VMware Licensing Cost Increases Under Broadcom – What Enterprises Should Expect

VMware Licensing Cost Increases Under Broadcom

Broadcom’s takeover of VMware has sent shockwaves through the IT procurement industry. Enterprise leaders in procurement, IT asset management, and the C-suite are bracing for substantial cost hikes on VMware licensing and support.

Broadcom’s approach is unapologetically profit-driven – a stark contrast to VMware’s historically flexible licensing.

Below, we break down what to expect in terms of pricing changes, licensing model shifts, and support cost increases, and guide how to strategically respond.

The tone is one of caution: assume costs will rise significantly and plan accordingly.

This proprietary advisory outlines the key changes and five actionable strategies to mitigate the impact.

For a full guide, read Broadcom Pricing & Discount Models: Benchmarks, Multi-Year Deals, and Cost Increases.

Broadcom’s High-Margin Pricing Philosophy

Broadcom brings a “high margin, no exceptions” philosophy to VMware licensing.

The company is laser-focused on maximizing revenue from VMware’s installed base, even if it means alienating smaller customers.

Key elements of this philosophy include:

• Profit-First, Not Volume-First: Broadcom favors high margins over market share. It would rather have fewer customers paying more than many customers paying less. Expect list prices to be steep and “goodwill” discounts to be rare.
• Subscription-First Model: Broadcom has transitioned VMware to a subscription-only licensing model. Perpetual licenses (one-time purchases) are no longer available. The goal is to lock customers into recurring revenue, driving up long-term spend. Broadcom isn’t interested in one-off sales – they want a steady annual income from each customer.
• No Loyalty Programs: Under VMware, longstanding customers enjoyed volume discounts, renewal incentives, or special pricing tiers. Broadcom has largely eliminated loyalty and reward programs. Every customer, big or small, is expected to pay near full price unless you have massive scale. Past relationships won’t guarantee future discounts.
• “Take-It-or-Leave-It” Stance: Negotiations with Broadcom are notably rigid. Many enterprises report receiving initial quotes with sharp increases (often double or triple the previous rates) and minimal room to negotiate. Broadcom’s sales approach banks on the mission-critical nature of VMware in your environment – knowing it’s hard for you to walk away. Procurement teams should be prepared for a firm stance and even implied threats (e.g., license termination or support cutoff) if renewals aren’t signed on Broadcom’s terms.
• Focus on Largest Accounts: Broadcom’s attention is centered on the top-tier of customers (Fortune 500 and similar). These giants may receive customized deals or dedicated account managers. In contrast, mid-market and small customers are finding themselves with less support and higher default pricing. In effect, Broadcom is comfortable “firing” smaller accounts that are unwilling to pay the new premiums.

Bottom line: Broadcom’s pricing philosophy is about maximizing value from each customer, not keeping every customer.

Enterprises must approach VMware renewals assuming significant cost increases and little generosity from the vendor. The onus is on you to justify any concessions.

From Per-CPU to Per-Core Licensing – A Costly Shift

One of the most impactful changes is VMware’s move from per-CPU licensing to per-core licensing under Broadcom.

In the past, VMware products (like vSphere) were often licensed per physical CPU socket (with one license covering a processor up to a certain core count).

Broadcom has now flipped the model to count CPU cores, and this seemingly technical change has major cost implications:

• Core-Based Metrics: VMware licenses are sold in core increments now (often 16 cores as a unit). If your server has a 32-core processor, that’s two units of 16 cores you must pay for (where previously one CPU license covered it). Higher core-count CPUs (common in modern data centers) will directly scale up your licensing costs. For example, a dual-processor server with 64 total cores might have required 2 CPU licenses before; now it could require four subscription units under a per-core scheme.
• Minimum Core Commitments: Broadcom isn’t just counting cores – it’s also imposing a much larger minimum purchase. The minimum order size for VMware licensing has jumped to 72 cores. In practice, even if you only need to license a small environment (say, one host with 8 or 16 cores), you will be required to buy far more. This 72-core minimum is equivalent to covering at least four CPU sockets’ worth of capacity, regardless of your actual usage. Small enterprises and edge deployments are hit hardest: a site that previously bought one CPU license now must pay for what amounts to a whole cluster’s worth of cores.
• Cost Impact Example: Consider a business running a single VMware server with eight cores. Under the old model, one CPU license would suffice. Under Broadcom’s new policy, the customer must purchase 72 cores of subscription – effectively paying for 9 times more capacity than they use. Even larger VMware customers feel the pain: environments with many high-core-count servers will see the licensing total climb as each processor beyond the old core cap requires additional licenses.
• No More “Free” Hypervisor: VMware’s free ESXi hypervisor (which was often used in labs or very small setups) has been discontinued. Now, any production use requires a paid core subscription. This change reinforces the idea that every core running VMware must generate revenue for Broadcom. There are no low-cost or no-cost tiers left for light usage scenarios.

