Top 20 Tips for Negotiating with Broadcom
Audience: CIOs, CTOs, and senior IT/procurement executives navigating Broadcom’s new VMware regime.
The landscape has shifted to subscription-only licenses, bundled SKUs, core-based pricing, and deteriorating support – here’s how to bluntly protect your interests and budget.
- Understand Broadcom’s New Licensing (Subscription & Per-Core) – Walk in armed with knowledge. Broadcom has killed perpetual VMware licenses and moved to subscription-only, per-core licensing, bundling many products into a few “suites.” For example, vSphere and vSAN are no longer sold standalone – they are part of VMware Cloud Foundation bundles. Know these changes cold. You can’t counter them if you don’t grasp how 72-core minimums or forced bundles work. Ensure your team thoroughly studies Broadcom’s new SKU list and pricing model before negotiating.
- Audit Your VMware Estate Before You Negotiate – Know exactly what you own and use. Do a thorough internal license audit and usage assessment 4-6 months before renewal. Identify how many cores you use, which products you use, and where you’re under- or over-licensed. Broadcom is ramping compliance audits as a pressure tactic, so uncover any exposure yourself. Example: One firm’s pre-renewal License Position Assessment revealed that 15% of their VMware licenses were for inactive VMs – they dropped those and saved accordingly. The more precise your data, the less Broadcom can inflate your quote or scare you with compliance fees.
- Expect Sticker Shock – prepare for price increases of 5 times or more. Don’t act surprised; act prepared. Broadcom’s VMware pricing is dramatically higher. Enterprises are seeing renewal quotes 5 to 10 times what they paid before. Set internal expectations with your CFO early – a huge jump is coming. Then, a mitigation plan (such as a reduction or a longer-term plan) will be formed. By bracing management for a possible 500 %+ hike, you can get support to push back hard. Your strategy: Treat Broadcom’s first quote as outrageous (because it likely is) and develop counter-requests to whittle it down. The goal is to minimize the increase, not naively hope to avoid it completely.
- Aggregate Your Needs for More Negotiating Clout – Bigger deals get more attention. Wherever possible, bundle your VMware requirements into one negotiation event. Broadcom is more willing to offer concessions for a larger deal that spans multiple products or a broader user base. Co-term your renewals so they all expire at the same time – then you’re negotiating one big renewal, not multiple small ones. Broadcom will see the total contract value listed. Use that to demand bigger discounts. For instance, negotiate vSphere, vSAN, NSX, etc. in a 3-year enterprise agreement rather than one-off – the combined spend should unlock higher discount tiers and leverage.
- Lock In Multi-Year Deals with Price Caps – Buy time and predictability. Push for a 3- to 5-year subscription term instead of annual renewals. In exchange for committing longer, insist on price protections: no price increases mid-term and a reasonable cap on renewal rates. This shields you from Broadcom’s year-over-year hikes. Non-negotiable: Any multi-year contract must include a rate lock or cap – don’t sign a 3-year deal that allows Broadcom to jack up prices in year 2. By locking in today’s (high) price for multiple years, you avoid even higher costs in years to come. It also delays facing Broadcom’s next round of increases, giving you breathing room.
- Use Your Perpetual Licenses as Bargaining Chips – Extract value from what you bought. If you still have VMware perpetual licenses, they are leveraged. Broadcom initially offered steep trade-in incentives (50 %+ off) to convert customers to subscriptions. Demand the same level of discount for your conversion. Make it clear: “We spent millions on perpetual licenses – if you want us to abandon them for subscriptions, we expect an aggressive trade-in deal.” Use the sunk cost of your existing licenses to negotiate a lower subscription price or credits. Tip: Push to carry over any pre-paid support value on those licenses – if you paid for support through the end of the year, get that prorated off your subscription cost.
- Push Back on Bundled “All-In” Offerings – Don’t pay for what you won’t use. Broadcom’s strategy bundles formerly separate products into pricey suites, meaning you might be forced to buy components you don’t need. Counter this in negotiations. If they insist you take the bundle, negotiate the price down to account for unused components or ask for other concessions. For example, if you only need vSphere and vSAN but must buy the full Cloud Foundation (which includes NSX, Aria, etc.), tell Broadcom straight: “We have no use for NSX right now – either remove it or adjust the cost because we won’t pay for shelfware.” In the best case, they create a custom SKU or discount; in the worst case, you’ve signaled that you’re not an easy upsell. At a minimum, ensure that any forced bundle is priced more favorably than the piecemeal parts – you shouldn’t pay more and get products you don’t want.
