That's not how the average should be calculated.

It should be:

(Contract_1_yearly+...+Contract_n_yearly)/num_contracts

Anyhow the customer signed the deal (https://twitter.com/cioontherun/status/1761882689886433742), implying they were underpaying and had the capacity to pay the true rate.

That’s going to get you basically the same number unless you think most of those 400k customers do not have contracts for some reason? My revenue-based approach would undercount in-year bookings but your approach would undercount NRR which I suspect is nontrivial for VMWare (but I haven’t checked).

Also just to be clear I agree with your initial comment - there are lots of reasons even big customers can be worth repricing based on their true costs and strategic relevance. And at less than 0.1% of revenue VMWare can certainly afford to risk it.

After having some caffeine percolate in my veins, I see your point and agree!

> Anyhow the customer signed the deal (https://twitter.com/cioontherun/status/1761882689886433742), implying they were underpaying and had the capacity to pay the true rate.

If they are sufficiently locked in, this might have been the best option to migrate away without major disruption.

edit: I'm wrong on the calculation portion - don't do napkin math without coffee

itsdrewmiller is right