What to expect: Licensing costs will rise, especially for firms with modern hardware or small clusters.

Procurement leaders should revisit how they deploy VMware: it may make sense to standardize on smaller core counts per CPU or consolidate workloads on fewer, larger hosts – whichever yields fewer total cores to license.

Additionally, budget for the fact that you may need to buy more licensing than you actually consume (due to the 72-core floor). This over-provisioned spend is essentially a Broadcom tax on smaller deployments.

Support & Maintenance Fee Increases

Broadcom is not only charging more for licenses – support costs are also climbing. VMware’s support and subscription (SnS) fees have historically been around 22% of the license price annually for maintenance and updates.

Post-acquisition, enterprises are finding higher support fees baked into contracts and quotes:

• Higher Annual Percentage: Broadcom is pushing support fees into the 25%–30% range of the license value. In other words, if you spend $1 million on VMware licenses, you might pay up to $300k each year just to receive support and software updates (whereas previously it may have been approximately $220k). This higher percentage may be explicit or hidden within a subscription bundle, but either way, it means a larger portion of your IT budget is allocated to maintaining operations.
• Premium Support Tiers: In addition to increasing base support costs, Broadcom offers tiered support levels. Standard support under Broadcom may be more bare-bones (slower response, less hands-on) than VMware customers are used to. To achieve enterprise-grade support responsiveness, customers may be encouraged to pay extra for a higher-tier or dedicated support engineer package. This essentially upsells support as a separate product. Expect your account reps to suggest “premium support” additions – at a cost.
• No Support for Perpetual Licenses: Broadcom has made it clear that legacy perpetual licenses (which some customers still own) will not be renewed for support except in very limited cases. If you were hoping to retain your old VMware licenses and simply pay for support, that path is now closed. The only way to stay supported is to migrate to subscriptions (which likely increases your costs significantly). This policy forces customers into the higher-cost model and eliminates the previously available, cheaper maintenance-only option that was offered with perpetual licensing.
• Impact on Long-Term Maintenance: Over a typical 5-year period, these higher support fees compound the cost difference. With VMware (pre-Broadcom), five years of support (~22% annually) would roughly equal the upfront license cost (5 × 22% ≈ 110%). Under Broadcom’s regime, five years of support could be 125%–150% of the license value. That’s on top of the already increased license prices. For budgeting, it means the total cost of ownership of VMware software is significantly higher over its lifecycle now.

What to expect: Support contract renewals will come with sticker shock.

Even if your license count remains the same, the maintenance line item is increasing. Plan for roughly a 3%–8% increase in support costs as a percentage of license value, and more if you opt into premium support tiers.

It’s also worth reevaluating which environments truly require premium vendor support – some non-critical systems may be adequately supported by third-party providers or lower-tier coverage, a tactic we’ll discuss later.

Product Bundling and SKU Simplification

Broadcom has radically simplified VMware’s product catalog – and this “simplification” comes at the price of flexibility.

VMware had a wide range of products and add-ons; Broadcom is repackaging most value into a few all-encompassing bundles.

Key changes on this front:

• Goodbye, À la Carte: Previously, customers could buy specific VMware products individually (for example, just vSphere, or just vSAN for storage, or NSX for networking). Now, Broadcom sells VMware in big bundles. The primary offerings include suites such as VMware Cloud Foundation (VCF) or the new vSphere+ Foundation, which combine hypervisor, storage, networking, and management tools. Many standalone SKUs have been discontinued or rolled into these bundles.
• From hundreds of SKUs to a Handful: VMware’s portfolio was trimmed from about 160+ products down to a focus on roughly four major solution bundles. This SKU cleanup is aimed at streamlining sales, but it also means you may end up buying more than you need. If a feature you use is now part of a larger suite, you must subscribe to the entire suite. For example, the Aria cloud management products and vRealize tools were absorbed into broader offerings – you can’t easily buy them separately anymore.
• Forced Feature Bundling: This bundling strategy often includes extra components that your team may not currently use. Broadcom’s assumption is you’ll eventually adopt them (and it justifies a higher price). In practice, customers are reporting that to get one critical product, they’re being quoted for a package containing four or five products. ITAM managers will need to track unused licenses internally because you will inevitably have shelfware under these bundle deals.
• SKU Simplification ≠ Cost Simplification: Be wary of Broadcom’s messaging that this makes licensing easier or cheaper. Fewer SKUs can simplify procurement paperwork, but each SKU now carries a larger price tag. The complexity remains; it’s just hidden within a bundle. Enterprises should scrutinize exactly what’s in these new bundles and whether every component is needed – it may be possible to negotiate the removal of certain components or to reduce capacities. Still, Broadcom will likely resist à la carte requests.