- Optimize and Limit Your Licensed Core Counts – Reduce the metric before you reduce the price. Since VMware is now sold by CPU core (with a 72-core minimum per order), lower your core count wherever possible before finalizing your order. Audit and right-size your environment: consolidate workloads onto fewer servers with higher core utilization, retire idle virtual machines (VMs), and eliminate any “wasted” cores that exceed socket multiples of 16. For example, if you have many small 8-core hosts at remote sites, you’ll be charged for 72 cores each. Instead, consider concentrating those VMs on a cluster of fewer, larger hosts. Every core you eliminate is a cost saved under Broadcom’s per-core model. Bring these optimizations to the negotiation table: Show Broadcom that you’re actively minimizing your license footprint. It signals that you won’t simply pay for excess capacity, and it directly cuts what you owe.
- Engage Broadcom Early and Control the Timeline – Don’t get ambushed by a deadline. Start renewal discussions at least 4 to 6 months before your contract expires. Broadcom has been giving some customers extremely short notice on renewals (even just weeks) to pressure quick agreement. Initiating talks early removes their ability to corner you against a deadline. Set the pace by requesting pricing and terms well in advance. If the sales rep drags their feet, escalate (you have dates documented). Bluntly put, a last-minute ultimatum from Broadcom is unacceptable – make that clear. Early engagement also gives you time to negotiate multiple rounds. You never want to be in a position where Broadcom’s quote arrives one week before expiration, and you have no time to counter.
- Avoid the 20% Late Renewal Penalty – Never let your support lapse. Broadcom now imposes a hefty 20% penalty if you don’t renew your subscriptions by the anniversary date. This is essentially a tax on missing the deadline. Plan meticulously to avoid it. Mark your calendar well in advance, obtain internal approvals early, and have a contingency plan in place if legal or procurement delays occur. If you can’t close the renewal in time, consider creative workarounds. For instance, a partner noted that there is often no financial benefit to a formal “renewal” versus buying a new subscription license. In a pinch, you could let the old contract expire and purchase new subscriptions to sidestep the retroactive penalty. It’s not ideal, but eating a week of lapse might be cheaper than a 20% fee. The big picture: Do not pay Broadcom extra for the privilege of renewing late – manage the timeline to make this a non-issue.
- Engage Your C-Suite in the Negotiation – Make a Broadcom deal with your top brass. Given the scale of price increases, treat this as an executive-level negotiation. Involve your CIO, CFO, or even CEO in key meetings. Broadcom focuses on its largest customers and big deals, so leverage that. Demand executive attention on their side as well. If needed, request to speak with Broadcom’s VMware division leaders or a senior account executive who can approve concessions. When the conversation happens CXO-to-CXO, Broadcom knows your company means business. For example, have your CIO directly ask Broadcom’s VP for a commitment to support quality or price stability, which carries weight. This also signals that your organization prioritizes the VMware deal, strengthening your negotiating mandate. Broadcom will think twice about stonewalling if they see the issue has visibility up to your board level.
- Set a Firm Budget Limit – and Stick to It – Show them you’re willing to say “no.” Calculate what you can reasonably afford for VMware under Broadcom (perhaps with some increase, but not infinite) and declare that as your walk-away number. Make it clear to Broadcom that your wallet is not open-ended. If their proposals exceed your cap, you will reduce your VMware footprint or defer projects rather than overspend. For example, some enterprises are delaying upgrades or scaling back expansion plans to “buy time” and avoid bloated costs. Use this tactic: “At these prices, we’ll pause new deployments and squeeze another year out of our current infrastructure.” This stance puts pressure back on Broadcom to sharpen its pencil. It tells them you’re prepared to live with less VMware (or stretch equipment lifecycles) if they don’t reach a reasonable number. Key: Communicate your cutoff early and mean it – it’s one of the few levers you control. Read CIO Playbook – Negotiation with Broadcom.
