Tech giant eliminates separate $20 monthly charge for AI add-ons amid organizational restructuring and competition from OpenAI's ChatGPT platform.
Microsoft is preparing a significant pricing overhaul for its Copilot AI services, bundling previously separate add-ons into its main subscription to make its artificial intelligence tools more attractive to cost-conscious businesses.
The tech giant will reportedly eliminate the standalone $20 monthly charge for Copilot for Sales, Service, and Finance, folding these capabilities into the standard $30 Microsoft 365 Copilot subscription. This move effectively cuts the combined price from $50 to $30 per user per month—a 40% reduction for businesses needing the full suite of AI tools.
Struggling to Compete with ChatGPT
The pricing restructure comes as Microsoft faces challenges selling its AI assistant to enterprise customers, with many businesses balking at the steep costs, while OpenAI's ChatGPT gains momentum in the crucial enterprise market.
According to The Verge's reporting, sources indicate Microsoft is positioning this change as a simplification of its Copilot subscription model, making it easier for the company's extensive sales teams to pitch a single license rather than navigate a confusing array of add-ons.
Major AI Reorganization Underway
The pricing changes are part of a broader organizational restructuring within Microsoft's AI divisions. Charles Lamanna's Business and Industry Copilot (BIC) team, which manages Copilot integration in business applications and industry-specific tools, moved closer to the Microsoft 365 Copilot organization in June.
This week, Lamanna announced internally that Microsoft's Copilot, Agents, and Platform Ecosystem (CAPE) team is joining BIC to "bring more business value into the broader M365 agent platform," according to internal communications obtained by The Verge.
The consolidation means that teams building Microsoft 365 Copilot and the company's AI agent vision now report to Rajesh Jha, Microsoft's head of experiences and devices—a significant shift from a year ago when no single leader owned Copilot within the company.
Agent 365: Microsoft's Next Big AI Play
Microsoft is doubling down on AI agents with the development of Agent 365, a comprehensive set of tools designed to manage AI agents while ensuring business security and compliance requirements are met. The initiative is being led by Nirav Shah, a 24-year Microsoft veteran.
"As agents become part of the workforce, the Microsoft Admin Center will need to evolve into the central hub where both people and agents are managed by IT departments," Lamanna stated in his internal memo.
Sources indicate Microsoft plans to unveil Agent 365 at its Ignite conference later this year, marking a significant expansion of the company's AI agent strategy.
New Monetization Strategy Takes Shape
The restructuring reveals Microsoft's three-pronged approach to monetizing Copilot:
Microsoft 365 Copilot: The main subscription service, soon to include bundled add-ons
Copilot Studio: A pay-as-you-go platform for building custom AI agents
Dynamics 365: Integration with business applications
Microsoft plans to monetize autonomous agents outside of Copilot licenses through Copilot Studio, which operates on a consumption basis. The company is transitioning from charging for "messages" to a new "Copilot Credits" system, applicable across Dynamics 365 prebuilt agents, Power Apps "agentic experiences," and Microsoft 365 prebuilt agents.
Arpit is a dreamer, wanderer, and tech nerd who loves to jot down tech musings and updates. With a knack for crafting compelling narratives, Arpit has a sharp specialization in everything: from Predictive Analytics to Game Development, along with artificial intelligence (AI), Cloud Computing, IoT, and let’s not forget SaaS, healthcare, and more. Arpit crafts content that’s as strategic as it is compelling. With a Logician's mind, he is always chasing sunrises and tech advancements while secretly preparing for the robot uprising.
