Broadcom Subscription Conversion
Introduction – Broadcom’s Push to Subscription
Broadcom is aggressively pushing enterprise customers away from perpetual software licenses and toward subscription-based models.
After acquiring companies like CA, Symantec, and, most recently, VMware, Broadcom has made it clear that perpetual licensing is being phased out in favor of recurring subscriptions. Read our complete guide to Broadcom Subscription vs Perpetual Licensing: How to Choose the Right Model.
Tactics to drive this shift include increasing maintenance fees on perpetual licenses, withholding new features from perpetual versions, shortening support timelines, and offering “conversion incentive” deals to those who trade in their perpetual licenses.
Without a solid negotiation, converting to subscription can become costly and one-sided – benefiting Broadcom’s revenue goals at the expense of your IT budget.
This guide provides a practical playbook for negotiating maximum value if you switch, as well as how to defend staying on perpetual if that’s the better path for your organization.
Broadcom’s goal is clear: they want the steady, predictable revenue of subscriptions. VMware customers, for example, have already seen the end of new perpetual license sales and even limits on renewing support for existing licenses.
If you do nothing, you could face spiraling costs, feature loss, or even unsupported software. The good news is that with the right negotiation strategies, you can turn this situation into an opportunity to extract concessions and protect your interests.
Let’s break down what to negotiate when converting, how to secure price protections, transition tactics to avoid double-paying, and tips if you choose to remain on perpetual licensing despite the pressure.
What to Negotiate When Converting
When Broadcom pushes you to convert your perpetual licenses into a subscription model, don’t accept the default terms. Go into the conversation with a checklist of key value points to negotiate.
Here are the top items you should insist on in any conversion deal:
- License Credit for Past Investment: You’ve likely spent significant capital on perpetual licenses over the years. Negotiate a credit toward the new subscription fees based on that historical investment. For example, if you paid $500,000 for VMware perpetual licenses, ask Broadcom to apply that as a credit against your first-year subscription cost. This ensures you’re not paying twice for the same software. (Sample clause: “Customer’s prior perpetual investment of $X shall be applied as credit against the first year of subscription fees.”)
- Discount Continuity: If you had discounted pricing on your original licenses or maintenance (e.g., a 20% discount off the list price), demand that the same discount level be carried over to the subscription. Broadcom’s initial subscription quotes may eliminate legacy discounts, potentially leading to a significant price increase. Ensure that any pre-existing discount percentages are preserved in the new subscription model, so you’re not paying full list rates all of a sudden.
- Dual-Use Rights (Transition Period): Avoid the trap of double-paying during your migration. Negotiate dual-use rights allowing you to run your existing perpetual licenses in parallel with the new subscription licenses for a defined period (commonly 6–12 months). This grace period allows your team to transition users and systems to the new version without rushing – and without incurring the cost of two licenses for the same product. Make sure it’s explicit that you can use both the perpetual and subscription software concurrently, so there’s no gap in coverage. (Sample clause: “Customer may continue to use existing perpetual licenses for 12 months alongside subscription licenses to enable a smooth migration without additional cost.”)
- Feature Parity Assurance: One risk of switching licensing models is ending up with less functionality than you had. Ensure that the subscription offering includes all the features and capabilities that your perpetual licenses cover. Sometimes, vendors restructure product bundles so that certain features (such as integration tools, advanced reporting, and security add-ons) may only be available in higher-tier subscriptions. You must negotiate feature parity – meaning you should not lose any functionality or usage rights in the move to subscription, unless you explicitly agree to drop something. If your perpetual VMware suite included a particular feature, your new subscription should also include it, ideally at no extra charge. (Sample clause: “All functionality available under prior perpetual licenses shall remain available under the equivalent subscription at no additional cost.”)
By focusing on these key areas, you turn the conversion discussion into one about value exchange. If Broadcom wants you to give up perpetual, they need to compensate you with credits, sustained discounts, and assurances that you’re not losing out.
Next, let’s look at protecting yourself from price escalations once you’re on a subscription.
Renewal & Price Protections
A major concern with moving to a subscription model is the potential for cost creep over time. Broadcom’s subscriptions might come with an attractive first-year price, only to hit you with steep increases at renewal.
Since you no longer “own” the software, you’re vulnerable to price hikes because walking away means losing access.
