Reducing Support & Maintenance Costs in Broadcom Contracts
Introduction – Why Support Costs Must Be Negotiated
Broadcom’s support and maintenance fees are too costly to treat as a formality. Left unchecked, they often rise significantly each year.
CIOs and procurement must approach every support renewal as a negotiation.
By challenging Broadcom’s default terms and using strategic tactics, you can reduce support costs without risking coverage of critical systems.
Support is not a fixed overhead – it’s a controllable expense if you negotiate assertively.
For the ultimate guide, read Negotiating Broadcom Support & Maintenance: How to Secure Better Support Terms.
Why Broadcom Support Costs Escalate
- High Base Percentage: Broadcom sets maintenance at roughly 20% of the software’s list price per year. That is a substantial recurring cost in addition to the initial license.
- Annual Uplifts: It’s not unusual to see 5–10% support fee hikes each year in Broadcom’s renewal proposals. These increases are often justified by “expanded services” or inflation, far above typical cost-of-living adjustments.
- Unified Contracts: Broadcom sometimes bundles products into one support contract. This umbrella approach simplifies billing but hides individual product costs. You might not notice one product’s support spiking in price because it’s buried in the total.
Strategy 1: Multi-Year Renewal Caps
Lock in pricing stability by negotiating a multi-year support term with protections:
- Lock Rates for 3–5 Years: Propose a 3–5 year support renewal with a fixed annual fee or a tight cap on increases (e.g., no more than 3% per year). This shields you from Broadcom’s yearly hikes and provides budget stability.
- Leverage Commitment, Keep Flexibility: Use a longer commitment to secure a lower starting price or other concessions. However, only commit to multi-year contracts for products you’ll need long-term. Avoid getting stuck paying support on software you might retire. If possible, include a clause that allows you to adjust coverage annually, so you’re not locked into unwanted support.
Strategy 2: Bundling Support with New Purchases
Use new software deals to reduce maintenance costs on existing products:
- Bundle Discounts with New Deals: When purchasing additional Broadcom licenses, consider negotiating support concessions as part of the purchase. For example, consider offering the first year of support free with new licenses, or a sizable discount on your overall support bill in exchange for the new sale.
- Include Shelfware Relief: Leverage the new purchase to get relief on underused products. If you have shelfware (unused licenses), push for steep support discounts on those or the option to drop them from maintenance. Make it clear that a significant new sale is contingent upon optimizing the support spend across your account. The larger the deal, the more leverage you have.
Strategy 3: Right-Sizing Maintenance (Shelfware)
Stop paying for software support you aren’t using:
- Audit and Drop Shelfware: Before renewal, audit your Broadcom software usage to find any shelfware – products not used in the last year or more. Plan to drop support for these in the renewal. You’re not obligated to keep paying maintenance on unused software. Cutting these items yields immediate savings.
- Negotiate Portfolio Flexibility: Push back on any contract clauses that require maintaining support on your entire product suite. You want the freedom to turn off support for any product without penalty. If an unused tool becomes needed later, you can always re-subscribe to support for it instead of paying years of maintenance “just in case.”
For more insights, Broadcom’s Support Offerings: Unified, Tiered, and Maintenance Models Explained.
Strategy 4: Optimizing Support Tiers
Match support service levels to system criticality:
- Don’t Overpay for 24/7 Support: Identify Which Systems Are Truly Mission-Critical. Provide those critical systems with premium (24/7) support, but utilize standard business-hours support for less critical or test/development environments. Reserve top-tier support only for what really needs it.
- Mix-and-Match Tiers: Negotiate the right to choose different support levels for different products. Ensure the contract lets you adjust support tiers per product as needs change. This way, Broadcom can’t force an expensive one-size-fits-all support level across all your software.
Strategy 5: Third-Party Support Leverage
Consider independent support providers to create competition:
- Explore Cheaper Alternatives: Third-party firms can support many Broadcom products (CA, Symantec, even VMware) at 30–50% lower cost. They handle bug fixes and technical support on your current versions, though they can’t provide official upgrades or new features.
