Broadcom’s SaaS, On-Prem, and Consumption Licensing Models
Broadcom has shifted entirely to subscription licensing. By 2024, it stopped selling perpetual licenses for its major software portfolios. Customers now face three subscription models, each with different cost structures and risks.
This post explains Broadcom’s SaaS, on-premises subscription, and consumption-based licensing models in plain terms – and how to protect your organization in each.
Read our complete guide to Broadcom Subscription vs Perpetual Licensing: How to Choose the Right Model.
Broadcom’s New Licensing Landscape
Today, perpetual licenses are no longer available from Broadcom. All new deals use one of these models:
- SaaS subscription: Broadcom hosts the software in its cloud; you pay per user or unit for access.
- On-premises subscription: You deploy the software on your own servers; the license is term-based and must be renewed to continue use.
- Consumption-based license: Fees are tied to actual usage (for example, mainframe CPU consumption), offering flexibility but with cost variability.
Each model changes how you budget and negotiate. Below, we break down pricing, risks, and negotiation tips for each one.
SaaS Subscription Model
Broadcom’s SaaS licensing model delivers software as a service in Broadcom’s cloud. You typically pay per user, device, or data volume on an annual subscription.
Pricing: All costs are OPEX, with a recurring fee covering software use, support, and hosting. There’s no upfront license buy-in. Broadcom often requires multi-year commitments, and pricing is based on usage metrics (e.g. number of users or endpoints). You generally need to commit to a certain number upfront.
Risks: Vendor lock-in is high. If you don’t renew, you lose access to the software and potentially your data (ensure you have data export rights). Broadcom can also raise prices at renewal, knowing switching isn’t easy. Outages and performance are out of your hands – you rely on Broadcom’s SLAs.
Negotiation Tips: Negotiate price caps on renewals (e.g., “fees can’t increase more than 5% annually”). Get clear contract language on service availability and support response times. Additionally, consider negotiating flexibility to adjust user counts at renewal if your needs change. In SaaS deals, insist on clauses that secure data ownership and include a transition period in the event of service termination.
Example clause: “SaaS Price Cap: Vendor will not increase the annual subscription fee by more than 5% or CPI, whichever is lower, for any renewal term.”
On-Premises Subscription Model
The on-premises subscription model allows you to install and run the software in your own environment, while paying a time-limited license fee (e.g., yearly).
Pricing: This is essentially “term licensing.” You pay an annual (or multi-year) fee for a defined scope (number of servers, users, etc.). Support and updates are included during the term. Broadcom often offers initial discounts; however, be aware of the renewal pricing. They prefer multi-year agreements (often 3-year deals) and may bundle multiple products together.
Risks: If you let the subscription expire, you must stop using the software – a big leverage point for Broadcom. They have a track record of tough renewal tactics (like significant price hikes once you’re dependent). You also risk paying for more than you need if usage drops, as you’re locked in until the next renewal. Bundled deals can include shelfware (products you don’t actually use but are paying for).
Negotiation Tips: Secure Renewal Price Protections. Ensure any discounts you get on the first term carry forward. Include language that caps renewal increases or guarantees the same discount off the list price at renewal. Try to negotiate flexibility to reduce license counts if needed at renewal (Broadcom won’t offer it unless you request it). If Broadcom bundles products, demand transparency in pricing for each component and the right to swap or drop unused components at renewal.
Example clause: “Renewal Discount Continuity: Any renewal shall maintain at least the same discount percentage off the prevailing list price as was provided in the initial term.”
How to do the business case, Calculating TCO for Broadcom Licensing – Perpetual vs Subscription.
Consumption-Based Licensing Model
In Broadcom’s consumption-based licensing, costs are based on actual usage volume (for example, mainframe CPU use).
Pricing: You commit to a baseline usage (an expected minimum amount per year) and pay according to your actual consumption. If you exceed the baseline, you pay additional fees; if you use less, you still pay the committed minimum. This aligns cost to usage, but you always pay at least the baseline amount.
Risks: Spending can become unpredictable. A surge in usage will directly increase costs. Broadcom also sets a substantial minimum commitment, so you may incur additional costs if your needs fall short. Moreover, you rely on Broadcom’s monitoring of your usage, so transparency and accuracy are crucial.
Negotiation Tips: Build in spend controls. Negotiate a not-to-exceed cap on charges (to prevent runaway overage costs). Secure the right to adjust your baseline commitment downward at renewal if your actual usage drops. Insist on regular usage reports and audit rights to verify Broadcom’s numbers, ensuring you only pay for what you actually use.
