Renewal quote: 90% increase since 2019

[Carl Maycock]

I had our 3 year enterprise renewal quote come through today. It was about a90% increase since we purchased it in 2019. Let me restate that. 90% Same license. Not adds, changes nothing. My supplier was so shocked that he's arranged a meeting with the Veeam rep because even he can't comprehend it. He even confirmed that this would be the price from any vendor. I've never had a supplier exhibit such blatant profiteering in my 20 years in IT. I will be looking at alternatives because that is just insane.

[Gostev]

I've split your post into a separate topic because renewing your existing Socket license has nothing to deal with the future end of sale of new Socket licenses discussed in that topic.

I am likewise puzzled to see such a significant change to a renewal fee of your existing license, simply because there were no such Socket price changes in the past 3 years that could lead to such a big renewal price increase (and renewal fee is calculated as percentage off the current MSRP). My only explanation here is that you negotiated a massive discount on your initial purchase 3 years ago? Or there's a mistake and you're being quoted something else, as opposed to a simple renewal of your existing license.

I'll forward this to our renewals management and they will be able to say exactly what it is.

[Carl Maycock]

Ok that makes sense.

My supplier was also very shocked so he checked with Veeam directly and confirmed.

Our current license is for 70 VMs.

Whilst we may have had a discount in 2019 in would be highly unlikely that my supplier at the time would have access to such huge discounts.

So all things being equal it represents a real 90% increase that Veeam have comfirmed

[Carl Maycock]

And to confirm I even gave my supplier the Veeam part number that we purchased in 2019 to make sure everything aligned.

[Gostev]

Our current license is for 70 VMs.

Wait, I am super confused now. You initially posted this in the topic about our Socket licensing discontinuation, but you never actually had Socket licenses in the first place? As all my comments above were in that context you set.

[Gostev]

From what I remember, 3 years ago was before Veeam Universal License (VUL). We did have per-VM licensing scheme which was discontinued later in favor of VUL. Unlike VUL, that per-VM licensing had editions and it is likely that you did not have Enterprise Plus edition. In which case your current quote would definitely not be for the "same license" because VUL only comes in one fully-featured edition. So we're talking massive upgrade in terms of functionality, meaning the following statement would be incorrect "not adds, changes nothing".

Having said that, from what I vaguely remember about the pricing at the time, when VUL replaced per-VM licensing it was priced right between ENT and ENT+ editions of per-VM licensing. So it is still hard to explain 90% increase a major discount on the initial purchase. I say you should discuss this further with your Renewals rep, may be in light of the original discount they can make you a new offer which is more inline with what you have budgeted for your Veeam renewal.

However, the key point here is what you're seeing is NOT some random price increase on the exact same license. Rather, it's a better license with many more capabilities. The license you bought 3 years ago was discontinued, and all customers with such licenses were upgrade to VUL (with full capabilities) for the remained of their contract at no cost. Assuming MSRP with no discounts, VUL will cost more to renew because of these additional features and capabilities if you had Standard or Enterprise edition of per-VM license before, and less to renew if you had Enterprise Plus edition of per-VM license.

[Carl Maycock]

Having viewed my emails from 2019 it seems we must have been given a HUGE discount by Veeam in September 2019. I found another non discounted quote from earlier on in the year that was much more expensive so probably more representative. So in real terms the increase is more like 30% over that period. Still quite a hefty increase at about 8-9% per year. More than most other technology vendors we use.

[Carl Maycock]

I guess it was a 90% increase but mainly due to a healthy discount in 2019 + price increases.

[Gostev]

OK, that's what I thought - thanks for confirming.

But to be perfectly clear, there was NO license price increases like you say. The increase you're seeing is a consequence of moving to a fully functionality license. Let me try to explain it differently.

The per-VM license you had was called Veeam Instance License (VIL) and it was available in 3 editions:

VIL Standard Edition < minimal functionality at $ < this became the Community Edition later (free product)
VIL Enterprise Edition < partial functionality at $$ < I understand this is what you bought < this SKU was discontinued completely
VIL Enterprise+ Edition < full functionality at $$$ < this is what became VUL later

VIL was then discontinued and replaced by Veeam Universal License (VUL) which only comes in a single fully functional edition, which was priced as follows:

(REMOVED) VIL Enterprise Edition < partial functionality at $$
(NEW) VUL < full functionality, priced right between the two removed SKUs ($$ and a half)
(REMOVED) VIL Enterprise+ Edition < full functionality at $$$

So in your case renewal went up from $$ to ($$ and a half) which explains the 30% increase.
But for VIL ENT+ customers it instead went down from $$$ to ($$ and a half).

[Carl Maycock]

Unless I'm missing something the part number we ordered last time was V-VBRVUL-0I-SU3YP-00 which is ENT+ ? Which according to your clarification should mean a reduction in pricing?

[Carl Maycock]

No matter I'll go back to my suppliers and confirm.

[mkaec]

An upgrade to a license with more features when none of those additional features will be used is nothing more than a cost increase. It's frustrating when vendors try to justify cost increases by arguing the customer is getting more when the extra stuff is not useful to the customer and that path was forced upon the customer.

