Microsoft put Copilot in Microsoft 365 Personal and Family and raised prices by $3. Who paid more?
On January 16, 2025, Microsoft raised its consumer Microsoft 365 plans by $3 a month in the US, the first rise since launch, and included a monthly allowance of Copilot AI credits. Personal went up 43%. Subscribers who didn't want AI could ask for a Classic plan at the old price. This teardown looks at the decision behind it, and how you'd test it.
- Personal went from $6.99 to $9.99 a month and Family from $9.99 to $12.99, each with about 60 AI credits a month for Copilot in the apps.1,2
- Unlike a business bundle, few people were paying for AI here: Copilot Pro cost $20 a month on top.2 So the rise fell on almost everyone.
- Microsoft offered Classic plans without AI at the old price, for a limited time.1 The test: does the rise earn more than it loses to people who don't want AI?
AI was a separate $20 subscription
Before January 2025, Microsoft 365 Personal (one person) and Family (up to six) included the desktop Office apps and 1 TB of storage per person, but no Copilot in the apps. AI in Word, Excel and Outlook came with Copilot Pro, at $20 a month.2
Microsoft 365 consumer plans before January 16, 2025 (US)
| Plan | Billed monthly | Billed yearly |
|---|---|---|
| Personal | $6.99 | $69.99 |
| Family | $9.99 | $99.99 |
| Copilot Pro | $20 | — |
Per subscription. Microsoft 365 annual prices as reported by Computerworld ($70 and $100, rounded there); monthly prices are $3 below the new ones Microsoft announced.1,2
Keep AI as a $20 extra, or put some of it in every plan?
Microsoft gave its reason in the announcement: the price reflects the extensive subscription benefits that we've added over the past 12 years
and funds new ones.1 Microsoft has not published how many consumers paid for Copilot Pro.
So the pricing decision was this: a small rise for every subscriber, with a limited AI allowance, against a $20 extra that few people bought. And what happens to the subscribers who don't want AI?
Four questions a pricing study can answer
- Which features make a home office subscription worth paying for: the AI or the rest?MaxDiff →
- Should AI be sold as a $20 extra, or included with a usage allowance for $3 more?Conjoint →
- What is the acceptable price range for Personal with AI credits included?Van Westendorp →
- At what price does Personal with AI credits bring in the most revenue?Gabor-Granger →
The order runs from the offer to the price: what buyers value, how to package it, the range they accept, then the exact price. Each question is asked separately of the two groups the change affects differently: people who already pay for an AI assistant, and people who don't. The study, run in Albi, is at the end.
Both plans went up $3, with AI credits included
On January 16, 2025, Microsoft announced that Copilot was included in Microsoft 365 Personal and Family, and that US prices would rise by $3 a month. Existing subscribers saw the new price at their next renewal.1
| Plan | Before | From January 16, 2025 |
|---|---|---|
| Personal | $6.99 · no AI in the apps | $9.99 · AI credits included |
| Family | $9.99 · no AI in the apps | $12.99 · AI credits, owner only |
| Personal or Family Classic | — | Old price · no AI, limited time |
| Copilot Pro | $20 | $20 · for more AI use |
Billed monthly, US. About 60 AI credits a month2; in Family, only the subscription owner gets the AI features.3 Classic plans keep the old features without the new AI ones.1
The same $3 is a bigger rise for Personal
What is public about how it went
Microsoft has not published how many subscribers moved to Classic, cancelled, or used their AI credits. What is on the record:
- On October 1, 2025, Microsoft launched Microsoft 365 Premium at $19.99 a month, combining Family with Copilot Pro's features, and stopped selling Copilot Pro on its own.4 That is a separate pricing decision, not covered here.
What isn't public: how many subscribers took Classic, and whether the AI credits changed who renews. This teardown makes no claim about either.