Example clause: “Consumption Spend Cap: Customer’s annual fees shall not exceed 110% of the agreed baseline without written approval.”
Comparison of Broadcom Licensing Models
| Factor | SaaS Subscription | On-Premises Subscription | Consumption-Based License |
|---|---|---|---|
| Deployment | Vendor-hosted cloud service | Installed on customer’s own systems | On-prem or cloud, usage metered |
| Cost Basis | Per user/device or fixed usage tier | Per server, CPU, or user count (fixed fee) | Pay-per-use (e.g. MSUs, transactions) |
| Budget Predictability | Medium – fixed fee each term, but vendor can raise price at renewal | High – fixed during term; renewal price may change | Low – costs vary with usage; needs monitoring |
| Scalability | Can add users easily (cost goes up); reductions only at renewal | Fixed license count until renewal (true-down rarely allowed) | Flexible usage scaling, but often with minimum commitments |
| Vendor Lock-In | High – data and service in Broadcom’s cloud (switching is hard) | High – software ingrained on-prem; must renew to keep using | High – difficult to switch once reliant; cost spikes can lock you in |
| Typical Use | Broadcom SaaS security and agile tools | CA mainframe software, on-prem security, VMware software (all now term-based) | Broadcom Mainframe Consumption Licensing (MCL) program |
Buyer’s Checklist for Broadcom Contracts
Before signing a Broadcom subscription contract, review these points:
- Pricing Clarity: All fees and metrics should be clearly defined and transparent. No vague “to be determined” terms.
- Cap on Increases: Negotiate a cap on annual price increases (e.g., no more than 5% per year).
- Renewal Terms: Ensure that initial discounts or special pricing are carried over into renewals. Don’t allow a jump to full list price after the first term.
- Term Length: Align the contract term with your needs. Avoid overlong commitments. Know if it auto-renews.
- Exit Rights: Clarify what happens if you don’t renew. Ensure you have a plan for data export (for SaaS) or a short transition period to exit the software.
- Usage Flexibility: Can you reduce quantities at renewal if your needs drop? Get that in writing. Define true-up processes for growth and determine whether unused consumption can be rolled over.
- Bundling: List all products in a bundle, along with their prices. Avoid paying for components you don’t use – negotiate removal or swaps for any non-essential items.
Read our extensive FAQ, Broadcom Licensing Models FAQ – 20 Essential Buyer Questions Answered.
FAQ
Q: Can we still buy perpetual (evergreen) licenses from Broadcom?
A: Not for most products. Broadcom stopped selling new perpetual licenses for CA, Symantec, and VMware product lines by 2024. If you already have a perpetual license, you can continue using it, but support for these licenses is dwindling.
Q: Which products are SaaS vs. on-prem vs. consumption-based?
A: In general, cloud-delivered offerings (like some Symantec security services or Broadcom’s agile planning tools) are SaaS subscriptions. Traditional enterprise software that you install (e.g., CA mainframe tools, security software appliances, VMware infrastructure software) is sold as on-premises term licenses. Consumption licensing is currently mostly offered on the mainframe side (the MCL program for z/OS).
Q: How can we control costs under a consumption model?
A: Negotiate the contract to include a cap or “budget guardrail” on usage fees, so you’re not on the hook for unlimited overages. Also, actively monitor your usage. Treat it like a cloud service bill – set up alerts if you approach your usage commitment.
5 Strategies for Negotiating with Broadcom
- Start Early: Begin renewal talks well in advance of your contract expiration. Broadcom can’t use the ticking clock against you if you control the timeline. Also target Broadcom’s quarter-end or year-end for deals – they’ll be more eager to negotiate then.
- Show Alternatives: Make Broadcom believe you have options. Whether it’s considering a competitor or using third-party support, having a Plan B increases your leverage. Broadcom tends to soften its stance when it knows you could walk away.
- Scrutinize Bundles: Don’t accept Broadcom’s big bundle offers at face value. Push to remove or swap out products you don’t need.
- Get Everything in Writing: Every promise made by the sales team must be included in the contract. For example, if they say, “We won’t raise prices for three years,” ensure the contract explicitly states that. No handshake deals – lock in caps, discounts, and any special terms on paper.
- Leverage Your Entire Account: Coordinate internally and approach Broadcom as a single customer. If you’re buying mainframe software and security software, consider leveraging your total spend. Engage your executives (CIO/CFO) to communicate the importance of your business as a client. A united, high-level front can push Broadcom to be more reasonable on pricing and terms.
Broadcom’s aggressive licensing approach can be countered with the right preparation. Stay vigilant and use these tactics to secure a fair deal.
Read about our Broadcom Licensing Assessment Service.
