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VMware Licensing Considerations #1 - Perpetual vs. VSPP

Software licensing is one of the most confusing part within the IT industry. Since virtualization has become wildly popular things are getting worse. Some application software vendors require cpu socket based licensing, which is fair for physical hardware but inappropriate for software running inside virtual machines. With the latest changes VMware has really fair and understandable licensing models. Today i am going to compare the the two license models perpetual and VSPP (VMware Service Provider Program). To make the models comparable i will consider vSphere Enterprise Plus Licenses only, without any additional products, except VMware vCloud Director.



This is the common pricing model by VMware. The price is based on CPU sockets. As of today there is an unlimited virtual memory entitlement. (In 2011/2012 with vSphere 5 the memory entitlement was limited to 96GB per CPU socket within Enterprise Plus.) That implies that the cost factor is only the CPU Power. You do not need to consider virtual or physical memory when buying perpetual licenses. This makes the licensing really easy. Just count the CPU sockets, buy one additional vCenter license and you are done.

Perpetual editions does not include a vCenter Server. Additionally you always have to pay Subscription and Support (SnS) for at least one year. Since vSphere 5.1 there is a new pricing model available, the vCloud Suite which also includes vSphere Enterprise Plus, vCloud Director and VMware vCloud Networking and Security Standard. I will take this into consideration because vCloud director is also included in VSPP.

VMware perpetual retail prices

ProductLicense1 Year SnS
VMware vSphere Enterprise Plus
ESXi License per CPU socket
VMware vCloud Suite Standard
ESXi License per CPU socket (Includes vCloud Director)
VMware vCenter Server Standard
Per Instance


VMware Service Provider Program

The VMware Service Provider Program (VSPP) is suitable for partners who offer hosted IT services to 3rd parties. This is a non-pertual, pay-per-use model where a service provider licenses VMware products through a points based model where each product costs a specific number of points per month. The retail price for a single point is $1,00. The more points a service provider consumes, the less a single point costs.

The package i want to compare against perpetual licensing is the VMware vCloud Service Provider Bundle - Premier Edition which costs 7 points per month and is charged per 1GB reserved memory. This package includes vSphere Enterprise Plus, vCenter Server Standard, vCloud Director and VMware vCloud Networking and Security Advanced. The lower limit on reservation percentage is 50%, so even when you do not work with memory reservations you have to pay 50% of the virtual machines memory. There is also a pricing cap of 24GB per virtual machine. You will never be charged for more than 24GB reserved memory per vm.

What is reserved memory?
Reserved memory is a pure technical function. It guarantees a specific amount of physical memory to the virtual machine. Per default no reservations are configured. You can reserve all guest memory by selecting "Reserve all guest memory (All locked)" or reserve a specific amount of Megabytes. Because of that 50% and 24GB VSPP rule, licensing should be considered during resource planning.

Example Calculation:

VM MemoryCost (No Reservation)Cost (100% Reservation)
2GB7 Points
1*7 Points (lower limit 50%)
14 Points
2*7 Points
4GB14 Points
2*7 Points (lower limit 50%)
28 Points
4*7 Points
8GB28 Points
4*7 Points (lower limit 50%)
56 Points
8*7 Points
16GB56 Points
8*7 Points (lower limit 50%)
112 Points
16*7 Points
32GB112 Points
16*7 Points (lower limit 50%)
168 Points
24*7 Points (24GB Cap)
64GB168 Points
24*7 Points (24GB Cap)
168 Points
24*7 Points (24GB Cap)


Configure Memory Reservation with vSphere Client

Configure Memory Reservation with vSphere Web-Client


Perpetual vs. VSPP

There is no doubt that VSPP has a lot of advantages. You can size and buy a large cluster and grow while paying only the resources you actually use. You are much more flexible to run a cluster for a few month. Adding hosts to an existing cluster does not require additional licensing overhead. You do not have to track licenses, you just report what you use. HA failover resources are free. You do not need to consider vCenter Server licenses, because they are included. But are there any drawbacks except that is only available for service providers and not for internal use? Are there any circumstances that make perpetual licensing more attractive? Let's do the math!

Note: I will consider Enterprise Plus and vCloud Suite Standard (vCloud Director included) perpetual licensing. The lifetime is set to 3 years because you usually buy new hardware after 3 years. I assume that no virtual machine reaches the 24GB cap. When you reach that cap, VSPP becomes even more attractive. I also do not use memory overcommitment. With that, and the 50% lower limit in mind, there is a rule of thumb:

VSPP License Cost = at least 1/2 hosts memory
Perpetual License Cost = CPU Socket Count + vCenter


Calculation 1 - Small Entry Cluster

In the first example i want to calculate a small entry cluster:
3 ESXi Hosts with 2 Sockets, 64GB of RAM with one failover node.

vSphere Enterprise Plus+vCenter (+3 Years SnS): $52.194,00
VMware vCloud Suite Standard+vCenter  (+3 Years SnS): $61.194,00
VSPP 3 Years ($392,00 per month): $14.112,00

Conclusion: VSPP licensing is really attractive for small entry clusters. Even with memory overcommitment or 100% memory reservation, it is much cheaper.


Calculation 2 - Making it Comparable

Now i want to make both models comparable. How to compare a static cpu socket based license with the dynamic per vRAM licensing? The answer seems to be simple: How much memory is equivalent to one CPU socket? I am going to compare 2 and 4 CPU socket systems against VSPP memory cost where VSPP has a lower limit (no memory reservation) and an upper limit (full memory reservation). To make this example more real-world, the cluster size is set to 10 with one failover node.


