What is SLA?

A Service Level Agreement (SLA) is a formal contract that defines the minimum performance and availability standards a service provider must deliver to a customer. In hosting and cloud computing, SLAs typically guarantee a certain percentage of uptime, such as 99.9% or 99.99%, measured over a monthly or annual period. If the provider fails to meet these targets, the customer is entitled to service credits, which are often calculated as a percentage of the monthly fee.

SLAs work by establishing specific metrics, called Service Level Indicators (SLIs), and target thresholds, called Service Level Objectives (SLOs). Common SLIs include uptime, latency, throughput, and error rate. The provider monitors these metrics continuously and reports them to the customer. When a breach occurs, the customer must usually file a claim within a defined window to receive credits. The SLA also defines exclusions, such as scheduled maintenance or events beyond the provider's control (force majeure).

In the wider hosting stack, SLAs sit at the contractual layer above infrastructure and platform services. They are not technical guarantees in the strictest sense; they are business agreements that allocate risk and cost. A 99.9% SLA allows roughly 8.7 hours of downtime per year, while 99.99% allows about 52 minutes. Customers often choose SLAs based on their own application tolerance for downtime and the cost premium for higher guarantees. Major providers like AWS, Google Cloud, and Azure publish standardized SLAs for each service, with credit tiers ranging from 10% to 100% of the monthly bill depending on the severity and duration of the outage.