Perpetual vs Subscription: The IBM i Software Licensing Decision
When perpetual still makes sense, when subscription wins, the real cost of letting SWMA lapse, and how third-party software licensing compares.
IBM has been steadily moving IBM i licensing toward subscription. P05 and P10 have been subscription-only for new purchases and license transfers since May 7, 2024. P20 and P30 are now sold as bundled subscription editions. But existing perpetual licenses remain valid, and the choice between the two models still matters for budgeting and for shops weighing a hardware refresh.
The multi-year math
IT Jungle's analysis of the 2024 pricing changes found subscription running consistently more expensive than perpetual-plus-SWMA over a seven-year holding period -- but the premium shrinks as user count rises toward the unlimited-user crossover point.
Subscription premium over 7-year perpetual + SWMA
| Tier | Configuration | Subscription Premium (7yr) |
|---|---|---|
| P05 | 25 users | +30.3% |
| P05 | Unlimited users | +13.2% |
| P10 | 75 users | +22.0% |
| P20 | Unlimited users | +26.5% |
Figures from IT Jungle's April 2024 analysis of IBM's pricing letters. P05/P10 no longer offer a perpetual option for new purchases -- these figures describe the economics of licenses already in place.
Why subscription still gets chosen anyway
No large upfront outlay
Subscription spreads cost evenly, which matters for cash-flow-constrained budgets even when the multi-year total is higher.
Always current-release
Subscription bundles in the equivalent of always-current SWMA -- no separate reinstatement risk if a renewal is ever missed by IBM's own account management.
It's the only option at P05/P10
For new purchases or transfers at the entry tiers, subscription isn't a choice anymore -- it's the only path.
Bundle entitlements at P20/P30
The Standard and Enterprise Edition bundles add real entitlement value (see our Software Value Index) that a straight perpetual comparison doesn't capture.
The cost of letting SWMA lapse
For shops still on perpetual licensing, the single most expensive mistake is letting SWMA lapse to save money in a lean year. Reinstating coverage triggers the After License Fee (ALF), a flat penalty of roughly 2 to 3 times the annual SWMA rate, not prorated for how long the lapse lasted.
SWMA reinstatement (ALF) examples
| Annual SWMA | Reinstatement (ALF) |
|---|---|
| $1,500 | ~$3,000 |
| $3,500 | ~$7,000 |
| P10 tier reference | ~$10,500 |
A lapse that 'saves' one year of SWMA typically costs 2-3 years of SWMA equivalent to undo. Budget for continuous coverage rather than treating SWMA as a discretionary line item.
Third-party ISV software: the same pattern, less transparency
Independent software vendors selling HA/DR, backup, and security tools for IBM i generally follow the same perpetual-vs-subscription split IBM does, but almost none publish list pricing the way IBM's announcement letters do. Expect a similar directional tradeoff -- subscription costs more over a multi-year hold but avoids the upfront capital outlay -- and get the actual number in writing before comparing options.
Decision framework
Sources: https://www.itjungle.com/2024/04/15/drilling-down-into-new-ibm-i-perpetual-and-subscription-pricing/, https://programmers.io/blog/as400-ibmi-swma-price-increase/, https://www.itjungle.com/2020/04/20/ibm-grants-amnesty-on-software-maintenance-after-license-charges/