- Make Broadcom Earn Your Business – Keep a Plan B Visible – Remind them you have options (even if inconvenient). Broadcom knows ripping out VMware is hard, but you should still signal that you’re not 100% captive. Without explicitly threatening to quit VMware, mention that you are evaluating other solutions for certain workloads or future needs. It’s a fact that customers are now looking at alternatives like Hyper-V, AHV, KVM, etc., especially for smaller deployments. You can say: “We’re conducting a pilot on a cloud-native platform for new apps,” or that competitors are pitching you “VMware replacement” deals. This is not about actually switching everything today – it’s about leverage. If Broadcom believes there’s a risk of losing some of your business, they may become more flexible on price or terms. No bluffing needed: even the intent or initial steps toward an alternative can strengthen your hand. The message: “Don’t take our renewal for granted – we expect a fair deal, or we will explore other avenues.”
- Lock Down Favorable Contract Terms (Audit, Flexibility, Exit) – The fine print is your safety net. Commercials aside, demand key protections in the contract language:
- Audit Clauses: If Broadcom insists on audit rights, negotiate reasonable limits—e.g., 30 days’ notice, no audits more than once a year, and no audits during a negotiation period. Don’t let them use surprise audits as a weapon.
- Flexibility to Downsize: Ensure the agreement allows you to reduce license counts at renewal if your usage drops. Many subscriptions allow downscaling on renewal—confirm Broadcom will, too, so you’re not locked into today’s high-water mark.
- Price Increase Caps: For any renewal beyond the term, set a maximum % increase or tie it to an index. If you had a previous VMware ELA with a cap, insist that Broadcom honors it.
- Termination/Exit Options: If possible, negotiate a termination for convenience after a certain period or a conversion right to different products if the strategy changes. Even if Broadcom resists, raising the issue can lead to at least some concession, such as a partial refund clause if they fail to deliver the service.
- Transfer and Third-Party Support Rights: Ensure that nothing in the new contract penalizes you for using third-party support or maintaining perpetual licenses without support. You retain the right to use your software perpetually, even if you stop paying support—verify that the contract acknowledges this.
These terms collectively guard you against Broadcom’s known playbook of strict enforcement. Don’t accept a vague, one-sided contract no matter the discount – nail down the details to keep them in check.
- Don’t Lose Value from Existing Contracts – Every entitlement is leverage. If you have an existing VMware contract or support agreement, review it for any benefits you can take advantage of now. For example, did you prepay for support years in advance, or do you have unused support credits? Broadcom’s transition means support on old perpetual licenses will be cut off when they expire. So, ensure you either use what you paid for or get compensated. Example: If you have a support contract valid until December but Broadcom wants you to switch to a subscription in October, demand a credit for the two months you would be forfeiting. Likewise, confirm how any pre-paid funds or credit programs (such as VMware’s PSO credits or training vouchers) will be honored – don’t let them go unused in the shuffle. Also, inventory any perpetual license use rights you retain: you can run the software perpetually, even if you don’t renew support. Knowing that, you might negotiate to continue using a stable version without support as a cost-saving measure or encourage Broadcom to offer a limited support extension. The bottom line is to get the most out of your prior investments; you paid for them.
- Demand Better Support (or Get Compensated) – Don’t tolerate subpar service for top dollar. Broadcom is known for cutting support quality, with fewer engineers and longer response times. If you’re paying significantly more, you deserve equal or better support than before. During negotiations, put support on the table: “If we accept this price, we expect Premier Support level -24×7, fast response, and a dedicated TAM.” Get commitments on support SLAs included in the contract, if possible. If Broadcom won’t budge on support quality, use that to negotiate the price down: why pay a premium if the support is inferior? Another approach is to insist on trial periods or escape clauses related to support. For example, “If support tickets languish or SLAs are missed consistently, we reserve the right to escalate or terminate.” At the very least, document any promises: e.g., if the sales team says “support will remain the same,” have them write that. This gives you leverage post-sale. Remember, support is a major part of the value – don’t let it slip quietly. If Broadcom’s support falters, you should have remedies (refunds, credits, or the ability to seek third-party help).
