Broadcom Renewal Price Caps and Price Protections
Broadcom’s VMware renewal pricing no longer references your original purchase or perpetual list prices – instead, renewals are set at “then-current” rates.
This one phrase strips away your cost predictability and hands Broadcom control over future pricing. Under this model, many enterprises have seen 20–40% or higher price jumps at renewal with no warning or limit.
This guide shows how to reverse that dynamic and lock down renewal pricing before you sign the contract. We’ll explain how to build in renewal caps, preserve your negotiated discounts, and secure multi-year pricing stability to avoid unbounded cost increases.
For a bigger picture, read our comprehensive guide, Broadcom Enterprise Licensing – Contract Clauses to Defend.
Why Renewal Price Caps Are Non-Negotiable
Broadcom’s default model allows unlimited year-over-year increases under the guise of “market pricing.” Once your initial subscription or support term ends, Broadcom can reprice every SKU at will for the renewal.
Without a pre-negotiated cap or multi-year pricing clause, nothing stops a dramatic cost jump at each renewal cycle. In practice, companies without caps have faced surprise hikes of 20%, 30%, even 50% on VMware renewal pricing.
Multi-year price stability only happens if you write it into the contract. A cap on renewal pricing (for example, no more than 5% per year) is the only way to prevent sticker shock when your term is up. Broadcom won’t volunteer this protection — you must demand it as part of your deal.
Pro Tip: “A three-year discount without a renewal cap is just a three-year delay on bad news.”
What to Protect in Your Contract
Broadcom’s price volatility affects three key cost areas in your VMware agreement. Make sure your contract protects each of these:
| Category | Risk | Why Protection Matters |
|---|---|---|
| Subscription Renewal Rates | Renewing at new list price | Prevents cost doubling at renewal |
| Support Fee Escalation | Annual “maintenance uplift” | Keeps OpEx predictable |
| Discount Preservation | Losing negotiated discount | Ensures continuity for add-ons or expansions |
The Two Core Protection Mechanisms
1️⃣ Renewal Price Caps: This clause puts a hard limit on how much Broadcom can raise prices at renewal. A common benchmark is capping any annual increase to 3–5% or tying it to an index like the Consumer Price Index (CPI). Apply this cap to both subscription renewals and support fees. For multi-year terms, make it clear whether the cap applies per year or cumulatively over the term, so Broadcom can’t exploit compounding increases. In short, a renewal cap ensures your VMware subscription or support costs cannot spiral out of control unpredictably.
Example Clause: “Renewal pricing for subscriptions and support shall not increase by more than the lesser of five percent (5%) or the Consumer Price Index (CPI) per year.”
2️⃣ Discount-Level Lock: This protection preserves your negotiated discount percentage for any future purchases, expansions, or renewals. If you secured, say, a 30% discount on the initial deal, your contract should state that the same discount will apply to additional licenses or services of the same product family. This prevents Broadcom from quietly eroding your discount – for example, by raising list prices and offering a smaller percentage off later. By locking your discount level in the agreement, you ensure new purchases stay in line with the pricing you negotiated up front.
Example Clause: “Customer’s discount level, as specified in Exhibit A, shall apply to all additional purchases or renewals of equivalent product families for a period of three years.”
Pro Tip: “Price caps control the slope — discount locks protect the baseline.”
What are the audit terms to negotiate? – Negotiating Broadcom Audit & Compliance Terms.
Negotiation Levers That Work
Broadcom rarely offers price caps by default, but you can increase your odds by leveraging certain tactics in negotiations:
- Leverage Multi-Year Commitments: Offer to commit to a longer term (e.g., a 3–5 year subscription) in exchange for firm price caps or fixed renewal rates throughout the term.
- Link Caps to Volume: Use your spending volume as leverage. A higher annual spend or larger initial purchase can justify stricter price protections (since Broadcom secures more business upfront).
- Early Renewal or Prepayment: If the budget allows, offer early renewal or partial prepayment on a multi-year deal to guarantee locked-in prices. Broadcom is more amenable to caps if they get cash sooner.
