered by changes in [market index, demand levels, or cost inputs].
Market-driven cap-and-floor clause
This clause ties pricing limits to specific market indicators.
The price of [goods/services] will be capped at [maximum price] and floored at [minimum price], indexed against [specific market index or benchmark]. Adjustments will occur quarterly.
Indexed cap-and-floor clause
This clause aligns pricing limits with an external index.
The price of [goods/services] will range from [floor price] to [cap price], adjusted annually based on the [insert index, e.g., "Consumer Price Index"].
Supply-chain specific cap-and-floor clause
This clause addresses risks in the supply chain.
The price of [goods/services] will remain between [floor price] and [cap price], with periodic reviews to account for supply chain disruptions or increased costs of raw materials.
Milestone-based cap-and-floor clause
This clause links pricing changes to project milestones.
The price of [goods/services] will range between [floor price] and [cap price]. Adjustments will only occur upon completion of key milestones as outlined in [section or schedule].
Volume discount cap-and-floor clause
This clause combines volume discounts with pricing limits.
For orders exceeding [threshold volume], the price will remain between [adjusted floor price] and [adjusted cap price]. Orders below this threshold will default to the standard range of [floor price] and [cap price].
Customer loyalty cap-and-floor clause
This clause rewards loyalty while maintaining limits.
Loyal customers with [specific tenure or purchase history] will have prices capped at [loyalty cap] and floored at [loyalty floor]. New customers will be subject to the standard range of [floor price] to [cap price].
Duration-specific cap-and-floor clause
This clause applies pricing limits only for a defined contract duration.
The price of [goods/services] will be maintained between [floor price] and [cap price] for the first [insert duration]. Subsequent renewals will require a renegotiation of these limits.
Risk-adjusted cap-and-floor clause
This clause accounts for shared risk exposure.
The price of [goods/services] will remain within the range of [floor price] to [cap price]. If external risk factors such as [natural disasters or market volatility] arise, both parties agree to share the impact equally within these limits.
Geographic-specific cap-and-floor clause
This clause varies limits based on location.
The price of [goods/services] will range from [floor price] to [cap price], adjusted by [percentage or value] for transactions occurring in [specific region or country].
Seasonal cap-and-floor clause
This clause adjusts limits based on seasonal fluctuations.
The price of [goods/services] will range between [seasonal floor price] and [seasonal cap price], with adjustments applied during peak or off-peak seasons as outlined in [schedule or agreement].
Performance-based cap-and-floor clause
This clause ties pricing to service or product performance.
The price of [goods/services] will remain within [floor price] and [cap price], adjusted based on the achievement of performance benchmarks specified in [section or appendix].
Industry-specific cap-and-floor clause
This clause incorporates pricing norms of a specific industry.
The price of [goods/services] will range between [floor price] and [cap price], consistent with prevailing pricing practices in the [specific industry] sector.
Inflation-adjusted cap-and-floor clause
This clause accounts for inflationary changes.
The price of [goods/services] will remain between [floor price] and [cap price], adjusted annually to reflect the inflation rate as measured by [specific index].
Escalation-triggered cap-and-floor clause
This clause establishes pricing changes upon escalation of costs.
If input costs for [goods/services] increase by more than [percentage], the price may adjust within the range of [floor price] to [cap price], subject to mutual agreement.
Startup-focused cap-and-floor clause
This clause reflects the pricing dynamics of startups.
For startups or new ventures, the price of [goods/services] will range between [introductory floor price] and [introductory cap price] for the first [duration]. Regular pricing limits will apply thereafter.
Capital expenditure cap-and-floor clause
This clause links pricing adjustments to capital investments.
The price of [goods/services] will range between [floor price] and [cap price]. Adjustments will occur to reflect any significant changes in capital expenditure required for production or service delivery.
Multi-tiered cap-and-floor clause
This clause applies different ranges for various product or service tiers.
Pricing for [basic tier] will range between [basic floor] and [basic cap], while [premium tier] will range between [premium floor] and [premium cap], as detailed in [schedule or appendix].
Contingency-driven cap-and-floor clause
This clause accounts for pricing adjustments during specific contingencies.
The price of [goods/services] will remain between [floor price] and [cap price], with temporary adjustments allowed in the event of [specific contingency, e.g., supply shortage or economic downturn].
Fixed-range introductory cap-and-floor clause
This clause sets limits for an initial period.
The price of [goods/services] will be capped at [introductory cap price] and floored at [introductory floor price] for the first [time period], with subsequent adjustments to regular limits as agreed.
Volume-based cap-and-floor clause
This clause adjusts pricing based on the volume of goods or services purchased.
The price of [goods/services] will range between [floor price] and [cap price], with adjustments based on the purchase volume as specified in [schedule or section].
Competitive market cap-and-floor clause
This clause ties pricing to industry competitiveness.
The price of [goods/services] will remain between [floor price] and [cap price], benchmarked against prevailing market rates for similar goods or services.
Renewable contract cap-and-floor clause
This clause applies to contracts that renew periodically.
For each renewal period, the price of [goods/services] will be adjusted within the range of [floor price] and [cap price], based on agreed-upon performance or market factors.
Geographic cap-and-floor clause
This clause adjusts pricing based on regional market conditions.
Pricing for [goods/services] will be capped at [regional cap price] and floored at [regional floor price], varying by geographic location as detailed in [section or appendix].
Dynamic demand cap-and-floor clause
This clause accounts for fluctuating demand levels.
The price of [goods/services] will remain within [floor price] and [cap price], adjusted dynamically based on real-time demand data.
Currency fluctuation cap-and-floor clause
This clause mitigates risks from currency exchange rate changes.
The price of [goods/services] will range between [floor price] and [cap price], with adjustments allowed to account for currency fluctuations beyond [specific threshold].
Sustainability-linked cap-and-floor clause
This clause incentivizes sustainable practices.
The price of [goods/services] will range between [floor price] and [cap price], with adjustments linked to the achievement of sustainability goals outlined in [specific section].
Event-triggered cap-and-floor clause
This clause adjusts pricing in response to specific events.
The price of [goods/services] will be capped at [event cap price] and floored at [event floor price], with adjustments triggered by events such as [list events, e.g., regulatory changes or supply chain disruptions].
Long-term contract cap-and-floor clause
This clause sets limits for extended agreements.
For the duration of this long-term agreement, the price of [goods/services] will range between [long-term floor price] and [long-term cap price], reviewed annually for potential adjustments.
Early termination cap-and-floor clause
This clause applies in case of early contract termination.
In the event of early termination, the price of [goods/services] delivered up to that point will remain within the range of [floor price] and [cap price], with adjustments calculated on a prorated basis.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.