- Use Third-Party Support as a Strategic Lever – Keep a Plan B for support costs. An immediate way to counter Broadcom’s high prices and poor support is to consider third-party support providers for VMware. Companies like Rimini Street or Spinnaker offer independent VMware support that can cut costs by 30-40%. This option is viable if you have stable VMware environments and don’t need constant updates. Bringing this up in negotiations can be powerful: “We can renew with you, or we might offload support for half the cost elsewhere if the numbers don’t add up.” Broadcom must know you will take your support business elsewhere. Even if you don’t fully switch, you can use third-party support quotes to negotiate discounts or enhanced support from Broadcom.Additionally, third-party support lets you extend the life of perpetual licenses beyond Broadcom’s cut-off, giving you more flexibility. Many enterprises use it as a bridge – they keep their VMware running on old versions, supported by a third party, until they decide on a long-term direction. Leverage: The mere option of third-party support puts pressure on Broadcom to justify its support fees.
- Leverage Resellers or MSPs for Better Terms – Don’t go it alone if you don’t have to. Broadcom’s direct-sales approach has eliminated some middlemen, but top-tier VMware partners, such as Pinnacle partners, can still help you. Engage a trusted reseller or licensing advisor to see if they can obtain better pricing or add value. Sometimes, partners bundle VMware subscriptions with their services, effectively offering a discount (e.g., a global MSP might include VMware licenses in a managed service at a lower apparent cost). These partners also have channels to escalate issues within Broadcom on your behalf. If Broadcom has sidelined your current VMware reseller, find one that Broadcom has accredited at the highest level – they will have more sway. Another angle: consider whether a Managed Service Provider can host or manage part of your VMware environment. The MSP would handle licensing under their agreement, potentially at better rates. For example, moving some workloads to a VMware-based cloud service, where the provider offers bulk licensing, might reduce your direct exposure. In practice, one enterprise had its reseller negotiate an unofficial discount and include free training seats – something Broadcom wouldn’t have offered directly. Use every channel: let partners compete for your business and use their expertise to your advantage.
- Document Every Promise and Agreement – If it’s not written, it’s not real. Throughout the negotiation, keep meticulous records of what Broadcom reps commit to – whether it’s a discount percentage, a support guarantee, or a future capability. After every meeting or call, email the vendor a summary of key points for confirmation. If Broadcom’s team says, “We’ll give you X% off if you sign by Friday,” get that in writing. This protects you from “deal amnesia” later. Also, critical commitments should be incorporated into the final contract or an addendum. Examples to document include specific discount levels, eligibility for a certain upgrade program, the inclusion of premium support at no extra charge, or a promise that you can trade down to lower licenses next year. Broadcom’s transition has been messy, and even their teams may provide inconsistent information – having a written trail helps resolve disputes. Additionally, keep records of any difficulties, such as delayed quotes or pressure tactics. If the situation becomes serious, this history can be useful in escalating the issue to regulators or Broadcom senior management. In short, cover yourself. An executive negotiation can get complex – treating it with legal-grade diligence ensures you Get what you negotiated.
- Stay Vigilant for Future Changes – Negotiation isn’t a one-and-done – it’s ongoing. After you sign, the Broadcom and VMware landscapes will continue to evolve. Broadcom might introduce new bundles, adjust its policies, or even, over time, soften some terms due to customer backlash. Follow VMware user groups, analyst updates, and licensing blogs. For instance, if Broadcom later offers a more flexible licensing program or a discount initiative for loyal customers, you want to be the first to know and take advantage. Similarly, watch for any signs of further price hikes or changes in support so you aren’t caught off guard at your next renewal. Internally, track your VMware usage and satisfaction over the contract period. Start planning the next negotiation well ahead of time, using what you’ve learned this round. And if you’ve secured any special terms (like price caps or flex rights), flag those for follow-up to ensure Broadcom honors them. No fluff: The post-acquisition environment is dynamic – staying agile and informed is the key to maintaining leverage. What worked this year might change by next year, so treat this as an ongoing strategic vendor management exercise, not a one-time transaction. In summary, relentlessly protecting your interests every year, every deal.
Applying these 20 hard-nosed tips, you’ll approach Broadcom’s VMware negotiations with eyes open and armor on. The post-Broadcom reality is tough – subscription-only licensing, bundled extras, core-based pricing, weaker support, and aggressive sales tactics – but with preparation and bold negotiation, you can still secure a deal that keeps your IT organization running optimally without breaking the bank.
Read Broadcom Enterprise Agreements: Strategic Sourcing Guide for IT Procurement.