Mitigate this by negotiating ironclad renewal and pricing protections up front:
- Caps on Renewal Increases: Set a strict cap on how much the subscription fee can increase at renewal time. A common ask is a 3% to 5% annual cap on price increases, with no compounding (meaning each year’s increase is calculated on the original price, not on a newly inflated price). For example, negotiate language that “subscription renewals shall not exceed a 5% increase per year over the prior term’s fees.” This protects you from double-digit surprises in year 2 or 3. Broadcom often targets aggressive growth, so without a cap, they might attempt yearly uplifts of 8–10% (or higher) – lock it down in the contract.
- Multi-Year Price Locks: If possible, secure a multi-year subscription term with fixed pricing. For instance, commit to a 3-year subscription where the annual fee is predetermined (or at least the increase is fixed as noted above). A multi-year agreement can sometimes help you negotiate a better overall discount, as Broadcom receives the longer commitment. The key is ensuring you know what years 2, 3, and beyond will cost. Avoid any clauses that allow Broadcom to “re-price” or “re-benchmark” the deal at renewal – push for predictable costs for the duration of your contract.
- Carry-Forward of Existing Discounts: As mentioned earlier, ensure that any special pricing you have today is reflected in the new deal. If you currently pay 25% less than the list price for maintenance, your subscription should also be 25% off the standard rate. Prevent Broadcom from resetting your discount level just because it’s a “new” contract. Explicitly document your discount in the agreement (e.g., “Pricing reflects a X% discount off Broadcom’s standard rates, which shall carry into all renewals.”). This also helps protect you if Broadcom attempts to alter bundle packaging or part numbers – your discount should remain applicable regardless of product marketing changes.
- No Penalty for Downscaling at Renewal: While Broadcom will prefer to lock you in at a certain volume, negotiate flexibility for future adjustments. For example, if after a year you find you’re not using all the subscription licenses, you want the ability to reduce quantities at renewal without financial penalty. Subscription models often make it easier to scale up, but not down. Try to include terms that allow you to right-size in the future (or at least avoid built-in minimum annual spend increases).
By securing these renewal and pricing terms, you prevent the situation where Broadcom lures you in with a tolerable first-year price and then ramps up costs drastically later.
Always remember: the time to nail down renewal conditions is before you sign the conversion deal, when you still have leverage – not when you’re a year in and have no easy way out.
Read what to do with legacy contracts, Broadcom Legacy Perpetual Contracts – What Customers Need to Know.
Transition Tactics
Switching from perpetual licenses to subscriptions can be a disruptive process if not carefully managed. You want to minimize operational risk and avoid any period of double-paying for software.
Use these transition tactics in your negotiation and planning:
- Grace Period Overlap: As noted under dual-use rights, insist on a grace period that allows your perpetual licenses and new subscriptions to overlap. This ensures business continuity. Typically, customers negotiate a 6- to 12-month overlap during which both licenses are valid. During this time, you might, for example, continue running VMware on your perpetual licenses while testing or migrating workloads to the new subscription-based environment. The clause should state that this overlap comes at no additional cost – it’s essentially an extension of your old license rights during the migration window.
- Subscription Start Date Alignment: Align the subscription start date with the completion of your migration or the expiration of your current support term, whichever occurs later. In practice, this means that if your perpetual license support ends on December 31 and you need three more months to complete the transition, the subscription “clock” shouldn’t start until January 1 (or whenever you have fully completed the move). Do not let Broadcom start the subscription term immediately upon signing if you won’t be able to utilize it right away. Negotiate that the subscription term begins only when you actually transition (or on a specific future date that accounts for a reasonable migration timeline). This avoids paying for time when you’re still primarily using the old system.
- Migration Assistance: Changing licensing models might come with technical migration (new license keys, different versions, or editions to install) and administrative work. Request that Broadcom provide migration support as part of the deal. This could include technical consultants or support engineers to help implement the new software version, data migration tools, or even contractual flexibility during the switch (for example, the ability to swap certain licenses for equivalent subscription entitlements). The smoother Broadcom can make your transition, the less it costs you in downtime or extra effort. Ensure they make it their responsibility to ensure you’re fully up and running on the subscription before decommissioning your old licenses.
- Avoiding Gaps in Support: Ensure that there is no gap in support coverage during the changeover. If your perpetual support is ending and subscription support is starting, they must seamlessly cover you. One tactic is to get Broadcom to extend your perpetual support until the new subscription is live (possibly as part of that overlap period). That way, you’re not left unsupported if delays happen. All support entitlements (technical help, updates, security patches) should continue uninterrupted throughout the transition.
