Microsoft 365 Goes Up

Microsoft has announced price increases for its Microsoft 365 Personal and Family subscription plans. The reason? The inclusion of Copilot AI features, which were previously a separate add-on.
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Copilot brings AI-powered assistance to various Microsoft 365 apps like Word, Outlook, PowerPoint, and OneNote. These features include summarizing text, generating written content, creating outlines, and answering questions about your documents. While these AI tools have been gradually rolled out over the past year, they previously required a separate Copilot Pro subscription or a business account.

Now, Copilot is bundled directly into the standard Microsoft 365 plans, meaning everyone subscribing will have access. However, this comes at a cost.

Price Changes and New Plan Options:

• Microsoft 365 Personal: Now $100 per year (up from $70) or $10 per month (up from $7).
• Microsoft 365 Family: Now $130 per year (up from $100) or $13 per month (up from $9).

For existing subscribers on recurring billing who don't want the AI features, Microsoft is offering "Classic" plans that retain the old pricing. There's also the cheaper Microsoft 365 Basic plan, which includes 100GB of cloud storage but doesn't include the desktop Office apps, for $2 per month or $20 per year.

Limited AI Usage:

Adding insult to injury, Microsoft isn't even offering unlimited AI usage with the price hike. The AI features use "AI Credits," a monthly allowance shared across all apps on your Microsoft account, including Windows apps like Notepad and Paint. Microsoft claims this will be enough for most users, but those needing more will have to pay for the separate Copilot Pro subscription.

The "Bundle and Hike" Strategy:

This move by Microsoft resembles strategies used by other companies like Amazon, which bundles various services into its Prime membership and periodically raises the price. The idea is to make users feel like they're getting more for their money, even if they don't use all the bundled features.

What Are Your Alternatives?

If you're unhappy with the price increase, you have options:

• Stick with the "Classic" plan (if eligible): If you're an existing subscriber on recurring billing, you can opt for the Classic plan to keep the old pricing.
• Microsoft 365 Basic: If you only need cloud storage and don't require the desktop Office apps, the Basic plan is a cheaper alternative.
• One-time Purchase Office: You can still buy standalone versions of Office apps without a subscription.
• Free Office Suites: Consider free and open-source alternatives like LibreOffice or Apple's iWork suite.

​While price increases are never welcome, Microsoft's move to bundle Copilot with its core subscription plans is a clear indication of the growing importance of AI in its product strategy.

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Image Source: https://www.microsoft365.com/