Increases that compound
IBM raises prices every January, and the increase reaches S&S renewals as well as new licenses. At 6%, 6% and 9%, the same software costs more than 20% more over three years.
How IBM prices an enterprise deal
IBM licenses most of its software by capacity rather than by user. Traditional middleware such as WebSphere, Db2 and MQ is measured in Processor Value Units, or PVUs, and Cloud Paks and containerized software in Virtual Processor Cores, or VPCs. Some products use user-based metrics instead.
Most IBM software is bought through Passport Advantage, where Subscription and Support, or S&S, renews every year. Larger estates often move to an enterprise license agreement that bundles products over a multi-year term.
Sub-capacity licensing lets a business pay for the virtual cores its software can use rather than the whole physical server. It depends on the IBM License Metric Tool, or ILMT: installed within 90 days of the first sub-capacity deployment, producing quarterly reports and keeping them for two years. Without it, IBM can price the software at the full capacity of the host.
IBM applies a general price increase each January, and it reaches S&S renewals as well as new licenses. IBM’s fiscal year matches the calendar year, and October to December is when it closes its year.
What has changed recently
- Jan 2026
Software prices rise 6%
IBM’s annual price harmonization raises Passport Advantage software, SaaS, mainframe software and Power hardware by about 6%. IBM i software maintenance rises 10%.
- Aug 2026
2027 increase announced
IBM announces its 2027 price harmonization, covering software licenses, S&S renewals and SaaS. Confluent, HashiCorp and Apptio offerings are excluded.
- Nov 2026
SaaS prices rise 9%
Most IBM SaaS rises 9% on November 1, and a subset, including Planning Analytics as a Service, rises 20%.
- Jan 2027
Passport Advantage rises 9%
Distributed software, S&S renewals and mainframe software rise 9% on January 1. IBM i software maintenance rises 12%.
What moves an IBM renewal
An IBM renewal is priced on capacity, and several things move that number at once.
CapacityPVUs and VPCs, set by the processors the software can reach
S&SAnnual support renewal, repriced every January
MeasurementILMT records that decide sub-capacity or full capacity
VehiclePassport Advantage or an enterprise license agreement
Each of these changes what the business actually pays for the same software. Knowing which one is moving the number is the starting point.
Where an IBM renewal gets expensive
A renewal priced to be accepted
S&S renews every year on software the business already owns. IBM prices a routine renewal on the assumption that it will be signed as quoted.
Measurement gaps priced at full capacity
Sub-capacity pricing depends on ILMT covering every host and keeping two years of quarterly reports. Where it does not, IBM can price the software at the full capacity of the server.
Capacity that follows the hardware
PVU and VPC counts follow the processors the software can reach. New servers or a larger cluster can raise the count with no change in how the software is used.
Our IT team knows tech, our procurement knows sourcing, but neither knows both. Deal IQ does know both very well, which is why we work with them.
A NUMBER THAT LOOKS RIGHT
A renewal that looks reasonable is still IBM’s opening price.
IBM prices a renewal on the assumption that it will be accepted. A number close to last year’s plus the annual increase is what IBM expects you to accept, not the lowest price it will approve.
What well-prepared buyers do before an IBM renewal
Start 6 to 12 months out
A renewal that starts close to the anniversary runs on IBM’s timeline.
Know which increases apply
Check whether the renewal lands before or after January 1, 2027, and whether SaaS lines move on November 1.
Check your ILMT records
Confirm every host is covered and two years of quarterly reports are on file.
Know your capacity position
Know the PVU and VPC counts IBM will price against.
Know where you fall in IBM’s year
IBM’s fiscal year ends December 31. October to December is when it closes its year.
DEAL IQ ON IBM
We know how IBM decides.
IBM licensing layers capacity metrics, measurement rules and annual increases on top of each other, which makes a fair price hard to read from the outside. Our network of 350+ former vendor sales, pricing and deal desk leaders includes people who sold IBM and know how those numbers are put together. We pair that with our own IBM pricing data and a 32-factor assessment on every deal, then negotiate directly with IBM or behind the scenes with your team.
Savings come from the price. Same products, same quantities, same scope.
DEAL IQ EXPERIENCE WITH IBM
75+IBM negotiations
$600M+in IBM contract value negotiated
350+former vendor sales, pricing and deal desk leaders in our expert network, including people who sold IBM
Frequently asked questions
What is an IBM PVU?
A Processor Value Unit, IBM’s capacity metric for traditional middleware. IBM assigns each processor core a PVU rating, and the software is licensed by the total PVUs of the cores it can use.
What is an IBM VPC?
A Virtual Processor Core, the capacity metric IBM uses for Cloud Paks and containerized software, counted on the virtual cores available to the software.
What is IBM sub-capacity licensing?
Licensing the virtual cores the software can use rather than the full physical server. It requires ILMT, installed within 90 days of the first sub-capacity deployment, producing quarterly reports that are kept for two years.
What happens if ILMT is missing or incomplete?
IBM can price the affected software at the full capacity of the physical server rather than the virtual cores it uses.
How much is IBM raising prices in 2027?
9% on distributed software under Passport Advantage from January 1, 2027, including S&S renewals. SaaS rises 9% from November 1, 2026, with a subset at 20%. IBM i software maintenance rises 12%. Confluent, HashiCorp and Apptio offerings are excluded.
What is IBM S&S?
Subscription and Support, the annual renewal that keeps IBM licenses entitled to new versions and technical support. It renews every year and moves with IBM’s annual price increases.
When does IBM’s fiscal year end?
December 31. IBM’s fourth quarter runs from October through December.
Is IBM’s “best and final” offer really final?
Best and final is a sales position, not a floor. It reflects what the account team expects you to accept, not the lowest price IBM will approve.
Do we need to cut capacity or products to get a better IBM price?
No. We negotiate the price of what you use. Products, capacity and scope stay the same.
Has Deal IQ negotiated with IBM before?
Yes. More than 75 IBM negotiations covering $600M+ in IBM contract value, with a network that includes people who sold for IBM.
How does Deal IQ charge for an IBM negotiation?
No savings, no fee. We agree the starting price with you before we negotiate, and our fee is a share of the improvement against it.
DEAL IQ IN NUMBERS
$20B+contract value negotiated
3,000+negotiations
100Net Promoter Score
4.7/5client rating for delivering savings
$0fee if there are no savings
NPS and rating from independent client research by Plural Strategy Group, 2026.What our clients say →