[Gostev]

Unless I'm missing something the part number we ordered last time was V-VBRVUL-0I-SU3YP-00 which is ENT+ ?

I can see that your original entitlement is for Veeam Backup Enterprise edition. V-VBRVUL-0I-SU3YP-00 is the fully featured VUL license you were migrated at no cost to for the remained of your contract over 2 years ago, back when VIL was discontinued. So while there's a bump of renewal costs for you now, I guess the fact that you enjoyed access to full functionality at no extra cost for a couple of years balances this out a bit. However, I admit this does not solve your renewal budget issue, which is why I suggest you ask your renewal rep to talk to their manager and see if they can possibly throw an extra one-off discount on top based on your situation. In the end it's up to them, being with R&D I have no say here unfortunately.

[Gostev]

An upgrade to a license with more features when none of those additional features will be used is nothing more than a cost increase.

Our statistics shows that it is extremely rare when "none of those additional features will be used" and this particular case is not an exception to the rule either.

[mkaec]

If the additional features were useful to the customer, wouldn't the customer have opted for the more expensive SKU to begin with? I've been in that situation plenty of times where a vendor forced the license into a more expensive SKU where the additional functionality was not desired. It's a false argument that "you should be happy to pay more because you're getting more" when the option to pay less is forcefully removed.

[Gostev]

If the additional features were useful to the customer, wouldn't the customer have opted for the more expensive SKU to begin with?

I can answer this based on my own recent experience. I've been watching YouTube for over 10 years now. Last year I took an offer of 2 free months of YouTube Premium, and guess what - after they expired, I just could not go back to non-premium experience with all of those ads stealing my time... so I bit the bullet and am paying for premium now. I would have NEVER become a premium subscriber if they did not bump me there at no cost first. But the only thing I'm asking myself now is why in the world I did not "opt for the more expensive SKU to begin with"

Now, I can appreciate that some people may treat this and similar approaches as unfair. But at this point it becomes a very philosophical discussion I'd rather not participate in. Plus, no matter what anyone may feel about this - just like you admit, the reality is such that every single business on this planet tries to get you to use and like the additional services that you did not think were necessary (or simply did not exist) when you first opted for their service. Damn capitalism!

What's important for this discussion though is that VIL discontinuation was not a part of such an "evil capitalists plan" in the first place. Because VIL on the whole existed for less than a year and was a complexity disaster which had to be scrapped for this very reason, while there were still very few customers (just some hundreds) who had a chance to adopt it. So the number of customers was way to small for this "force upgrade" to present any meaningful revenue opportunity for Veeam to start with. If anything, this change resulted in extra costs for Veeam, as for the next few years we had to support customers using many more features than what they paid for, without any guarantee that they will renew once their contract expires.

[mkaec]

I don't think that example is quite comparable. We're talking about forced SKU upgrades from one paid product to another. Giving trials is a great way to provide potential customers the ability to try out a product and see if they like it. A more comparable example might be if you subscribe to Netflix and you got a letter informing you that Netflix is moving you from a plan that allows 4 simultaneous streams to one that allows 8 simultaneous streams, and they're doubling your price as a result.

[Gostev]

Except Netflix does not even bother giving more features and functionality. They just keep forever increasing the price of my 4 streams plan
I for one would be much happier as their user to see this same 30% increase over years translate into a better plan with more features instead.

[mkaec]

I had just made up that example. Looking now, they have a plan that offers 2 streams and 1080p HD for $15.49/month and a plan that offers 4 streams and 4K for 19.99/month (USA pricing). So, the more accurate example is that they eliminate your $15.49 plan and tell you you should be happy that your price is gong up because you get 2 extra streams and 4K, even though you only have one device that is 1080p. But you're right -- they will increase prices across the board because they can.

[m.novelli]

The conversation is derailing

[Gostev]

You are right. Here's the summary to close the main topic:

1. There was no 90% MSRP increase comparing to 2019:

we must have been given a HUGE discount by Veeam in September 2019. I found another non discounted quote from earlier on in the year that was much more expensive so probably more representative. So in real terms the increase is more like 30% over that period.

2. There was a 30% MSRP increase in OP's situation because they originally bought the product using a rare SKU that was discontinued shortly after its introduction.

(REMOVED) VIL Enterprise Edition < partial functionality at $$
(NEW) VUL < full functionality, priced right between the two removed SKUs ($$ and a half)
(REMOVED) VIL Enterprise+ Edition < full functionality at $$$

So in your case renewal went up from $$ to ($$ and a half) which explains the 30% increase.
But for VIL ENT+ customers it instead went down from $$$ to ($$ and a half).

3. Our Renewals management have assured me that they use extra gentle approach when dealing with customers who originally purchased now-discontinued SKUs and are now running into a renewal budget issue. They take into consideration the entire customers' situation: ask them to share the offer from previous years and what they budgeted for renewal, the added value they got from the replacement SKU they were grandfathered into (what extra features are they actually using), etc. Then they make a new offer based on all the input gathered. In short, it sounds like they are willing to work closely with those renewing a discontinued SKU and are striving to find an acceptable solutions on a case-by-case basis. You don't get that with Netflix