- Replace Automatic Uplifts with Reviews: Push back on any automatic yearly increase. Instead, request a price review clause that requires both parties to agree on any increase (or invokes a cap) rather than an automatic hike.
Pro Tip: “Broadcom trades flexibility for certainty — you just have to make certainty worth more.”
Price Protection Terms – Vendor vs. Customer Position
When drafting the contract, expect Broadcom to start with terms favoring them. Here’s how those default terms compare to a customer-friendly position:
| Clause Type | Broadcom’s Default | Customer’s Ask | Business Benefit |
|---|---|---|---|
| Renewal Pricing | “Then-current” list price | Cap of ~5% per year | Predictable cost planning |
| Support Fees | Variable annual uplift | Tied to CPI or fixed 3% | Budget control |
| Discounts | One-time deal only | Lock discount for term | Prevents margin clawback |
| Add-On Purchases | Priced at current list | Preserve original discount | Maintains fairness |
| Multi-Year Term | Yearly price resets | Fixed prices for 3–5 years | Simplifies forecasting |
Checklist – Contract Language to Include for Price Caps
Make sure your VMware contract includes explicit language covering these points:
- Annual increase cap: Renewal price increases limited to a maximum of 5% (or an agreed CPI-tied rate).
- Multi-year protection: Multi-year subscriptions have fixed pricing or capped upticks each year of the term.
- Discount preservation: Negotiated discount percentages locked in for any add-on licenses or renewals.
- Advance renewal notice: Renewal quotes are provided at least 90 days before the term ends (to allow time to react or renegotiate).
- Capped support escalator: Any support/maintenance fee increases are capped at a fixed rate or waived during the term.
- No “then-current list” clause: Remove or override any “then-current list price” language with the agreed cap or fixed price.
Pro Tip: “If it’s not written in numbers, it’s not a cap — it’s a promise.”
More what to focus upon, Top 5 Dangerous Broadcom Contract Clauses (Explained).
How Broadcom Typically Responds
Even with strong justification, Broadcom might push back against price caps. Be prepared for these common objections and your counter-arguments:
Pushback #1: “Our pricing aligns with current market rates.”
→ Counter: “We’re committing to a multi-year deal – we need market predictability, not surprises. A cap simply keeps pricing reasonable for both of us.”
Pushback #2: “We can’t guarantee CPI-based limits.”
→ Counter: “Many enterprise vendors do. If a strict CPI tie is an issue, let’s at least agree on a fixed 3–5% cap or a mid-term price review clause to revisit if inflation spikes.”
Pushback #3: “Discounts apply only to this initial purchase.”
→ Counter: “Then let’s write in the same discount structure for future SKUs in this product family. We want to grow with VMware’s products, but need assurance that we keep our negotiated rate.”
How to Enforce Price Protections Over Time
Winning good contract terms is only half the battle — you also need to enforce them throughout the relationship:
- Archive the Agreement: Keep a secure copy of the signed pricing exhibits, discount schedules, and relevant contract clauses in your contract repository. You’ll need these at renewal time.
- Document Everything: Conduct renewal communications via email or written form so you have a record. If a Broadcom quote violates your terms, you’ll want the proof handy.
- Cite Your Contract: When discussing renewal pricing with Broadcom reps, explicitly reference the agreed clause (by section or exhibit number) that caps your increase or preserves your discount.
- Escalate Early: If Broadcom’s renewal quote ignores your price protection terms, escalate the issue to management quickly. Don’t wait — address discrepancies before Broadcom’s fiscal year-end pressure kicks in.
5 Rules for Locking Renewal Price Protections
- Never accept “then-current list price” in any renewal clause – always define your renewal pricing.
- Tie annual uplifts to CPI or a hard percentage limit (no more than 5% is common).
- Lock in your discount percentage for the full product family, not just the initial purchase.
- Trade commitment for stability – use multi-year deals or bigger upfront orders to win price cap concessions.
- Build in renewal notice and review periods – require advance notice of renewals and include terms to revisit pricing if needed.
Pro Tip: “Your renewal clause is your shield — polish it before signing.”
Read about our Broadcom Audit Defense Services.