- Use as Bargaining Chip: Getting a third-party support quote gives you a bargaining chip. Let Broadcom know you have a lower-cost alternative if their renewal price is too high. The threat of losing your support business can motivate Broadcom to offer a better deal.
- Weigh the Trade-Off: If you do switch to third-party support, you lose Broadcom’s direct updates and upgrades. This option works best for stable systems that don’t need new features soon. Even if you stay with Broadcom, showing that you’re willing to consider third-party support strengthens your negotiating position.
Common Trade-Offs & Risks
Keep these considerations in mind when cutting support costs:
- Loss of Updates: Dropping maintenance means no new patches, fixes, or version upgrades will be provided by Broadcom. You’ll be stuck on your current software version. If a critical vulnerability appears, you won’t get an official fix without a support contract.
- Reactivation Costs: A product you drop from support now might need to be reactivated later. Re-subscribing often involves back payments or buying new licenses at full price. Weigh the short-term savings against potential reinstatement costs if that tool becomes important again.
- Lock-In vs. Savings: Multi-year deals and bundles can save money, but they also lock you in. If your needs change (e.g., you migrate to a different product), you may still be required to pay support fees. Try to negotiate a mid-term adjustment or an exit clause, or ensure that the savings justify the commitment.
- Subscription Model Limits: Some Broadcom products (like new VMware subscriptions) bundle support into the license. There’s no separate maintenance fee to cut – you have to negotiate the overall subscription price. Keep this in mind if you’re transitioning to Broadcom’s subscription models.
- Vendor Relationship: Employing hardball tactics (such as threatening third-party support or aggressive cost-cutting) can strain your relationship with Broadcom. You might face a tougher stance from their sales team. Maintain firm but professional negotiations, focusing on facts and business needs to foster a workable partnership.
Negotiation Checklist for Renewal Meetings
Use this checklist to prepare for your Broadcom support renewal negotiation:
- Cost Basis: Are maintenance fees calculated on your discounted purchase price (not on the full list price)? If not, push to have support charges based on what you actually paid.
- Renewal Alignment: Can you align all your Broadcom products to co-term (renew on the same date)? A single large renewal gives you more leverage than multiple smaller ones. (Also watch for auto-renew clauses and plan to negotiate them if needed.)
- Usage Audit: Have you identified any shelfware or excess licenses? Decide which products or licenses you will discontinue support for, so you’re not paying for what you don’t use.
- Support Tier Plan: Do you know which systems truly require premium 24/7 support and which can be supported on a standard basis? Plan your desired support tier mix now so that you can negotiate downgrades for non-critical items.
- Multi-Year Option: Will you seek a multi-year renewal? If yes, determine the acceptable term (e.g., 3 years) and an annual increase cap (e.g., 3%). Be ready to propose this and justify it.
- New Purchase Leverage: Are you considering new Broadcom purchases or expansions? If so, use that as leverage – e.g., “We’ll invest in these new licenses if we can reduce our support fees by X%.”
- Fallback Plan: What’s your alternative if Broadcom’s offer remains too high? It could be a quote from a third-party support provider or even plans to migrate away from certain products. Having a fallback plan gives you confidence and bargaining power.
Example Contract Language to Insert
Consider adding clauses like these to your Broadcom agreements:
- “Support fees shall not exceed a 3% annual uplift during the term.” – Caps the yearly increase in maintenance costs.
- “Customer may elect to drop support for unused products (shelfware) with 90 days’ notice.” – Allows removing unused products from support without penalty (with notice).
- “Support fees shall be based on the net discounted license value, not list price.” – Ensures maintenance is charged on your actual purchase price, not the higher list price.
Clear contract language, as above, sets firm rules on support costs and provides built-in rights to optimize if needed. (Always define terms like “shelfware” in the contract to avoid ambiguity when exercising those rights.)
Read about our Broadcom Negotiation Service.
Negotiating Broadcom Support & Maintenance: How to Cut Costs & Secure Better Terms
