Microsoft recently announced that Microsoft 365 Copilot is now available to purchase for enterprise customers. Microsoft 365 Copilot was first introduced at their annual Inspire conference back in July and is being marketed as a generative AI built into the Microsoft 365 bundles that can act as a “virtual assistant” that increases efficiency and productivity. It uses Learned Language Models to integrate your data into the popular Microsoft 365 apps like Teams.
At the time of its announcement, this version of Copilot was not yet generally available, and Microsoft never clarified when it would become available for Microsoft customers. What they did announce was an Early Access Program (EAP) for Copilot that was invite-only and allowed invited customers to acquire access before the product’s general availability by paying a one-time fee.
Microsoft 365 Copilot became generally available for enterprise customers on November 1st. Here, I will outline how much Microsoft 365 Copilot costs and what conditions there are when adopting the product, what Microsoft’s goals are with the new launch, and ways enterprise customers can leverage their interest to optimize their go-forward Microsoft spend if they are considering adding Copilot.
How Much Does Microsoft 365 Copilot Cost?
Microsoft 365 Copilot is priced at $30 per user per month with a minimum of 300 seats, though there has been some ambiguity on that number. Copilot is also currently only available as an add-on to Microsoft 365 E3 or E5. Copilot can also be added to Business Standard and Business Premium customers, but these plans are not typically being utilized by enterprise customers.
Using list prices to illustrate the point, here is a quick snap shot of just how expensive Microsoft 365 Copilot will be for enterprise customers:
|Bundle||M365 List Price||Copilot List Price||Total List Price||Uplift|
|Microsoft 365 E3||$36/u/m||$30/u/m||$66/u/m||83%|
|Microsoft 365 E5||$57/u/m||$30/u/m||$87/u/m||53%|
The uplift when adding Copilot to the already expensive E3 and/or E5 is remarkable, forcing current Microsoft 365 E3 customers to nearly double their spend and Microsoft 365 E5 customers to significantly increase their spend to access the generative AI features of Copilot.
For those enterprise customers that are looking to use AI features for their frontline worker users on Microsoft 365 F3, they would have to first move the user to Microsoft 365 E3 (go from $8/u/m list to $36/u/m list) and then add Copilot on top of that.
What are Microsoft’s Goals with Microsoft 365 Copilot?
Microsoft will be focused on aggressively pushing Copilot because they want their customers to adopt and utilize their AI technology. They want to position themselves as an AI leader in the market, something we’ve been seeing from Microsoft since they announced their partnership with OpenAI. The more customers that they can show have adopted Copilot, the more they can substantiate their investments.
Like every cloud and SaaS vendor, Microsoft is also trying to expand and grow their customers’ Annual Contract Value (ACV). Sales reps need to make the annual spend of each customer go up. Adding $30/u/m to an already pricey bundle of products does just that pretty efficiently.
If Microsoft gets enough enterprise customers interested in Copilot, there’s potential for Copilot to become bundled into Microsoft 365 E5 to help drive adoption of this more robust bundle. Of course, there would likely be an uplift to the current Microsoft 365 E5 price as well, but the uplift would have to be less than simply adding on Copilot.
If you remember, Microsoft 365 E5 did not get hit with a price increase back in March 2022, when other plans did. Plus, Microsoft hasn’t shared E5 growth numbers in over 2 years, alluding to the fact that they haven’t seen a lot of adoption of the bundle. Weaving Copilot into the Microsoft 365 bundle for a lower overall subscription price could drive the adoption they’ve been hoping for with E5. But, of course, this is just speculation at this time. Maybe Microsoft will go the “E7” route instead?
How Can Enterprise Customers Negotiate Microsoft 365 Copilot Pricing?
Enterprise customers should try to achieve additional discounting for Copilot despite any claims that the Copilot pricing is non-negotiable. If you orchestrate your negotiation strategy properly, you should be able to achieve discounting (beyond standard price level or volume discounting) and concessions for Copilot. Enterprise customers should also push for the following concessions from Microsoft as part of your negotiation (whether adding in-term or at a renewal):
1. Lower Microsoft 365 Bundle Pricing
Position an expectation that Microsoft improve or lower your proposed go-forward Microsoft 365 E3 or E5 subscription costs. If you’re thinking about adding Copilot, it would be a massive win for Microsoft to gain adoption.
For Microsoft to earn this win, set the expectation that Microsoft needs to look at the entire cost profile increase that comes with giving this commitment to them and it would simply not be enough to only lower the Copilot price itself. And if Microsoft is planning to impose a price increase to your current Microsoft 365 or E5 price at renewal, Microsoft needs to understand that that decision by Microsoft will prohibit you from adding Copilot.
When pushing for additional discounting and price improvement tied to the underlying Microsoft 365 E3 and/or Microsoft 365 E5 subscription costs, it will be incredibly helpful to have a granular understanding of how much of Microsoft 365 E3 or E5 is currently being utilized to present to Microsoft. If you are not using all the features in the bundle, that gives you additional leverage to ask for the necessary additional discounting before you consider adding Copilot at an additional cost.
2. Price Protections
At the same time, you should be positioning future price protections to prevent your Microsoft 365 E3 or E5 pricing and Copilot pricing from going up at your next renewal. Microsoft may not commit to no increase, but communicate an expectation that there will need to be a cap on the increase that can be imposed.
3. Investment Dollars
Enterprise customers should also ask for investment dollars to help roll out Copilot. There is no doubt that there will also need to be training to ensure the AI features are being utilized properly. Microsoft should be pushed to step up and provide meaningful funding to help unlock the full expected value from Copilot.
The bottom line is that Microsoft needs customers to adopt Microsoft 365 Copilot to achieve their larger goals. By properly preparing and executing your negotiation strategy, you can ensure nothing is left on the table pricing wise (i.e., spend more than you should be) while also getting the right level of commitments and concessions from Microsoft.