VMware Price Increase in 2025: What You Need to Know
- Raluca Robu
- May 6
- 6 min read
Updated: Jun 30
Since Broadcom acquired VMware in November 2023, the virtualization giant has undergone significant changes in its pricing and licensing models, with further adjustments set to impact customers in 2025.
These changes have sparked widespread concern among small and medium-sized businesses (SMBs) and large enterprises alike, with reported cost increases ranging from 150% to over 1,000%. In this article, we’ll explore the key changes, their implications, and actionable steps for organizations navigating this new landscape.
Key Changes to VMware Pricing and Licensing in 2025
1. Shift to Subscription-Based Licensing
VMware has fully transitioned from perpetual licenses to a subscription-based model, aligning with industry trends toward software-as-a-service (SaaS). This shift, which began before the Broadcom acquisition, eliminates the option to own licenses outright, replacing them with recurring subscription fees.
While this offers flexibility and access to the latest software versions, it has led to significant cost increases, especially for organizations with high core counts or those previously reliant on perpetual licenses.
2. Minimum Core License Requirements
Starting April 10, 2025, VMware will enforce a minimum 72-core license subscription for products like vSphere Standard, up from the previous 16-core minimum. This change disproportionately affects SMBs and organizations with smaller CPU footprints, such as those operating edge locations or remote offices.
The increased core requirement effectively raises costs, as customers must pay for licenses that may exceed their actual needs.
3. Product Bundling and SKU Reduction
Broadcom has consolidated VMware’s extensive product portfolio, reducing the number of stock-keeping units (SKUs) from approximately 8,000 to a few bundled offerings, primarily VMware Cloud Foundation (VCF) and vSphere Foundation (VVF).
While this simplifies the product structure, it forces customers to purchase bundled products like NSX Networking and vSAN, even if they don’t need them. This lack of flexibility has led to higher costs for organizations that previously purchased standalone products.
4. Late Renewal Penalties
Broadcom has introduced a 20% penalty on the first-year subscription price for customers who fail to renew their subscriptions by the anniversary date.
This policy adds financial pressure on organizations to renew promptly, further complicating budgeting and planning.
5. Long-Term Contract Commitments
VMware is moving away from annual renewals, requiring customers to commit to three- or five-year subscription terms.
This change limits flexibility and locks organizations into long-term agreements, making it harder to adjust to evolving IT needs or explore alternatives.
6. Price Reductions with Caveats
Broadcom has publicized a 50% price reduction for VMware Cloud Foundation, dropping the per-core annual subscription fee from $700 to $350.
However, this reduction is offset by the bundled structure and the removal of standalone product options, meaning many customers still face net cost increases. Additionally, the base pricing from which this reduction is calculated remains unclear, raising questions about the actual savings.
Impact on Businesses
The pricing and licensing changes have caused significant disruption, particularly for SMBs and organizations with constrained budgets. Key impacts include:
Cost Increases: Customers have reported price hikes ranging from 150% to 1,200%, with some, like AT&T, alleging increases as high as 1,050%. These spikes are driven by the shift to core-based licensing, higher minimum core requirements, and bundled offerings.
Reduced Flexibility: The elimination of standalone products and perpetual licenses limits organizations’ ability to tailor solutions to their needs, forcing them to pay for unnecessary features.
SMB Challenges: The discontinuation of offerings like vSphere Essentials Plus and vSphere ROBO, combined with the 72-core minimum, has made VMware less viable for smaller businesses, pushing them toward costlier tiers or alternative solutions.
Customer Backlash: A CloudBolt Software report found that 99% of VMware customers are concerned about the acquisition’s impact, with 76% expressing extreme or high concern. This sentiment is echoed in online forums, where users discuss migrating to alternatives due to unsustainable costs.
Many businesses are reconsidering their VMware strategy due to rising costs and licensing changes. Colocation Plus can help you evaluate your options and find tailored solutions to optimize your infrastructure without overspending. Get expert guidance tailored to your virtualization needs.
Strategic Options for Organizations
Organizations facing VMware’s price increases in 2025 have several options to manage costs and ensure business continuity:
1. Absorb the Cost Increase
For organizations deeply integrated with VMware’s ecosystem, absorbing the price increase may be the most practical short-term option.
