What each IBM i software tier means in real dollar terms, how hardware generation affects tier eligibility, and the hidden cost of a tier change at your next upgrade.

IBM i software isn't licensed by core count alone -- it's licensed by tier. Every processor core in your Power system carries a software tier rating (P05, P10, P20, P30, P40, or P50) based on its relative performance, and that tier is what determines your IBM i, database, and middleware licensing cost. Two systems with the same core count can carry very different software bills if they land in different tiers.

The current tier structure

IBM i software tiers: pricing and status

Tier	Status	Perpetual OTC	Annual SWMA	IBM i-only Subscription	Bundle Subscription
P05	Subscription-only since 2024-05-07	$2,245 (historical)	n/a	not published	n/a
P10	Subscription-only since 2024-05-07	$14,995 (historical)	n/a	not published	n/a
P20 Standard Edition	Bundle available since 2025-07-15	$49,438	$8,954/yr	$14,500/yr	$16,000/yr
P30 Enterprise Edition	Bundle available	$66,292	$13,310/yr	$21,900/yr	$24,500/yr
P40	Retired	-	-	-	-
P50	Priced same as P30	see P30	see P30	see P30	see P30

P05/P10 perpetual figures are historical reference points from before the May 2024 subscription-only change. See our full IBM i Tier Pricing Dataset for sourcing on every figure.

No per-user fees at P20 and above

P05 and P10 support optional per-user licensing alongside per-core pricing, with unlimited-user licensing becoming cost-competitive around 50 users at P05 and 200 users at P10. P20 and P30 drop per-user fees entirely -- once you're in an Enterprise-class tier, every user on the box is covered by the core-based subscription.

The hidden cost of a hardware upgrade

Moving to a newer Power generation doesn't just change your hardware bill -- if the new processor feature code lands in a higher software tier than your current system, your IBM i software cost jumps too, sometimes by more than the hardware price difference itself. Before signing off on a Power8-to-Power11 refresh, confirm which software tier the target processor feature code carries, not just its core count or CPW rating.

P20 5250 Enablement Crossover~4 years vs. buying it unbundled

P30 5250 Enablement Crossover~6 years vs. buying it unbundled

2024 Price IncreasesSWMA +10%, subscription +10%, perpetual +6%

P10 SWMA Reinstatement Example~$10,500 after a lapse

Real example: a single S1122 configuration, three ways

Midland Information Systems publishes real configuration pricing for the Power S1122, which shows how dramatically the same hardware can price out depending on IBM i software: users, and LPAR count.

S1122 (9824-22A), real published configuration pricing

Configuration	Hardware	IBM i Software OTC	Total
1 IBM i partition, 10 users, 128 GB	$33,303.98	$36,664.00	$69,967.98
1 IBM i partition, unlimited users, 256 GB	$43,601.98	$84,698.00	$128,299.98
4 IBM i partitions, unlimited users, 256 GB	$43,601.98	$176,141.00	$219,742.98

Published by Midland Information Systems; not IBM list prices. Note that software cost, not hardware, is what scales fastest as partitions and users grow.

Tier optimization strategies

Right-size before you buy

Confirm the software tier of a processor feature code before committing to hardware -- the tier, not the core count, drives your recurring cost.

Consolidate LPARs deliberately

Each additional partition multiplies IBM i software cost. Consolidating workloads onto fewer, larger partitions can cut total licensing cost even at a higher tier.

Model the bundle math

At P20/P30, compare the bundle subscription against buying the IBM i-only subscription plus the specific entitlements you actually need -- the bundle isn't always the cheaper path for every shop.

Never let SWMA lapse casually

The After License Fee (ALF) reinstatement penalty is 2-3x the annual SWMA rate. A short-term savings move rarely pays for itself.

IBM i Tier Economics: P05 Through P50