- Document Conversion of Entitlements: Ensure the contract or an attachment clearly outlines how your existing license entitlements are converted into the new model. For example, “10 perpetual licenses of Symantec product X convert into 10 subscription licenses of product Y (equivalent edition)”. This inventory mapping helps prevent confusion later – you don’t want Broadcom claiming you only have eight subscriptions because of some bundle change. Everything you had rights to should carry over one-for-one (unless you intentionally drop something as part of a negotiated scope reduction).
By planning these transition details, you protect your organization from the common pitfalls of switching licensing midstream – like paying two bills, losing support, or rushing a migration and breaking something. A well-negotiated transition plan can save tens of thousands of dollars and countless hours of headaches.
If Staying Perpetual
What if, after all the pressure, you decide not to convert to subscription (at least not yet)? Many enterprises have valid reasons to stay on perpetual licenses: cost predictability, regulatory or security requirements, or simply the fact that you’ve already paid for the licenses and they serve your needs.
Broadcom may not make it easy, but you can negotiate terms to protect your interests as a perpetual customer.
Here’s how to defend your position:
- Justify Your Stance: Clearly communicate (to Broadcom and internally) why staying perpetual is important for your organization. For instance, you might have long-term cost stability since the licenses are paid off, or perhaps certain products are deeply embedded and certified in your environment, making a sudden change risky or non-compliant. Emphasize the value of ownership and control – with perpetual licenses, you aren’t dependent on Broadcom’s pricing whims for continued usage.
- Cap Maintenance Fee Increases: Broadcom may attempt to make staying on maintenance almost as expensive as switching by increasing support fees annually (often by 8–10% or more). In your support renewal negotiations, push back hard on these hikes. Negotiate a cap on maintenance increases similar to the subscription renewal cap – e.g., no more than 3–5% per year. If you have a multi-year maintenance contract, try to lock the rate for that period. Use market benchmarks: if peers or industry averages for maintenance are, say, 20% of license cost, argue against Broadcom trying to elevate it beyond that without justification.
- Assurances of Continued Support: One of the biggest fears of not converting is that Broadcom will declare your product or version “end of support” to force your hand. To counter this, seek written assurance of support for longevity. For example, obtain a commitment that you can continue renewing support for your current product for at least a certain number of years, or that if support is slated to end, you will be offered an alternative (even if it’s through third-party support partnerships) to bridge any gaps. While Broadcom might not give an indefinite promise, you can often negotiate support extensions for a high-priority customer. Make it part of the deal that if you forego conversion now, Broadcom will still provide the necessary updates and assistance on your existing licenses for the foreseeable future.
- Leverage Third-Party Support Options: As a negotiation angle, remember you do have alternatives. There are third-party maintenance providers (for VMware, Symantec, etc.) that can support legacy versions at a lower cost. If Broadcom’s maintenance quote becomes extortionate, mention that you are evaluating third-party support or even alternate solutions. Often, the mere possibility of losing your support business can motivate Broadcom to soften its stance on price increases. It shows them you’re not completely at their mercy. (Be sure to only use this if it’s a viable option for you, though – bluffing without a plan B can backfire.)
- Consider Selective Conversion: Perhaps you stay perpetual on core systems but remain open to subscription for new projects or secondary products. This hybrid approach can be a way to appease Broadcom somewhat (“We might convert Product X next year, but Product Y we need to keep perpetual now”). In such cases, negotiate conversion guarantees – e.g., “We’ll consider moving Product X in 12 months under agreed pricing conditions, and Broadcom will, in return, freeze our maintenance rate on Product Y this year.” Use future conversions as a bargaining chip to secure better terms on what you retain today.
Staying on perpetual licenses is about buying time and preserving value.
You want to maintain support and functionality as long as possible without overspending, until it either makes sense to switch or you find alternatives. Make Broadcom earn your conversion later by showing you reasonable treatment now.
Checklist: Must-Have Conversion Clauses
If you do proceed with converting to a subscription under Broadcom, certain contract clauses are absolutely critical to include.
Use this checklist of must-have clauses in the agreement (and don’t rely on verbal promises – get everything in writing):
- License Credit Clause: “Customer’s prior perpetual investment of $X shall be applied as credit against the first year of subscription fees.” – This ensures you receive financial credit for the money already spent on licenses.
