Microsoft to Raise Prices on Commercial Subscriptions. Copilot Price Will Remain.

The price of Microsoft’s 365 Copilot add-on isn’t changing. (Dreamstime)

Key Points

• Microsoft will increase prices for Microsoft 365 suite subscriptions starting July 1 due to new AI-powered capabilities.
• Price increases include a $1 bump for Business Basic, a $2.50 rise for Business Standard, and a $3 increase for Microsoft 365 E3.
• Microsoft’s 365 Copilot add-on, starting at $30 per user a month, will not see a price increase.

Microsoft announced on Thursday that it will be raising the price for its Microsoft 365 suite subscriptions as it updates these products with new artificial-intelligence-powered capabilities.

Microsoft announced that expanded availability of AI, security, and management capabilities are coming to its Microsoft 365 offerings next year. To support these updates, the tech giant said that it will be raising commercial pricing for Microsoft 365 suite subscriptions effective July 1.

Some of the price increases include a $1 bump for the Business Basic subscription, a $2.50 rise to the Business Standard plan, and a $3 increase to the Microsoft 365 E3 plan.

“Organizations face an increasingly complex threat landscape, rising IT demands, and the urgent need for AI-powered transformation. To help our customers meet these challenges head-on, we’re enhancing our Microsoft 365 offerings with additional security and management capabilities empowered by AI,” Microsoft said in the blog post.

Microsoft won’t be raising the price of its 365 Copilot add-on, which currently starts at $30 per user a month and gives people access to AI capabilities, like an AI-powered search across all work data, and the ability to create AI-generated images, posters, videos, and more.

Shares of Microsoft were little changed after the announcement. The stock was up 0.3% to $479.24.

Shares dropped 2.5% on Wednesday after the Information reported that Microsoft was easing sales quotas for enterprise AI products like Microsoft 365 Copilot. Wall Street was nervous that despite enthusiasm about the future of AI and the boost it could bring to productivity, companies are being cautious about full scale adoption of the tech.

A Microsoft spokesperson told Barron’s on Wednesday that “aggregate sales quotas for AI products have not been lowered.”

Thursday’s price increase announcement is the latest software change for Microsoft, but not the only one made this year.

The company stopped providing support for its Windows 10 operating system in October. Technical assistance and software updates for Windows 10 systems are no longer being provided, unless customers pay a per-device fee to cover one year. This has created an incentive for people and businesses to upgrade their laptops.

Write to Angela Palumbo at angela.palumbo@dowjones.com