Conclusion: As you can see, VSPP licensing is a really price attractive program for service providers. You hit the perpetual cost only when buying servers with much memory or abnormal overprovisioning rates. It is possible to pay more with VSPP licensing, but it's not plausible to have such clusters. Please also note that the cost for a single point drops the more total points you have. The more clusters you have, the more money you safe. To answer the question: As a rule of thumb, 1 CPU socket perpetual license is equivalent to 64 GB of vRAM with VSPP. But the is much more to consider...



12 thoughts on “VMware Licensing Considerations #1 - Perpetual vs. VSPP”

  1. Interesting reading and nice to see a clear description about the VSPP licensing model.

    However, could you explain under the VSPP licensing model whether you are still required to license the host itself, or is this purely covered all by the VSPP?


    1. You do not have to license the ESXi host or the vCenter. You only pay for the virtual machines. You can buy 5 Hosts and build a cluster including vCenter and do not have to pay any VMware licenses. Only after deploying your first virtual machine to that cluster, you have to pay the virtual machines reserved memory.
      (Of course you have to enter a licenses key for vCenter and ESXi Host. You get special VSPP Keys which you can use as often as you want)

      1. fgr,

        That is fantastic, not only does this page explain in a much easier fashion than anything else I've seen but you've also managed to answer the question which no one has been able to answer simply, without getting into the complete wrangles of licensing!

        Thanks fgr, really appreciate the response and the quick reply. :cool:

  2. This is simply superb. Key point is that VMware may offer discount on perpetual products where VSPP is with no discounts at entry level. But really nice way of explaining. Keep it up

  3. FGR, very clear and easy to understand but one thing that you haven't mentioned (unless I have missed it) is the minimum commit. There is a minimum commit on VSPP that you must sign up to for a 12 month period; you cannot get out of this and must pay that minimum per month whether you use any VMware or not. So your answer where you state that you do not have to pay anything until you have deployed your first VM is a little misleading as you automatically have to pay for the minimum commit, whether you have any VMs or not. The minimum commit is about $360 per month...


    1. Hi David,
      thanks for the comment and you are totally right. I did not mention that 360, 1,800, 3,600,[...] packaging in depth. I resumed that to "The more points you consume, the less a single point costs.".
      You have to pay the minimum amount of 360 points to get into the VSPP, even if you do not consume them. Running ESXi and vCenter actually costs nothing (=0 Points) if they have no virtual machines running. It's open to interpretation whether you pay for "being with VSPP" or "paying for (your first) ESXi-Cluster running without VMs".
      I am trying to update my comment and post to make it more clear.


  4. Thanks for the explanations and the great simple write-up... quick questions:

    1- Can you resell (become a service provider) after buying the Perpetual or it's only for internal use?

    2- If you commit for the 360 minimum on the VSPP - does the the unused points rollover to next month in case you have months that you have not use any resources?

    3- Will you be able to advertise your service as a partner and add logo as sevice provider if you have VSPP , Perpetual or both - Does it even matter?

    Thank you so much in advance!

    1. 1. There are different programs available. Not sure about your current situation and i am not a VSPP Sales expert. This question should be answered in detail here (flow chart on page 1):
      2. No. I've not heard of points rolling over to the next months. The smallest package is 360 Points which is not much. Perpetual licenses are much more expensive.
      3. With VSPP you are eligible to use Service Provider Partner logos. You are also listed at the Partner Locator.

  5. Great article comparing the cost of the different licensing models.

    I am not the VMware police, but one thing to note here is the EULA. Service Providers who offer hosted services to 3rd parties in a multi-tenant environment are required to use the VSPP licensing model. The only exception are Service Providers who offer Software as a Service (using their own internally developed software). In which case, MSPs have the option to chose either the perpetual licensing model OR VSPP.

  6. Great article and thanks for the information. One question I have though is your first calculation of the 3 node cluster...where did you come up with the number of 392/month?
    Is the 64GB RAM the total of all 3 hosts combined or 64GB per host which would be 192GB possibly available to VM's)?
    Are the points calculated per hour or per day or per month? ( Think this might help get a better idea which minimum point someone should sign up by forecasting the worse case and rate the points are generated)
    I would be interested to know if you took the worse case approach and your assumptions were hitting the full 24GB vRAM consumption on all VM's in the cluster what the monthly charge would come out to as a comparison

    Again I think its a great article and if I misunderstood your example then my apologies and thanks so much for the breakdown

  7. The points/usage is based off average daily vRAM consumption. So for example, you have a scenario where certain VMs are only powered on for certain times of the day, you can pull more granular reporting from the Usage Meter - whereas it calculates number of gigabyte hours. Then you would divide by total number of hours the VM was powered in within that month (for example, 720 hours = 1 month) The program Guide lists a couple examples of this.

    In terms of max price, you would just take the number of virtual machines x 24 gb x 5 to get point totals.

  8. Actually, this is a really poor analysis. "Making it comparable" is flawed. Perpetual licenses can be re-deployed onto better servers, so the underlying capabilities are not static, they are dynamic over time (basically improving at high rates -- Moore's Law).

    The VSSP model is far more static (per memory, where performance grows more slowly the processors).

    VMware knows this. That is why they tried the memory pricing model in the enterprise market, only to receive pushback and had to largely pull it back.

    Providers succumbed to this poor pricing model simply because they cannot steer end demand.

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