Microsoft is adding Office AI features to Microsoft 365 and raising prices

Microsoft is combining the AI-powered features of Office with Microsoft 365 Personal and Home subscriptions, but as a result, increasing prices. Previously, Microsoft 365 subscribers had to pay an additional $20 per month to get Copilot in Office apps like Word, Excel, and PowerPoint with a Copilot Pro subscription, but now Microsoft is adding these AI features to Microsoft 365 apps for an additional $3 USD per month. However, existing subscribers can opt out of the AI ​​feature and not see the price enhance.

In recent months, Microsoft has been testing the addition of AI-powered Office applications, a key feature of Copilot Pro, to Microsoft 365 subscriptions. What was previously only available in Australia, Novel Zealand and many countries in Asia is now expanding to most markets around the world.

While Microsoft appears to acknowledge that people are not willing to pay an extra $20 a month for AI-powered Office features, Microsoft says it has always wanted to make AI features available to more users.

“We know people are willing to pay for integration with Microsoft 365,” says Gareth Oystryk, senior director of marketing for Copilot Pro and Microsoft 365, in an interview Edge. “Copilot Pro is an opportunity to learn from our power users and early adopters. Our whole plan was how to deliver that value to as many subscribers as possible in a way that benefits both them and us.

Copilot Pro isn’t going away, and Microsoft isn’t lowering its $20 monthly price either. It will remain available to 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 harnessing the power of Copilot Pro.”

Microsoft is increasing the price of Microsoft 365 Personal and Home subscriptions by $3 per month in the US to make the AI-powered features of Office available to all subscribers. “For the first time in 12 years, we are increasing the prices of Microsoft 365 Personal and Family services,” says Oystryk. “We have never actually raised the price in the U.S. and we raise it by $3 a month, just like in other markets.”

No one likes price increases, and consumers are currently particularly sensitive to having to pay more for AI features. If you don’t want to pay extra for these AI features, Microsoft will have plans to keep current subscribers at the same price tier without the Copilot feature in Office apps.

“We have created two new plans that won’t actually be available until next year, Personal Classic and Family Classic,” Oystryk explains. “They will be available as people go through their renewal cycle. If they cancel, they will have the option to choose one of the Personal Classic or Family Classic plans.”

These plans will only be available to existing Microsoft 365 subscribers, and fresh subscribers will receive AI-powered Office features by default with the fresh pricing changes. However, it looks like the classic plans won’t be getting any of Microsoft’s huge fresh features. “They will continue to receive security updates and minor feature updates, but any new, additional innovations we introduce in the future will not be included in these plans,” Oystryk says.

In addition to changes to Microsoft 365 subscriptions, Microsoft is also introducing a fresh AI credits system today. It’s a fresh system that works across most of Microsoft’s AI-powered consumer experiences, including Word, Excel, PowerPoint, Outlook, and OneNote. You’ll receive a monthly allocation of Microsoft 365 Personal and Home points to employ, for example, to generate images in Designer or in Windows apps like Paint, Photos, and Notebook. Copilot Pro essentially includes unlimited employ of all AI features, based on a fair employ policy.

Microsoft is also making it easier to turn off Copilot in Office applications if you simply don’t want to employ the AI ​​assistant or if you’re a student and your school has a policy against using AI. “The most interesting information we received was that sometimes our users want to turn off Copilot,” says Oystryk. “We’ve been working on adding new settings to some of our key apps that allow you to disable Copilot.” The feature will appear first in Word today and in Excel and PowerPoint in the coming weeks.