Should You Renew Your Oracle Java Agreement? A Cost-Benefit Analysis
Deciding whether to renew your Oracle Java agreement depends on comparing costs and business needs. Oracle now prices Java per employee, replacing older per-processor or per-user models.
Here’s how to analyze the numbers:
Read Is Your Java License Agreement Expiring? 10 Things You Must Know.
New Employee-Based Pricing
Since 2023, Oracle has charged a monthly fee per employee (full-time, part-time, contractors, etc.).
The price tiers (per month, list price) are:
- 1–999 employees: $15 per employee
- 1,000–2,999: $12 per employee
- 3,000–9,999: $10.50 per employee
- 10,000–19,999: $8.25 per employee
- 20,000–29,999: $6.75 per employee
- 30,000–39,999: $5.70 per employee
- 40,000–49,999: $5.25 per employee
- 50,000+: custom pricing
For example, a company with 200 employees (at $15/emp) pays 200×$15 $3,000 per month or $36,000 per year.
Old Metrics: Processor and Named User Plus
Legacy Oracle Java agreements used Processor or Named User Plus (NUP) metrics. For example, 50 named-user licenses at $800 each would cost $40,000 per year—far more than the headcount price for 50 employees.
- Processor licensing: You need one license per CPU (Oracle’s core factor applies). For instance, a server with eight cores and a 0.5 core factor counts as four processors. Historically, Oracle charged about $300 per processor per year. So, one processor costs $300/year.
- Named User Plus (NUP): A license per named user (often a developer or admin). These licenses could be several hundred dollars each, usually with minimums per server.
Processor licensing charges only for the machines running Java. NUPs charge per user needing Java. Both older models often cost less than the number of employees in larger organizations.
Cost Comparison Scenarios
Let’s compare costs under different scenarios:
- 10 employees, two processors (small company):
- Employee model: 10 × $15 × 12 = $1,800/year.
- Processor model: 2 × $300 = $600/year.
The processor metric is cheaper by $1,200.
- 50 employees, six processors:
- Employee model: 50 × $15 × 12 = $9,000/year.
- Processor model: 6 × $300 = $1,800/year.
The processor is cheaper by $7,200.
- 2 employees, two processors:
- Employee model: 2 × $15 × 12 = $360/year.
- Processor model: 2 × $300 = $600/year.
Employee model is cheaper ($360 vs $600).
- 500 employees, 10 processors:
- Employee model: 500 × $12 × 12 = $72,000/year.
- Processor model: 10 × $300 = $3,000/year.
The processor is cheaper by $69,000.
These examples show that the processor metric costs far less for medium and large companies. A quick rule of thumb is 25–30 employees per processor as a break-even point. Above that, processor licensing wins; below it, employee licensing can cost less.
When Renewal Makes Sense
Renewing under Oracle’s employee-based pricing may be reasonable if:
- You have a very small organization. If you only have a few employees, your annual fee is modest. For example, two employees cost just $360/year under the new model.
- You require Oracle’s commercial features or support, which open JDKs don’t provide.
- Compliance or policies require an official Oracle contract with indemnification.
If you want to renew, try to negotiate legacy metrics. Oracle sometimes lets existing contracts renew under the old terms (counting processors or users) for a transitional period. For instance, if your Java usage is confined to a few servers, a processor license or a small NUP pack might cost you less.
When Migration is Cheaper
In most cases, companies find migrating off Oracle Java far more cost-effective than renewing:
- Switch to OpenJDK: Use free builds (Eclipse Temurin, Amazon Corretto, etc.) for all Java workloads, eliminating license fees. See our migration guide.
- Hybrid approach: If you need Oracle Java on critical systems, renew only for those and move the rest to OpenJDK. For example, one production cluster can be kept on Oracle JDK, and development servers can be migrated to Temurin.
- Migration effort vs. savings: Migration takes work (testing, updating scripts), but cost savings can be substantial. Even if migration costs some money, it can pay for itself within a year of avoided fees.
- Alternative support: Vendors like Azul or Red Hat offer commercial support for OpenJDK. Their fees are often lower than Oracle’s subscription.
This approach often yields savings immediately. However, to avoid surprises, make sure to thoroughly test your applications on the new JDK.
Recommendations
- Do the math: Calculate both employee-based and processor-based costs for your scenario. Compare the annual total under each model.
- Pilot migration: If the math favors migration, set up a small pilot using OpenJDK (per our migration guide) and test application behavior early.
- Negotiate terms: Discuss renewal options with Oracle and see if you can extend your legacy license metrics for a year.
- Growth plan: Remember that employee-based fees grow with headcount. Budget for future hires or downsizing.
- Document your decision: Write down your cost analysis and chosen strategy (renew or migrate). This record helps justify the decision to stakeholders or in any future audit.
- Communicate with teams: Inform developers and sysadmins of the plan. If migrating, provide training on the new Java runtime. If renewing, ensure they know Oracle support is available.
- Assess risk: Consider industry or compliance needs. If regulatory issues require Oracle coverage, factor that into the cost decision.
Decide with both short-term budgets and long-term strategy in mind. The right choice depends on your Java usage, budget, and risk tolerance.
See Also
- How to Prepare for an Oracle Java License Expiration
- 5 Challenges You’ll Face When Your Oracle Java Subscription Ends
- How to Migrate from Oracle Java to OpenJDK: A Practical Guide
- What to Do If Oracle Starts a Java Audit After Expiration
