Microsoft 365 Copilot goes monthly for a 5% premium and annual commitment

Microsoft is introducing flexible billing for Microsoft 365 Copilot starting next month to spread the cost of an annual subscription. For a price.

Noted by analyst Mary Jo Foley of Directions on Microsoft, the plan is "in response to customer and partner feedback." It means that customers can opt to pay for their annual Microsoft 365 Copilot subscriptions on a monthly basis. The downside is that the cost will be 5 percent higher, and an annual contract will still be required.

Microsoft did not go into specifics on the feedback, but we imagine it was more along the lines of "it would really help our cash flow if this could be monthly" rather than "we would love to pay a bit more to use Microsoft 365 Copilot - could you help us with that?"

Customers seeking more flexibility from the software vendor around Microsoft 365 Copilot may also be disappointed in the continued requirement for an annual commitment.

Microsoft's "cash flow flexibility" extends to other products as well, including Microsoft 365, Office 365, Windows 365, Dynamics 365, and the Power Platform. Monthly billing plans for annual subscriptions are set to rise by 5 percent from April 1, 2025.

Want to avoid the increase? Unless a customer's licensing anniversary occurs before April 1, 2025, they will need to switch to an upfront annual payment at the renewal date.

According to Microsoft, which reported a revenue bump of 16 percent to $65.6 billion in its FY25 Q1 results for the three months ended September 30, "by standardizing the billing structure, we ensure consistency and transparency across all platforms."

Prices are also set to increase be updated elsewhere in the company's portfolio. Microsoft plans an uplift for Teams Phone pricing "to reflect the continuous innovations delivered since the launch of Teams Phone."

Changes include a hike from $8 per user per month to $10 for Teams Phone Standard and a $1 increase for Frontline Workers from $4 per user per month to $5. From April 1, 2025, there will also be a 5 percent increase on top of yearly pricing for customers opting for a monthly billing plan for their annual subscription.

Foley noted Microsoft's plans to move some organizations off Enterprise Agreements (EA) and onto Microsoft Customer Agreements for Enterprise (MCA-E) or Cloud Solution Provider (CSP) agreements. The upshot is that customers are likely to lose some of their EA benefits and will need to take a hard look at licensing.

In addition, Foley warned there was every chance that a customer moving from EA to MCA-E might be considered a new customer by Microsoft and so would have to buy Teams separately from Microsoft 365.

Directions on Microsoft analyst Rob Horwitz cautioned: "Customers now forced to move from EA to MCA are going to have a bunch of unwelcome surprises." ®