Microsoft is bundling its AI-powered Office features into Microsoft 365 Personal and Home subscriptions, but it’s also raising prices as a result. Previously, Microsoft 365 subscribers had to pay an extra $20 per month to embed Copilot inside Office apps like Word, Excel, and PowerPoint as part of a Copilot Pro subscription, but Microsoft is now adding these AI features to its apps. Microsoft 365 for an additional $3. per month. However, existing subscribers can be attracted by the AI features and not suffer from the price increase.
Microsoft has been testing adding AI-powered Office apps, Copilot Pro’s most important feature, to Microsoft 365 subscriptions for the past few months. What was previously only available in Australia, New Zealand and a number of countries across Asia is now expanding to most markets worldwide.
While it seems like Microsoft is admitting that people aren’t willing to pay an extra $20 a month for AI-powered Office features, Microsoft argues that it has always wanted to bring AI features to more users.
“We know people are willing to pay for Microsoft 365 integration,” says Gareth Oystryk, senior director of marketing for Copilot Pro and Microsoft 365, in an interview with threshold. “Copilot Pro is an opportunity to learn from our power users and early adopters. Our plan all along has been how to bring this value to as many subscribers as possible in a way that works for them and for us.”
Copilot Pro isn’t going away, and Microsoft isn’t dropping the $20 monthly price either. It will remain for power users who want priority access to the latest AI models, along with early access to new AI features. “We definitely have a place for Copilot Pro,” says Oystryk. “There is still a group of people who enjoy using the power of Copilot Pro.”
Microsoft is raising the price of Microsoft 365 Personal and Family subscriptions by $3 per month in the US to bring these Office with AI features to all subscribers. “We’re raising the prices of Microsoft 365 Personal and Family for the first time in 12 years,” says Oystryk. “We have never raised the price in the US and are raising it by $3 per month, along with similar amounts in other markets.”
No one likes price hikes, and consumers are especially sensitive to being asked to pay more for AI features now. If you don’t want to pay extra for these AI features, then Microsoft will have plans for existing subscribers to stay at the same price point without Copilot in Office apps.
“We’ve created two new plans that will really only be available for next year, Personal Classic and Family Classic,” explains Oystryk. “They will be available as people go through the renewal cycle. If they go to cancel, they will have the option to choose one of these Personal Classic or Family Classic plans.”
These plans will only be available to existing Microsoft 365 subscribers, and new subscribers will get AI-powered Office features by default with the new pricing changes. However, it looks like the classic plans won’t have any of Microsoft’s big new features. “They will continue to receive security updates and minor feature updates, but any additional new innovations we offer in the future will not be included in those plans,” says Oystryk.
Microsoft is also introducing a new AI credits system today, along with Microsoft 365 subscription changes. It’s a new system that works across most of Microsoft’s AI-powered consumer experiences, including Word, Excel, PowerPoint, Outlook and OneNote. You’ll get a monthly allotment of credits within Microsoft 365 Personal and Family to use for things like generating images in the Designer app or in Windows apps like Paint, Photos, and Notepad. Copilot Pro essentially includes unlimited use of all these AI features, based on a fair use policy.
Microsoft is also making it easy to turn off Copilot in Office apps if you just don’t want the AI assistant or you’re a student and your school has policies against using AI. “The most interesting part of the feedback we got is that there are times when our users want to disable Copilot,” says Oystryk. “We’ve been working to add new settings to some of our core apps that allow people to disable Copilot.” This will come first to Word today and then to Excel and PowerPoint in the coming weeks.
