① Licensing concept · Consumption pricing
Five solutions sit under one name, and only some lower your bill. The whole model turns on a baseline you negotiate, not a meter you watch. Here is what each solution prices, when it fits, and where it costs you.
A negotiated yearly baseline replaces the monthly peak. The number is set at the table.
IBM Tailored Fit Pricing, which IBM introduced in 2019, is a family of licensing models for IBM Z software and hardware built to move away from the rolling four hour peak, the R4HA, that drives traditional Monthly License Charge bills. Instead of charging on the highest four hour average each month, it sets a negotiated annual consumption baseline and a growth rate, then bills against that. The pitch is predictability: you stop tuning workloads to dodge a peak and pay against a yearly number agreed in advance.
The model is not one offer but five, and the difference matters because only some of them lower a given estate's bill. The Software Consumption Solution, formerly the Enterprise Consumption Solution, prices z/OS software on metered MSU against an annual baseline. The Hardware Consumption Solution adds an always on corridor of capacity for short spikes. The Application Development and Test Solution carves out dev and test. The Enterprise Capacity Solution prices the full machine flat. The New Application Solution prices new colocated workloads separately. IBM decides which solution it offers first, so the buyer's job is to know which one actually fits the estate.
Availability and terms vary by machine generation and contract. Verify the current offer against your own SCRT data before signing.
| Solution | What it prices | Best fit |
|---|---|---|
| Software Consumption Solution | z/OS software on metered MSU against an annual baseline plus growth rate | Growing estates with sharp, unavoidable peaks |
| Hardware Consumption Solution | A subscription corridor of capacity on top of purchased hardware for spikes | Genuinely unpredictable spikes that cannot be scheduled away |
| Application Development and Test Solution | Dev and test capacity carved out at a workload specific rate | Estates with large, separable dev and test footprints |
| Enterprise Capacity Solution | Full machine capacity at a flat, predictable charge | High, steady utilization where simplicity outweighs metering |
| New Application Solution | New approved workloads colocated with existing ones, measured separately | A net new application you do not want inflating the R4HA |
Work top to bottom against your own twelve months of SCRT data. The model rewards opposite behavior to MLC, so the answer is rarely automatic.
One estate modeled under sub-capacity MLC and under a consumption baseline. Rate R is an illustrative placeholder; actual rates are negotiated and are not stated here. The point is which behavior each model rewards.
| Measure | Sub-capacity MLC | Tailored Fit Pricing |
|---|---|---|
| What sets the bill | Monthly peak R4HA per product | Negotiated annual baseline plus growth rate |
| Typical sustained consumption (MSU) | 430 | 430 |
| Billable figure | Peak 600 | Baseline 450 |
| Year one charge at rate R | 600 × R | 450 × R |
| What lowers it | Capping and peak shaving every month | Modeling the baseline low at signature |
| What raises it | An uncontrolled spike in any one month | A baseline anchored on your worst month |
MLC pays you to manage the peak relentlessly. Tailored Fit Pricing pays you to negotiate the baseline well once, then stop tuning. An estate that lets IBM anchor the baseline on its peak gives up the savings on both sides: it loses the MLC discipline and accepts a high consumption floor. The model only delivers when the baseline lands near sustained consumption and the growth rate stays low.
Vendors commonly propose a baseline near recent peak consumption, which sets a high floor for the whole term. Once signed, you pay that floor whether or not you use it, so the work happens before signature, in the data.
A growth percentage applied yearly on top of the baseline raises the floor automatically. A high baseline and a high growth rate together can outrun any savings the model promised, which is why both numbers are negotiated, not accepted.
The model removes the incentive to schedule and cap, because the peak no longer sets the bill. That is the convenience, but an estate that was disciplined on the R4HA can quietly give up the savings that discipline produced.
Reverting to MLC is governed by the agreement, and terms vary. If the revert and renewal conditions are not negotiated in up front, you discover them at the end of the term, when leverage is gone.
Model both, anchor the baseline low, cap the growth rate, keep an exit.
Approach Tailored Fit Pricing as a modeling exercise first and a contract second. Pull at least twelve months of SCRT data and model the estate under both traditional sub-capacity and the proposed consumption baseline, because the two reward opposite behavior. Anchor the baseline on sustained consumption, not the peak, and push the growth rate as low as the workload trajectory honestly supports. Treat the corridor as a last resort for genuinely unpredictable spikes, after checking whether peak shaving would flatten them for free. Build a credible option to stay on MLC so the consumption offer competes against something.
The metric underneath all of this is still capacity, so read the rolling four hour average for how the peak is built and the pricing history from PSLC to TFP for how the model arrived. When IBM puts a consumption baseline on the table, our mainframe license negotiation team models it against your own data before you sign, and our IBM contract review reads the revert and growth clauses line by line.
A family of IBM Z consumption and full capacity models, introduced in 2019, that bill against a negotiated annual baseline and growth rate instead of the monthly four hour peak. It spans five solutions, only some of which lower a given estate's bill.
Only if the baseline is set near sustained consumption and the growth rate is low. A baseline anchored on your peak locks a high floor for the term. The savings are decided in the negotiation, not the meter.
It depends on the estate. MLC rewards peak management; Tailored Fit Pricing trades that for predictability. Estates with sharp unavoidable peaks often gain; flat, well capped estates may give up savings they already earn.
Reverting is governed by the contract, and terms vary. Tailored Fit Pricing is commonly committed for a multi year term, so negotiate the revert and renewal conditions in before signing rather than discovering them at the end.