Microsoft (MSFT, Financial) has announced the integration of AI tools into its consumer version of the Microsoft 365 suite, marking the first price increase in its subscription service in 12 years. The company plans to introduce the Copilot AI assistant to applications such as Word, Excel, PowerPoint, Outlook, and OneNote, enhancing functionality for consumer users. This move is part of Microsoft's strategy to boost the appeal of its Microsoft 365 subscription service.
According to Bryan Rognier, Vice President of Microsoft 365 Consumer Products, the monthly subscription fees will rise by $3 to reflect the numerous benefits added over the past 12 years and to support future innovations. The updated pricing will be as follows: Microsoft 365 Personal will increase from $6.99 to $9.99 per month, and annually from $69.99 to $99.99. Microsoft 365 Family, which supports up to six users, will rise from $9.99 to $12.99 per month, and annually from $99.99 to $129.99.
Existing subscribers will see the new pricing upon renewal. As of September, Microsoft has 84.4 million Microsoft 365 consumer subscribers, a 10% increase year-over-year. While Microsoft 365, formerly known as Office 365, is crucial in competing with Google's productivity tools in the consumer market, its revenue contribution is lower compared to enterprise sales. In Microsoft's third quarter of the 2023 fiscal year, commercial products and cloud services accounted for 31% of the company's revenue, while consumer products and services contributed less than 3%.
In addition to the Copilot AI assistant, subscribers will gain access to the Microsoft Designer image editing tool. Current subscribers can opt for a plan without Copilot or AI features within a limited time. These plans will maintain existing functionalities, but new features will require a Microsoft 365 Personal or Family subscription.
