With VMware's new vRAM licensing plan beginning with vSphere 5, VMware licensing will be based on the total amount of vRAM in an environment.

VMs can be overallocated in vRAM from their creation, or allocations may change or may need to be changed during a virtual machine's life. If VM vRAM is not correctly sized, data centers will pay for additional licenses based off vRAM that is not needed with the new vSphere pricing structure.

VKernel's vOPS Optimizer notes vRAM usage on peak and average basis. It is especially important to note peak usage during a measurable time cycle to size appropriately, as taking an average may understate the sizing needs and VMs undersized in vRAM could face performance issues. Optimizer will provide appropriate VM memory sizing recommendations and can automate the sizing process.

Checkout this video from VKernel's Alex Rosemblat explaining and walking you through it.