Microsoft announces billing changes to Copilot and paid monthly, annual subscriptions

Microsoft has unveiled significant pricing updates that will impact Copilot subscriptions, a variety of annual subscription products, and Teams Phone. These changes are set to take effect in April 2024 and will have implications for partners and clients alike. Staying informed on these updates is crucial to ensure a smooth transition and to address any potential impacts on your billing strategy. Pricing updates to Copilot subscriptions, many annual subscription products, and Teams Phone 

Based on client feedback, Microsoft is introducing a monthly billing option at a five percent price update for its three versions of Copilot in the cloud: Microsoft 365 Copilot, Copilot for Sales, and Copilot for Service. This option became available effective December 1st, 2024.

Also, based on feedback, Microsoft is standardizing monthly billing rates for many of its annual subscription products. Beginning April 1st, 2025, all covered annual subscriptions will have a set monthly billing option with the same 5 percent price update as Copilot versions—more on the specific covered subscriptions below.

Last but not least, Microsoft is updating pricing on its Teams Phone products. Teams Phone has undergone significant development in the past several years without any price increases. Microsoft is bringing subscription rates in line with the value they feel Teams Phone delivers.

Key takeaways on these pricing updates for Microsoft clients 

he greatest benefit of these pricing updates for Microsoft Partners and their clients is flexibility. Microsoft is aligning costs with what they view as the current value of their product, but simplifying and standardizing a monthly billing option for Copilot subscriptions and annual products gives better control over how they use them.

It is also a good example of Microsoft’s commitment to addressing partner and client feedback.

What should clients do now? 

Clients should review their current billing plans and evaluate their options ahead of renewal dates. Copilot monthly billing options are available now, so we recommend those as the priority subscriptions to review. After that, review your other annual subscriptions before April 1, 2025. After that, you can choose plans that best suit your financial strategy.

Let us dig into the details of these three pricing changes so Microsoft partners and clients can better understand how these will affect them.

New monthly billing option for Microsoft 365 Copilot 

Starting December 1, 2024, Microsoft introduced a monthly billing option for its Copilot annual term subscriptions. Monthly billing is priced five percent higher than the upfront annual payment. While that is an increase, this option provides businesses greater flexibility, allowing them to pay monthly when needed, while maintaining the same feature set as an annual subscription.

This is an ideal solution for organizations looking to access the full power of Copilot’s AI-driven tools without the need for a lump-sum payment upfront. Or those who need it on a short-term basis.

This billing option is currently available for Microsoft 365 Copilot, Copilot for Sales, and Copilot for Service. All three subscriptions are available online, through Cloud Solution Providers (CSPs), and Microsoft Client Agreement for Enterprise (MCA-E) channels.

Standardized monthly billing prices for many annual term, billed monthly subscriptions 

Starting April 1, 2025, Microsoft will standardize monthly billing prices for most major annual term subscriptions at a five percent increase compared to upfront annual payments. This adjustment ensures consistency in pricing across all eligible products and billing platforms.

This change applies to a wide range of Microsoft services, most notably including:

• Microsoft 365
• Office 365
• Dynamics 365 solutions
• Windows 365
• Power Platform
• and more

This change aims to provide better consistency and transparency across the Microsoft product ecosystem. Clients can more easily manage finances and predict ongoing costs. While this represents an increase in some subscription costs, this change should make managing a rotating suite of subscriptions on monthly billing cycles much easier for existing customers.

To minimize costs, clients should evaluate their billing plans ahead of renewal dates. Switching to annual billing at renewal locks in the lower rate, avoiding the five percent increase. Clients should also consider whether they get better value by switching lightly used products to periodic monthly billed subscriptions.

With Microsoft’s upcoming price increase, there’s no better time to review your current licenses and identify opportunities to reduce your monthly costs. A proactive review can ensure your organization is optimized, minimizing unnecessary costs and preparing for the changes ahead. Through Velosio’s free licensing evaluation, our expert team can help you identify significant savings opportunities. On average, our clients save up to 20% on Microsoft licensing costs after an evaluation. Our tailored licensing programs are designed to streamline expenses across Microsoft 365, Dynamics 365, Azure, and other Microsoft applications, helping you maximize value while staying efficient and compliant. Sign up for your free consultation today!

Updated pricing for Microsoft Teams Phone 

For the first time since its launch, Microsoft is updating pricing for Teams Phone, effective April 1, 2025. Microsoft has poured resources into developing and updating this product since 2017, and they feel the new rates reflect the current value provided by the product.

Note that there are no pricing changes for Teams Phone bundled with Microsoft 365 E5 or Office 365 E5 subscriptions.

The new rates as of April 1st will be:

• Teams Phone Standard: $10/user/month ($120/year).
• Teams Phone with Domestic and International Calling: $34/user/month ($408/year).

For clients opting for monthly billing, subscriptions will include the same five percent price increase as with the other products discussed here. This is also to align with Microsoft’s new standardized pricing model.

Existing clients will retain their current pricing until their next renewal date. So you have time to prepare for these pricing updates.

New clients will adopt the updated rates upon subscribing. We encourage businesses to review their current plans and consider whether an annual billing plan makes sense or if they would benefit from monthly billing flexibility.

Frequently Asked Questions 

Q: What does a monthly billing option provide for annual subscribers? 

Monthly billing allows clients to spread their payments over 12 months instead of paying the full amount upfront. This option offers greater flexibility for managing budgets or short-term subscription needs while retaining access to the full subscription product. However, monthly billing comes at a five percent higher cost than the upfront annual payment.

Q: What products are impacted by price standardization?  

The price standardization affects several annual term subscription categories, including:

• Microsoft 365
• Office 365
• Dynamics 365
• Windows 365
• Power Platform

These are the most commonly used subscriptions affected. A full list of all subscriptions is available in Microsoft’s own FAQ on the price increases.

Q: Will existing Teams Phone licenses be impacted? 

Existing Teams Phone clients will retain their current pricing until renewal, after which the updated rates will apply. New clients adopting Teams Phone after April 1, 2025, will subscribe at the updated rates. There are no pricing changes for Teams Phone bundled with Microsoft 365 E5 or Office 365 E5 subscriptions.

Next steps 

Microsoft’s pricing updates bring new flexibility and alignment with the value of its services, but understanding how these changes affect your business is essential. Velosio is here to help you navigate these updates, optimize your subscriptions, and ensure cost efficiency without disrupting your operations. With the right approach, you can adapt to these changes seamlessly and continue leveraging Microsoft’s tools to drive your success.

Discover how you can save up to 20% on your Microsoft licensing – Schedule your free consultation today! 

Contact Velosio today for personalized guidance on managing billing changes and selecting the best subscription plans for your organization.