What to expect:

Your VMware renewals will be quoted as larger bundles, rather than individual products. This means a higher total cost, albeit with more functionality included. Procurement teams should map the new bundles to their actual usage: identify which components of a bundle are truly required and which are “nice to have.”

This knowledge is crucial for negotiations – if you’re paying for five products in a bundle but only actively using three, you have a strong case to push back or seek a pricing adjustment.

However, be prepared: Broadcom’s default answer will be that the bundle is the only way they sell now. You may need to dispose of some unused products in the short term, so factor that inefficiency into your cost expectations.

Sticker Shock: Real-World Pricing Increases

All the above changes aren’t just theoretical – enterprises are already experiencing significant price increases on VMware licensing and renewals under Broadcom.

Here are a few real-world scenarios that illustrate the impact:

• Mid-Sized Company, Moderate Footprint: A regional financial services firm with a modest VMware deployment (comprising dozens of hosts) saw its annual renewal quote increase by ~30% compared to the previous year. This included the transition to subscription licensing and higher support fees. While 30% isn’t business-breaking for them, it required shifting budget from other projects. Their CIO noted that features they used to buy separately were now bundled – and priced higher, nullifying any “bundle discount” argument.
• Small Enterprise, Few Servers: A small manufacturing company running VMware on just two servers reported that its costs effectively doubled. They had been paying around $2,000 per year in support for a vSphere Essentials package; their new quote under Broadcom was over $4,000 annually. The culprit was the new 72-core minimum: with only two servers (each with eight cores), they had to pay for 72 cores anyway. This 100%+ increase is pushing them to consider alternative hypervisors. Scenarios like this are playing out for many small VMware customers – some are calling it “VMware’s SMB exit.”
• Large Enterprise, Multi-Product: A Fortune 100 company reported that its VMware Enterprise License Agreement (ELA) renewal came in at nearly 50% higher than the previous year’s cost for the same environment. Broadcom’s quote bundled everything into a 3-year subscription deal and removed prior discounts the customer had negotiated years ago. In raw numbers, a $10 million VMware spend over three years has now become roughly $15 million for the next three years. After intense negotiations (and evaluating a partial move to cloud alternatives), they managed to trim the increase somewhat, but still ended up paying considerably more than before. This illustrates that even the largest customers are not immune to big hikes (although they often have more leverage to negotiate).
• Public Sector Case: A well-known educational network consortium publicly mentioned a 268% increase in support renewal costs under Broadcom for their VMware estate. This kind of triple-digit jump tends to occur when an organization is on a specially discounted legacy deal that Broadcom then “resets” to list pricing. It’s a dramatic example, but it underscores the risk: if your organization has enjoyed special pricing, assume Broadcom will attempt to strip that away and charge closer to market standard (or above).

These examples demonstrate a range of increases, from ~30% to several-fold.

Your outcome will depend on factors such as how heavily you were discounted previously, the number of VMware products you use, and your willingness to explore alternatives. **The common theme, however, is that no one is seeing price decreases.

The trajectory is up, often sharply. Procurement and ITAM professionals should prepare stakeholders for this sticker shock well in advance of the renewal quote arriving.

No CIO wants to be surprised by a doubling of a major IT expense – proactive communication and expectation-setting are key.

Broadcom’s Track Record: Lessons from CA and Symantec

If all of this sounds familiar, that’s because Broadcom has employed similar tactics in previous software acquisitions (CA Technologies in 2018 and Symantec’s Enterprise division in 2019).