- Dual-Use Rights Clause: “Customer may continue to use existing perpetual licenses for 12 months alongside subscription licenses to enable migration.” – This clause grants the agreed overlap period where both license types can be used concurrently.
- Feature Parity Clause: “All functionality available under prior perpetual licenses shall remain available under subscription at no additional cost.” – Guarantees you aren’t losing features or getting a lesser edition when you switch.
- Renewal Cap Clause: “Subscription renewals shall not exceed a 3% annual increase over the prior term’s fees.” – Protects you from excessive price hikes in the future. Adjust the percentage to what you negotiated (3% or 5% are common targets).
- Price Lock / Discount Carry-Over Clause: While not quoted above, include language stating that any special pricing or discounts previously offered will continue. For example, “The pricing in this order includes a XX% discount off standard rates, which shall apply to all renewal periods as long as the subscription remains continuous.”
- Subscription Start and Co-Terminus Clause: Specify the exact start date of the subscription term (especially if delayed to align with migration or support expiry) and ensure all new subscriptions co-term (end on the same date) for simplicity. For example, “The subscription term for Product X will commence on [Date] or upon completion of Customer’s migration, whichever is later.”
- Exit/Reversion Clause (Optional): In some cases, customers negotiate a safety clause. For example, if the subscription isn’t delivering value, you may have the right to revert to a perpetual license or receive a refund for the unused term. Broadcom might resist this, but it doesn’t hurt to ask for some exit protection if things go south.
Before signing, review the contract against this checklist. If any of these protections are missing, return to Broadcom and request that they be included. It’s easier to spend the time negotiating clauses now than to regret their absence later.
FAQs
Q: Will Broadcom force me to switch to subscription?
A: Broadcom cannot literally “force” you to give up a perpetual license you already own – that license is yours to use indefinitely. However, they can apply pressure and constraints that make staying on perpetual very difficult. For instance, Broadcom can refuse to offer renewals for support/updates on certain perpetual products, effectively leaving you with an outdated or unsupported system unless you switch. They can also sharply increase maintenance costs or cease development of new features for the perpetual version. In short, while you won’t have your software turned off, Broadcom’s policies may force your hand over time if you need ongoing support, patches, or improvements. Always remember that you have the choice to continue using what you have, but you will need a support plan (either through Broadcom or third parties) if you decide to hold out.
Q: Can I keep my perpetual VMware licenses under Broadcom?
A: Yes, if you already purchased VMware perpetual licenses, those licenses remain valid. You can continue to use your VMware software on a perpetual basis as long as you want. The challenge is that Broadcom has ended the sale of new perpetual licenses and will eventually stop providing standard support for perpetual customers. This means you won’t be able to purchase additional licenses to expand your environment using the old model, and after your current support contract expires, Broadcom will encourage you to transition to a subscription for continued support. You can choose to keep running your VMware environment without Broadcom support (or with a third-party support provider), but this comes with risks (no official patches, potential compliance issues). Many VMware customers are evaluating their timelines: some are staying on perpetual for now and using third-party support to extend the life of their investment, while others plan a transition to Broadcom’s subscription when their business case or budget allows. Bottom line: You can keep using perpetual licenses you own, but plan for what to do when Broadcom’s support and updates cease for those licenses.
Q: What happens to maintenance if I decline the conversion offer?
A: If you say “no” to Broadcom’s subscription conversion proposal, a few things could happen with your maintenance:
- Higher Maintenance Quotes: Broadcom may respond by increasing your annual maintenance fees significantly at your next renewal. This is a common tactic to make the status quo less attractive. Don’t be surprised if the maintenance renewal quote comes back much higher than last year’s, especially if your contract doesn’t fix the rate. They might cite “changes in support structure” or new bundle requirements to justify it. You should negotiate hard to minimize any increase (as discussed earlier, try to cap it at a reasonable level).
- Non-Renewal of Support: In some cases, Broadcom may eventually refuse to renew your support contract altogether (as we’ve seen with some legacy Symantec and VMware products). This means that once your current support term ends, you will either need to switch to a subscription to receive support or operate without a support agreement in place. It’s essentially Broadcom saying, “Subscribe or no service.” This outcome is severe, and Broadcom typically gives notice if a product’s support is being discontinued. Always ask them directly: “If we choose not to convert, will you continue to offer us support renewals? For how long?” Get clarity so you can plan.
