Microsoft Price Increases and “Flexible” Copilot Billing Are Coming: How to Prepare

Microsoft is preparing for substantial price increases on several key products and pricing model changes to their M365 Copilot offering. Here’s how these changes will impact upcoming negotiations and what customers need to know to prepare.

Starting April 1, 2025, Microsoft price increases will impact Power BI and Microsoft Teams Phone. Plus, Microsoft announced a new flexible billing model for their M365 Copilot offering that will take effect before the end of the year. This new model will come with uplifted pricing for those customers looking to take advantage of the model and its added flexibility.

This is not the first time Microsoft has increased their prices to account for the added value and innovation – back in 2022, we saw an increase in the list prices of some Office 365 and Microsoft 365 product suites. The 2022 increase came after nearly a decade of steady list prices.

At the time, Microsoft 365 E5 was not touched because Microsoft wanted to close the gap between the price of Microsoft 365 E3 and E5 to help push customers towards Microsoft 365 E5. Microsoft customers evaluating Microsoft 365 E5 are likely seeing proposals with Microsoft 365 E3 pricing similar to Microsoft 365 E5. For those customers looking at going the “E5 add-on” route, the cost profile is likely lower to go “all-in” on Microsoft 365 E5 based on the proposals being presented.

The continued push towards M365 is prevalent in the upcoming price increases. Here, I will outline what the price increases are, why Microsoft is increasing the Power BI and Teams Phone prices, and how to combat these price increases at your upcoming renewals.

Microsoft Power BI, Teams Phone, and M365 Copilot Price Increases Tied to Added Flexibility

The following price increases reflect uplifts of up to 40% for Power BI and Microsoft Teams Phone products:

• Power BI Pro will go from $10 per user per month (/u/m) to $14/u/m
• Power BI Premium Per User (PPU) will increase from $20/u/m to $24/u/m
• Teams Phone Standard will go from $8/u/m to $10/u/m
• Teams Phone Standard for Frontline Workers will go from $4/u/m to $5/u/m

In addition to these increases, starting December 1st, M365 Copilot customers can pay on a monthly basis for access to the product versus paying all upfront. This is tied to annual subscribers of Microsoft 365 Copilot, Microsoft 365 Copilot for Sales and Microsoft 365 Copilot for Service.

The already expensive Microsoft 365 Copilot price tag, which is $30/u/m under the annual upfront subscription, will go up 5%. This makes Microsoft 365 Copilot’s list price $31.50/u/m and M365 for Sales and Service will be $52.50/u/m for monthly subscribers.

Why is Microsoft Increasing Prices?

To justify the significant increases to the Power BI products, Microsoft said, “The increase in price is reflective of all the investment in the innovation we have delivered over the years.”

Bumping up the price of Power BI Pro is also likely tied to Microsoft’s ongoing goal of moving customers to Microsoft 365 E5 since Power BI Pro comes with Microsoft 365 E5. Increasing the cost of one product in the E5 bundle, if bought “standalone,” is similar to when Microsoft uplifted the price of Microsoft 365 E3 to close the gap between its price and the price of Microsoft 365 E5. Microsoft hopes that by making Microsoft 365 E5 the more cost-effective option to access products like Power BI Pro, it will increase adoption of Microsoft 365 E5.

To justify the significant increases to Microsoft Teams Phone, Microsoft said, “It is reflective of the increased value we have delivered to our customers to enable flexible, smart, and reliable calling natively in Teams.”

Similar to Power BI, added innovation and features are giving Microsoft the boost they need to up overall pricing. It is up to the customers to determine whether that added value is or will be realized. If not, it will be critically important to approach Microsoft with the right plan and strategy in place in order to leverage this and ensure the right price is achieved moving forward.

How to Navigate Microsoft’s Price Increases

With these list price increases and premiums for more flexibility coming up quickly, there are a few things that your organization can do to prepare for your next negotiation or renewal with Microsoft:

1. Achieve Proper Pricing and Price Protections:For those with renewals coming up ahead of the price increase, it will be critical to not only achieve the right upfront pricing but also the proper renewal term price protections that adequately address the level of increase Microsoft can apply at your upcoming renewal. Of course, that is assuming the pricing you negotiated last time is what it should be. Unfortunately, many customers do not have renewal term price protections in place or did not negotiate a competitive price to begin with, presenting a significant challenge in their negotiations moving forward.
2. Assess Current Utilization: Customers also need to set aside the necessary amount of time to carefully assess current utilization of the added value Microsoft is citing to support the price increase. Microsoft’s plan is to lean on the added value and innovation to justify the upcoming price increases, but customers need to be armed with granular-level knowledge of their use. This is especially true in cases where value is not realized, as it will help shape and drive the negotiation with Microsoft.
3. Push for Investments in Rollout:Once you have assessed your utilization and have shown Microsoft what has not been utilized, you can push them to step up and provide investments to ensure your company does get the expected value through use moving forward. This would be in addition to appropriate and compelling pricing.

At UpperEdge, we help customers overcome imposed price increases and secure the proper upfront pricing as well as renewal price protections to ensure they receive competitive pricing at all phases of their contract. Explore our Microsoft Advisory Services to see how we can help.