History offers a valuable preview of what happens post-acquisition:

• Symantec Example: After Broadcom took over Symantec’s enterprise software, many long-time Symantec customers were stunned by huge renewal quotes. It was common to see 2× to 4× cost increases for similar quantities of security software. Broadcom axed Symantec’s small-business offerings and pushed everyone into large enterprise bundles (Portfolio License Agreements) that made little sense for smaller users. Essentially, if a Symantec client wasn’t spending at a certain high level, Broadcom showed little interest in keeping them. The result: many SMB customers felt “fired” and scrambled to find alternative security solutions.
• CA Technologies Example: Broadcom’s acquisition of CA (known for mainframe and enterprise software) was followed by deep cost-cutting and a focus on top accounts. CA customers reported that Broadcom significantly reduced customer support resources and was very inflexible on contract terms. However, Broadcom also tended to honor CA’s existing long-term contracts until they lapsed – at which point massive hikes and hardball tactics came into play for renewal.
• Common Threads: In both cases, Broadcom demonstrated a playbook of: (a) simplifying product lines and discontinuing marginal products, (b) converting licensing to subscriptions or multi-year agreements, (c) raising prices substantially, and (d) prioritizing the biggest customers while letting go of the low-revenue ones. Customer satisfaction took a backseat to immediate revenue. Many customers of those companies felt the pain – some absorbed the costs, others switched vendors when possible.
• VMware Outlook: Given this track record, enterprises using VMware should not assume they’ll be treated differently. VMware’s user community is larger and more vocal than those of CA or Symantec’s, but Broadcom is likely to stay the course because the financial incentives are strong. The analogy is clear: expect Broadcom to squeeze VMware customers similarly. The difference is that VMware underpins core infrastructure, which makes it even harder for customers to walk away quickly. Broadcom is aware of this leverage.

The lesson for CIOs and procurement leaders is to study these historical cases.

Those who navigated Symantec or CA renewals under Broadcom often had to create contingency plans (alternative vendors, reduction strategies) to gain any bargaining power.

The silver lining is that being forewarned allows VMware customers today to be much better prepared than Symantec’s customers were back in 2019.

Budgeting Guidance: Anticipate 15–30%+ Cost Increases

Budget conservatively for your VMware spend in the Broadcom era.

Every organization’s situation will differ, but a prudent rule of thumb is to plan for at least a 15–30% increase in VMware costs at your next renewal or purchase.

For many, it could be higher. Here’s how to approach budgeting:

• Baseline Increase (15–30%): If your VMware environment is relatively straightforward – meaning you’re running common products (vSphere, vCenter, maybe vSAN) and you were paying standard rates – expect around a 15–30% cost uptick. This accounts for the switch to subscriptions (OpEx instead of CapEx, which is often a bit pricier over a multi-year period) and the rise in support fees. Essentially, even “average” customers will pay more.
• Higher End (30–50% or more): If you have a complex VMware deployment with a lot of add-on products (NSX, Horizon, Aria Automation, etc.), or if you previously had a large discount via an Enterprise License Agreement, budget for perhaps up to 50% higher costs. The more legacy discounts and piecemeal licenses you were benefiting from, the bigger the correction when Broadcom consolidates you into its new model. Some organizations with older ELAs might see initial quotes that are 50–100% higher, but with negotiation, could land in the ~50% range. It’s wise to scenario-plan for the worst case, so funding is reserved.
• Case-by-Case Extremes: Outliers exist – a handful of customers have experienced astronomical quote increases (2x, 5x, even 10x), particularly if they were on expiring unlimited agreements or had previously under-licensed. While those are not the norm, be aware of the potential. If your VMware contract history includes any special terms (such as an unlimited deployment addendum or a steep discount), flag this as a risk – Broadcom will likely seek to normalize it (i.e., charge you a higher rate in the future).
• Multi-Year Considerations: Broadcom often pushes 3-year deals. When budgeting, consider the total over the multi-year term. A clever tactic is to calculate the 3-year TCO of VMware pre-Broadcom vs. post-Broadcom. Many CIOs are doing this to illustrate the jump to their boards (it can be eye-opening, e.g., “Over the next 3 years we will spend 40% more on VMware than the last 3, unless we take mitigating actions”). This framing helps justify investments in cost mitigation or alternative solutions.

In summary, don’t count on “business as usual” budgeting for VMware. Build a cushion into your IT spend forecasts specifically earmarked for VMware price increases. It’s far better to over-estimate and have funds left over than to be caught underfunded when a Broadcom quote lands on your desk.

Stakeholders up the chain (CFO, CEO) should also be briefed early that critical infrastructure software costs are rising – this avoids unpleasant surprises when those bills come due.

Summary of Key VMware Cost Changes Under Broadcom

To crystallize the discussion, the table below summarizes the major VMware licensing and cost changes since the Broadcom acquisition, compared to the previous status quo:

Table: Key differences in VMware licensing and pricing before vs. after Broadcom’s acquisition.

As the table highlights, the net effect is higher costs and tighter control by the vendor in almost every dimension. Next, we turn to how enterprises can respond to these challenging changes.