- Product Obsolescence: Sometimes a refusal to convert might coincide with Broadcom declaring that the product/version is end-of-life. In such cases, maintenance might be moot because the product is being phased out. Broadcom could offer a newer product (on subscription) as the only path forward. Keep an eye on Broadcom’s product roadmaps and support lifecycle announcements to stay informed and avoid surprises.
In summary, if you decline to convert, prepare for Broadcom to apply pressure through the maintenance channel.
Your best defense is to negotiate maintenance terms (price caps, guaranteed renewals) proactively, or have alternatives ready (like third-party support or even migrating to a different solution) to maintain leverage.
It’s not the end of the world to say no, but make sure you’re protected against the possible outcomes.
Q: Are there alternatives to converting, like third-party support or switching vendors?
A: Yes, and these alternatives can be part of your negotiation strategy. Some customers choose to contract with third-party support providers to maintain their perpetual software after Broadcom’s official support ends or becomes too expensive. Companies like these often support older versions of VMware, CA, or Symantec products at a fraction of the cost of Broadcom’s products. This can buy you a few more years on your perpetual licenses. Another alternative is evaluating competing products; for instance, if Broadcom’s terms for a VMware subscription are too onerous, an organization might consider other virtualization or cloud solutions as leverage. While switching vendors or solutions is not trivial, the mere fact that you have options gives you negotiating power. Broadcom ultimately doesn’t want to lose you as a customer (they’d rather have you on subscription than see you leave entirely), so mentioning that you’re considering “all options” – including third-party support or competing software – can sometimes lead to a better offer. Always research the viability of these alternatives before using them as a bluff. However, you are not completely captive; you have options, and you should evaluate them in parallel with negotiating with Broadcom.
(Feel free to adapt these FAQs to your specific scenario. The key is understanding Broadcom’s likely moves and having a clear plan, whether you decide to transition or stay put.)
5 Actionable Negotiation Tips
Finally, to wrap up, here are five concrete tips to maximize your leverage and secure a fair deal when facing Broadcom’s subscription push:
- Don’t Switch Without Credit: Never agree to switch to a subscription without getting credit for the perpetual licenses you’ve already paid for. Remind Broadcom of the significant investment you’ve made historically and insist on a meaningful offset in the new pricing. This could be an upfront credit or a heavily discounted initial subscription term. The worst outcome is paying full price as if you’re a new customer when you’ve spent millions on licenses over the years.
- Secure Dual-Use Rights: Always include a dual-use or transition period in the deal. This protects you from having to double-pay or rush the migration. You maintain continuous service on the old system until the new one is fully in place. Without this, you may find yourself in a costly race to deploy the new licenses before your old ones expire. Make dual-use rights non-negotiable on your checklist.
- Lock In Renewal Caps and Term Length: Negotiate the future, not just the first-year price. Insist on a cap (e.g. 5% or less) on annual renewal increases and try to get a multi-year commitment to prices. If Broadcom’s rep says, “We’ll discuss renewals later,” that’s a red flag – discuss it now. Having these protections in writing means you won’t be ambushed by a huge price jump down the line when you have no easy way out.
- Insist on Feature Parity (No Downgrades): Do not accept any reduction in functionality or support as the cost of moving to subscription. If your current licenses have specific capabilities, ensure the new licenses match or exceed them. If Broadcom only offers the features you need in a higher subscription tier, push to get that tier for the price of the lower tier (or some concession) since you effectively already paid for those features before. Never let the conversion leave you worse off in terms of product capability.
- Protect Perpetual Options: If you choose to remain on perpetual for now, negotiate safeguards to protect your interests. Cap your maintenance increases to control costs. Demand commitments for ongoing support. And keep an eye on Broadcom’s moves – if they announce the end of life for your product, engage early to understand your options. In parallel, continue to evaluate third-party support or other solutions as contingency plans. Showing Broadcom that you’re willing to walk away (and have a plan to do so) is often the best way to improve their offer.
By following these tips, you’ll approach Broadcom’s proposed “trade-in” not as a passive recipient of their terms, but as an informed customer with a strategy.
Broadcom’s sales team is prepared to push hard – but with this playbook, so are you. Good luck, and happy negotiating!
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