Microsoft Copilot Pricing Has Landed – What Enterprise IT Buyers Need to Know

August 09, 2023
IT Microsoft

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Microsoft’s eagerly awaited Copilot pricing has been announced at Inspire, the annual partner conference for the Redmond-based software giant. While details are still sparse on specific pricing for the Enterprise Agreement program, Microsoft did state the following:

“We’re sharing that Microsoft 365 Copilot will be priced at $30 per user, per month for Microsoft 365 E3, E5, Business Standard and Business Premium customers…”

Since the Microsoft Copilot pricing announcement, there have been more than a few negative reactions on the exorbitant price point for Microsoft 365 Copilot. It’s much more expensive than what many customers expected, and could have a ballooning effect on Microsoft 365 spend. A company of 10,000 employees can expect to pay $3.6M per year – which will be more than some customers are willing to spend and likely result in customers licensing Copilot only for specialized knowledge workers.

But the threshold of what enterprise customers are willing to pay for certain use cases  has yet to be determined. For some use cases/user profiles, it could be worth the cost depending on Microsoft’s ability to move the productivity needle. Currently, Microsoft 365 Copilot is in private preview with approximately 600 customers.

As predicted, Microsoft will offer a free version of Copilot – Bing Chat Enterprise – which will be free for Microsoft 365 E3 or E5 customers. Or if you’re not yet using M365 E3 or E5, Bing Chat Enterprise will be available for $5 per user per month. There is a caveat though: it appears that Bing Chat Enterprise requires you to use Microsoft’s Edge browser (perhaps the browser wars aren’t over?). In any event, it’s worth looking at Microsoft’s implementation of AI-powered chat. Microsoft states that your data is protected and will not leak outside of the organization, nor will be it used to train the Microsoft large language models.

Microsoft 365 Copilot Benefits are Numerous – But Not Without Hidden Cost Implications

Microsoft 365 Copilot is certain to be of interest to enterprise customers as it will go far beyond a chat-type implementation of a public search engine. Microsoft 365 Copilot will combine your own data stored in the Microsoft 365 applications (Word, Excel, PowerPoint, Outlook, Teams and more) with the power of a large language model (LMM) to “turn your words into the most powerful productivity tool on the planet.”

Copilot will be integrated into the Office product to help you create first drafts, enhance spreadsheets, and create professional-looking presentations in just a few simple steps.  Additionally, Microsoft Copilot will include a Business Chat functionality that works across the LLM, the Microsoft 365 applications, and your data (calendar, emails, chat, documents, meetings, and contacts) “to do things that you’ve never done before.”

It should be noted that some of the capabilities Microsoft is touting for the average Office user generally exist in the product today, yet they may be difficult to learn. Perhaps one advantage we’ll see with Microsoft 365 Copilot is an increase in skills of the Office user.

The real advantage to enterprise AI, though, is the integration of the LLM with your enterprise data. Microsoft states “the key to unlocking productivity in business lies in connecting LLMs to your business data,” which is likely code-talk for “move your enterprise data to Azure” where it can be readily analyzed by the LLM. So this will lead to significant increases in your Azure spend. Microsoft states that Copilot is built on Microsoft enterprise-grade security, privacy, identity, and compliance policies meaning that your data is isolated and protected within your Microsoft 365 tenant.

Things to Consider Before Purchasing Microsoft Copilot

Customers should expect Microsoft’s sales teams to aggressively push Copilot during Enterprise Agreement renewals. The vendor’s investment and focus (and resulting investor and press coverage) indicate reps will be highly incentivized to get customers to purchase the SKU, which could create buy-side leverage to pursue higher discounts on other products or total deal amount.

While it’s too early to say whether the company will offer significant discounts for Copilot, it’s important to remember that Copilot is priced near the cost of the basic M365 E3 subscription. And there will be a lot of dependencies on the Copilot product that will drive up overall Microsoft spend. Case in point: the “security, identity, and compliance” provisions noted above are all capabilities offered with the M365 E5 product. Given the deep integration upon Microsoft’s advanced editions of the security, identity, and compliance products, it’s a given that a robust Copilot deployment will rely heavily upon M365 E5 subscriptions. Coupled with the likely increase in Azure commitments, Copilot may very well be revolutionary on several fronts – not the least of which is increased customer spend.

Interested in optimizing and reducing your enterprise spend with Microsoft? NPI can help. Contact us to learn more.