VMware’s Pricing Forces Upgrades and Drives Up Costs

Broadcom’s acquisition of VMware has triggered a seismic shift in the virtualization market, with sweeping changes to how VMware’s products are licenced and priced, and a new model centered around bundled pricing and subscriptions. For many organizations, this means facing a migration to expensive subscription bundles and potentially upgrading to a product suite, retaining critical functionality, but including paying for features that may never be used.

This blog explores the details behind these changes, the problems they create, real-world examples of the financial impact on customers, and what you can do to avoid the high costs.

The New Broadcom VMware Pricing Model: What’s Changed?

Elimination of Perpetual Licences

Broadcom has discontinued perpetual licences for VMware products. Instead, all licencing is now subscription-based, requiring customers to pay annually or on a multi-year basis to maintain access and support.

Forced Bundled Offerings

Standalone VMware products—such as vSphere, vSAN, and NSX—are no longer available for individual purchase. Customers must now buy them as part of larger bundles, such as VMware Cloud Foundation (VCF) or vSphere Foundation (VVF), regardless of whether they need all the included features.

Increased Minimum Core Requirements

The minimum number of processor cores that must be licenced has jumped from 16 to 72 for many bundles. Even small businesses or branch offices with modest needs must now pay for far more capacity than they actually use.

Late Renewal Penalties

Customers who fail to renew their subscriptions on time face a 20% penalty on their first-year renewal price, adding even more financial pressure and complexity to the renewal process.

How Bundled Pricing Forces Upgrades or Overpayment

Forced Upgrades to Maintain Essential Features

Many customers who previously relied on vSphere Enterprise or vSAN as standalone products now find that critical features are only available in higher-tier bundles. For example, downgrading to vSphere Standard means losing essential functionality, while upgrading to VVF or VCF requires paying for additional products and capabilities that may never be used.

Paying for Unneeded Features

The new bundles include a range of software—such as NSX Networking, Aria Suite, and enhanced vSAN capacity—that many organizations did not previously license or require. This “all-in-one” approach may sound like value, but for customers with simple needs, it means paying for features they don’t need and won’t use.

• Example 1: Veeam, a premier-level VMware Technology Alliance Partner and a VMware Ready Management member, saw its migration to the new bundled subscription pricing jump 300%.
• Example 2: A UK university’s annual support costs soared from £40,000 to £500,000 after being forced into a bundled subscription, representing a staggering 1,150% increase. Quoted from a Reddit post, “On questioning where on earth such an uplift has come from, we’ve been told that because we’re education, we’re being forcibly classified as a ‘strategic’ customer and so are only allowed to be sold the full cost VMware Cloud Foundation product and nothing else.”
• Example 3: Lake Land College in Illinois had VMware Enterprise Edition costs rise by 300 percent due to subscription bundling “with no additional features/benefits,” according to Director of Technical Services James Westendorf
• Example 4: The Euro Cloud Coalition (ECCO) reports, based on Cloud Infrastructure Service Providers in Europe (CISPE) data, that member price hikes for VMware are between 800% and 1,500%. Discounts are only available for those willing to commit to three-year fixed contracts

Other Problems with Broadcom VMware Bundled Pricing

Budget Disruption

Many organizations, especially those with tight or multi-year budgets, such as education, healthcare, and local government, have been blindsided by sudden 2x to 10x cost increases, forcing painful trade-offs or urgent platform migrations. Forrester Research released a report stating, “one VMware client shared that they’re experiencing a 500% price increase based on their current use of VMware products and how it maps to the new licensing and packaging.”

Reduced Flexibility and Choice

Customers lose the ability to tailor licencing to their needs, as bundles force the purchase of unnecessary products. This lack of flexibility is especially problematic for organizations with straightforward virtualization needs or those running lean IT operations.

Customer Backlash and Market Uncertainty

The changes have led to widespread dissatisfaction, with many customers exploring alternatives or dual-vendor strategies to mitigate risk and cost. Industry forums and analyst reports are filled with stories of sticker shock, frustration, and urgent reassessment of virtualization strategies.

What Can Customers Do?

Assess Your Current and Future Needs

Organizations should conduct a detailed inventory of their VMware usage and identify which features are essential. This can help you negotiate with Broadcom or consider alternative vendors.

Explore Alternative Solutions

With the increase in VMware costs, many organizations are evaluating other virtualization platforms, such as Microsoft Hyper-V, Nutanix, Proxmox, or public cloud solutions. Migration may require upfront investment, but can offer long-term savings and flexibility.

Consider Third-Party Support

Some organizations are turning to third-party support providers like Support Revolution to maintain legacy VMware environments at a lower cost, buying time to plan migrations.

A Detailed Look at Third-Party Support

Third-party support offers independent maintenance, troubleshooting, and security for VMware, particularly for customers with perpetual licences or those not ready to migrate to Broadcom’s bundled subscriptions. Providers, like Support Revolution, deliver services ranging from technical support and managed services to hardware and migration consulting.

Key Benefits

• Cost efficiency: Third-party support is typically 30 to 50% less expensive than Broadcom’s previous perpetual maintenance fees, with some reporting even higher savings. You pay only for the support you need and avoid being forced into bundles with unwanted features.
• Support for perpetual licences: Unlike Broadcom, which has ended support for perpetual licences, Support Revolution continues to support your perpetual VMware environments, allowing you to maximize your existing investments and avoid costly forced upgrades.
• Personalized service models: Support Revolution offers tailored plans, including flexible shelfware policies and all-inclusive 24/7 support that aligns with your technical and business needs.
• Operational flexibility: Third-party support can act as a gap solution, giving you time to evaluate long-term strategies, plan migrations, or simply maintain stability during periods of uncertainty.

VMware Next Steps

Broadcom’s new VMware bundled pricing model is marketed as a simplification, but for many customers, it means higher costs, forced upgrades, and paying for features they don’t need. The impact is especially severe for smaller organizations and those with straightforward virtualization needs. As the market adjusts, organizations must carefully evaluate their VMware usage, explore alternatives, and negotiate renewal terms with eyes wide open.