Five Actionable Renewal Strategies for Enterprises

Facing a VMware renewal under Broadcom’s new terms can be daunting, but you are not powerless. Smart organizations are developing proactive strategies to counteract cost increases and safeguard their interests.

Below are five actionable strategies procurement leaders and CIOs can deploy to navigate VMware licensing negotiations with Broadcom:

1. Negotiate Renewal Caps: Push for a cap on annual price increases in your contract. For example, aim for a clause that limits year-over-year renewal price uplifts to no more than 3–5%. Broadcom may resist, but large customers have had some success inserting uplift caps to prevent surprise jumps later. Even if you accept a higher price today, capping future increases provides cost predictability. Emphasize to Broadcom that your organization needs this for long-term budgeting – it’s a reasonable ask if they want a multi-year commitment.
2. Phase in Price Increases: If Broadcom presents a significant cost increase, propose a phased increase over the contract term. Rather than absorbing (for example) a 30% hike all at once, negotiate a plan where the price rises 10% per year over three years. Broadcom still receives its increase, but you gain breathing room to adjust budgets and possibly reduce usage before the full impact is felt. Phased increases can often be tied to a longer renewal term (e.g., a 3-year deal) – position it as a win-win: you commit for a longer period, and they allow you to ramp up to the new pricing gradually.
3. Conduct a Usage Audit to Reduce Licenses: Audit your VMware usage in detail before renewal. Many companies find they have idle or over-provisioned licenses (e.g., CPUs assigned to hosts no longer in service, or subscriptions covering non-production systems that could be downsized). By identifying unused capacity, you can confidently cut those licenses from the renewal. Additionally, consider core counts: you may be able to optimize your environment (through consolidation or more strategic VM placement) to utilize fewer total cores, thereby requiring fewer subscriptions. Enter negotiations armed with data on what you actually need, not what Broadcom thinks you’ll renew blindly. Reducing your license quantity is the most direct way to counteract price-per-unit increases.
4. Leverage Third-Party Support or Alternatives: To strengthen your negotiating position, cultivate a Plan B. Explore third-party support providers (for example, firms that offer support for VMware products independent of Broadcom) to see if they can cover your environment at a lower cost, even if only temporarily. Additionally, assess alternative virtualization solutions (such as Hyper-V, KVM, Proxmox, and public cloud services) for specific workloads. You don’t need to replace VMware overnight, but knowing that you could shift part of your estate gives you leverage. Broadcom is far more likely to offer concessions if it senses that you have a credible alternative path. In one case, a customer’s willingness to migrate 20–30% of workloads off VMware prompted Broadcom to soften its pricing. Even the threat of reducing dependence on VMware can be a useful negotiation chip.
5. Carry Forward Historical Discounts and Terms: Don’t let Broadcom reset the clock on your prior agreements without a fight. If you had pre-existing discounts, special pricing, or contractual terms with VMware (such as price protections or grandfathered entitlements), bring those to the table. Explicitly reference them and request that Broadcom honor the spirit of those deals. For instance, if you had a 20% discount under a VMware ELA, start negotiations by assuming that 20% off is a baseline. You may not keep all of it, but it anchors the discussion. Similarly, if your old contract allowed some usage flexibility or had favorable conditions, ask to carry those forward into the new contract. At the very least, this signals that you are an informed customer. Broadcom reps then know you’re expecting continuity of treatment as a loyal VMware customer, and it may temper their most aggressive moves.

By employing these strategies, enterprises can regain some control in what is otherwise a challenging negotiation.

In addition, a few overarching best practices can amplify your success: start the renewal process early (as much as a year in advance), involve your executive sponsors, and benchmark what other organizations are seeing to strengthen your case.

Broadcom’s default approach is tough, but with data and preparation, you can avoid simply accepting their first offer.

In conclusion, VMware’s transition under Broadcom is redefining the cost and contract landscape for virtualization software. Procurement leaders must be both strategic and skeptical – assume Broadcom’s initial terms will be unfavorable and be ready to push back.

By understanding Broadcom’s philosophy and anticipating the changes (from core-based licensing to pricier support and bundled products), you can forecast the impact on your IT budgets with fewer surprises.

Most importantly, proactively deploy the renewal strategies outlined above. They will help you secure more palatable terms or at least buy time to consider alternatives.

The goal for enterprises now is clear: adapt your VMware licensing approach to this new reality, or risk paying a premium for clinging to the old one.

Your organization’s ability to negotiate and plan will directly translate into cost savings and strategic value in the era of Broadcom-owned VMware.

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