This approach is viable for large enterprises with budgets to accommodate the hikes or those with contracts that delay the impact. Engaging with VMware’s sales team before contract renewals can help secure discounts or lock in current pricing.
2. Optimize Licensing
Conducting a workload analysis can help organizations reduce costs by aligning licenses with actual needs.
For example, segregating workloads to use vSphere Standard instead of vSphere Foundation for less demanding tasks can yield significant savings (up to 60% per license). However, this requires careful planning and may involve managing multiple environments.
3. Explore Alternatives
The price increases have prompted many organizations to consider virtualization alternatives, including:
Proxmox VE: An open-source virtualization platform tailored for SMBs, offering robust features at a lower cost.
Microsoft Hyper-V: A cost-effective hypervisor that integrates well with Microsoft ecosystems, suitable for organizations already using Windows-based infrastructure.
Nutanix: A hyper-converged infrastructure (HCI) solution that competes with VMware in feature parity and is gaining traction as a direct alternative.
Public Clouds: Platforms like AWS, Microsoft Azure, and Oracle Cloud Infrastructure offer virtualization solutions with economies of scale, though migration requires careful planning to avoid lift-and-shift pitfalls.
VirtualBox: An open-source option from Oracle, ideal for budget-conscious users with simpler virtualization needs.
Migration to these alternatives can take 6–12 months for assessment and several years for planning and execution, so organizations should start evaluating options early. If Proxmox VE is part of that consideration, take a moment to review how its pricing structure fits your plans. Here’s a closer look at the subscription and pricing breakdown.
4. Leverage Negotiation Tactics
When renewing contracts, organizations can push for discounts by citing budget constraints, committing to multi-year agreements, or prepaying annually.
Consulting peer networks and industry professionals can provide insights into effective negotiation strategies. Tools like VMware’s customer EA lookup tool can also help track licenses and avoid over-provisioning.
Preparing for VMware Price Increase
To mitigate the financial and operational impact of VMware’s 2025 price increases, organizations should take proactive steps:
Assess Current Usage: Evaluate your VMware environment to identify optimization opportunities and determine which workloads require premium features versus standard licensing.
Engage with Vendors: Contact VMware’s sales team or trusted resellers to clarify pricing details and explore discounts before renewals.
Plan for Alternatives: Begin researching and testing alternative virtualization platforms to ensure compatibility with your workloads and long-term IT strategy.
Monitor Broadcom Updates: Stay informed about new product releases and licensing changes, as Broadcom may introduce further adjustments in response to customer feedback or regulatory scrutiny.
Conclusion
The VMware price increases in 2025, driven by Broadcom’s acquisition and strategic overhaul, present significant challenges for customers, particularly SMBs. While the shift to subscription-based licensing and product bundling aims to streamline offerings, it has led to substantial cost increases and reduced flexibility.
By understanding these changes, optimizing licensing, exploring alternatives, and engaging in strategic negotiations, organizations can navigate this transition effectively. Proactive planning and a clear understanding of your virtualization needs will be critical to managing costs and maintaining operational efficiency in 2025.
For personalized guidance on managing VMware’s price increases or transitioning to alternative platforms, contact a trusted IT consultant or virtualization solution to tailor a strategy to your business needs.
FAQs on VMware Price Increase in 2025
When did these VMware price and licensing changes take effect?
Effective April 10, 2025, VMware will stop selling new perpetual licenses for products like vSphere and Cloud Foundation. Going forward, all new deployments must use subscription‐only licensing; existing perpetual licenses remain under current support contracts until renewal.
What does the jump from a 16-core to a 72-core minimum mean?
Under the new rules, you must license at least 72 cores per CPU, even if your servers run fewer cores. That raises the baseline cost by up to 4.5× for smaller environments compared to the previous 16-core minimum.
What happens if I miss my subscription renewal date?
If your annual renewal slips past its anniversary, VMware will apply a one-time surcharge equal to 20 % of that year’s subscription fee, billed retroactively to discourage any coverage gaps.
How can I minimize the financial impact?
Audit your active core usage and align licenses to real needs, build higher renewals into your budget early, negotiate list-price adjustments with your VMware partner, and evaluate open-source hypervisors or cloud-native alternatives before your next term.