Towards the end of 2023, Microsoft announced that their latest offering, Copilot for Microsoft 365 (previously Microsoft 365 Copilot), was generally available for enterprise customers. Microsoft pushed the offering heavily as their latest innovation in Generative AI technology that worked alongside Microsoft 365 E3 and E5 bundles. As a “virtual assistant” to the products in these bundles, the use of Copilot for Microsoft 365 promised to increase efficiency and productivity.
However, there were several noteworthy and impactful conditions tied to customers gaining access to the promise of Copilot for Microsoft 365. First, customers had to already have an underlying subscription to either Microsoft 365 E3 or Microsoft 365 E5 or purchase a subscription to gain access. The AI product was also only available at an add-on fee of $30 per user per month to M365 E3 or M365 E5, leading to a significant pricing uplift for each associated user profile. Microsoft also required a minimum of 300 users when adopting Copilot for Microsoft 365.
Since its initial release, Microsoft received push back on the offering from customers that were actually interested in using Copilot for Microsoft 365, including
- Lack of availability in other popular (and less expensive) product bundles like Office 365 E3
- Lack of availability for M365 Business Standard and/or M365 Business Premium customers
- Lack of flexibility to test the product on small quantities of users before rolling it out across a company’s workforce.
Here, I will cover the major updates Microsoft announced in response to Copilot for Microsoft 365’s initial feedback and why Microsoft customers need to account for these updates if they are considering adopting Copilot for Microsoft 365.
Recent Updates to Copilot for Microsoft 365
Commercial customers are no longer required to have an underlying Microsoft 365 E3 or Microsoft 365 E5 bundle subscription and can now tack Copilot for Microsoft 365 onto their Office 365 E3 or Office 365 E5 subscriptions. Commercial customers are also no longer held to a 300-seat minimum, enabling more flexibility to test out the product before making a more extensive commitment and rolling out more broadly. Copilot for Microsoft 365 is still priced at $30 per user per month regardless of which bundle you add it onto.
When you factor in the significant price uplifts that come with adding Copilot for Microsoft 365 (see table below), the “sticker shock” gets even more shocking.
Customers are also no longer required to acquire their Copilot for Microsoft 365 subscriptions directly through Microsoft. Instead, customers can now acquire Copilot for Microsoft 365 offering through a Microsoft Cloud Solution Provider (CSP) partner. There are pros and cons with going down the CSP path, but this does present an option that, for some customers, may be worth exploring.
Microsoft also recognized that there were smaller, midmarket sized companies that wanted access to Copilot for Microsoft 365 but had no way of acquiring it because they lacked the underlying Microsoft 365 E3 or E5 solution. To combat this, Microsoft made Copilot for Microsoft 365 available as an add-on to their Microsoft 365 Business Premium and Microsoft 365 Business Standard offerings. It is still priced at $30 per user per month and there is no minimum commitment requirement.
Personal and Family plan customers did not previously have access to AI powered features for Office Apps like Word, Excel, PowerPoint, or Outlook. Now, Consumer customers will have access through Microsoft’s newly created “Copilot Pro” add-on. It costs $20 per user per month.
This is a particularly interesting update that Commercial customers should pay attention to. Microsoft knows that if they provide access to these AI features through Copilot Pro to their Consumer customers, these consumer users will start to enjoy and rely on these AI capabilities and will likely start to rely on them to be productive and efficient.
As current and future members of the workforce (i.e., the users that make up the subscription counts tied to Microsoft’s commercial customer’s subscriptions), these Personal and Family plan users will expect these capabilities from their employers to be productive. Microsoft has now created leverage against their Commercial customers to potentially force their hand into adopting Copilot for Microsoft 365.
On January 1st, Educational institutions started having access to Copilot for Microsoft 365. These educational institutions had to have an underlying Microsoft 365 A3 or Microsoft 365 A5 bundle subscriptions in place. As of January 15th, these educational institutions can now access Copilot for Microsoft 365 as an add-on to Office 365 A3 or Office 365 A5. The price remains $30 per user per month.
Updated Pricing for Copilot for Microsoft 365
Here is an up-to-date pricing and associated price uplift breakdown for Microsoft 365, Office 365, Business Premium/Standard, and Educational Customers:
|Copilot for M365 List Price
|Total List Price
|Microsoft 365 E3
|Microsoft 365 E5
|Office 365 E3
|Office 365 E5
Even though it is clear through these recent announcements that Microsoft is listening to and addressing the needs of the customers, you can fully expect Microsoft to push back on any requested price concessions for Copilot for Microsoft 365., With that being said, it doesn’t mean concessions can’t be achieved. But, to have any shot at achieving concessions, it will be critical to approach your Microsoft negotiations with as much as leverage as possible.
Key Takeaways from Copilot for Microsoft 365
Overall, the updates to Copilot for Microsoft 365 should remove friction and significantly widen the pool of users able to use and benefit from Microsoft’s AI capabilities, whether it be Copilot for Microsoft 365 or Copilot Pro.
While it is certainly commendable that Microsoft is listening to the needs and wants of their customer base, it will still be important for customers to challenge Microsoft to address concerns raised around the cost profile of Copilot for Microsoft 365, including commitments to future pricing and level of investments made to ensure successful rollouts and receipt of the promised productivity gains.
At UpperEdge we help Microsoft customers evaluate products like Copilot for Microsoft 365, ensuring they negotiate and achieve competitive pricing even where there appears to be little to no leverage. Explore our Microsoft Advisory Services to learn more about how we can help.