From the four questions to the decision
Illustrative study with synthetic respondents — not the company's data.We ran the four questions above as one Albi survey. The respondents are US adults who pay for a home office-apps subscription for themselves or their household: 150 who already pay for an AI assistant, and 150 who don't.
These results come from synthetic respondents: AI-modelled buyer profiles, not people. Use them to shape the question, then confirm with real respondents. Run in Albi on October 3, 2026, with 300 synthetic respondents generated by Gemini 3.5 Flash-Lite. Every chart below meets the minimum sample Albi sets for its method.
Which features make a home office subscription worth paying for: the AI or the rest?
MaxDiff · all 300Result. The desktop apps came first by a wide margin (23.1, more than twice the average). Advanced security came second (12.4), with AI in email and AI help with spreadsheets just behind (11.9 each). The five AI features together hold 41 of the 100 points, below their half of the list, and AI image creation came last. The groups split sharply: people who already pay for AI put AI drafting far ahead of everything; people who don't put the desktop apps first and AI drafting near the bottom.
For the decision: the subscription is bought for the apps. AI adds value for people who already use it, and almost none for the rest, who pay the same $3.
Should AI be sold as a $20 extra, or included with a usage allowance for $3 more?
Conjoint · all 300 · 5 prices × 3 AI levels × 2 plan sizesOld packaging vs new: who buys what, and what it earns
AI sold separately as Copilot Pro
| Buyers | Revenue | |
|---|---|---|
| No plan bought (vs. these options) | 4% | — |
| Personal | 70% | 61% |
| Family | 26% | 33% |
| Copilot Pro | 2.5% take it | 6% |
AI credits included, price up $3
| Buyers | Revenue | |
|---|---|---|
| No plan bought (vs. these options) | 12% | — |
| Personal | 76% | 83% |
| Family | 12% | 17% |
| Copilot Pro | <1% take it | 0% |
Result. Price drove 93% of the choices, plan size 6%, and the AI level only 2% overall, because the two groups pulled in opposite directions: people who already pay for AI preferred plans with AI, and the others preferred plans without it. Before the change, only 2.5% took Copilot Pro on top. After it, revenue per 100 buyers rises from $802 to $918 a month, +14%. But the share buying none of these plans goes from 4% to 12%, all of it among people without AI: 23% of them buy nothing at the new prices. Family falls from 26% to 12% of buyers.
For the decision: the $3 rise earns more than it loses, at any mix of AI and non-AI buyers (+10% to +18%). The cost is a large share of non-AI buyers walking away. Offering Classic at the old price keeps almost all of them, at a smaller gain (+9%), with most of them choosing it.
What is the acceptable price range for Personal with AI credits included?
Van Westendorp · all 300, then each groupResult. Across all 300, the acceptable range was $8 to $12, with the optimal price at about $10. So $9.99 sits right at the optimum. The groups differ: for people already paying for AI the range is $9 to $15, so $9.99 is near the bottom. For people without AI it is $6 to $10, with the optimum at about $8: $9.99 is the very top, and 67% of them already called a price of $9.99 or less "getting expensive".
For the decision: $9.99 is a fair price for the average buyer, cheap for AI users and the ceiling for everyone else.
At what price does Personal with AI credits bring in the most revenue?
Gabor-Granger · each group · prices $6.99, $8.99, $9.99, $11.99, $14.99Result. Across all 300, revenue per 100 buyers is about the same at $6.99 ($671, 96% buying) and at $9.99 ($666, 67% buying). People already paying for AI peak at $9.99 ($966), with almost all still buying. People without AI peak at $6.99; at $9.99 only 37% would buy, and their revenue is 43% lower.
For the decision: asked about Personal alone, $9.99 makes about the same money as $6.99 from about a third fewer buyers. The buyers it loses are the ones a Classic plan at the old price could keep.
The $3 rise pays, but it leans on the Classic plans to keep the people who don't want AI.
- Value: people buy the subscription for the apps; AI matters only to those who already use it (question 1). Including AI credits for $3 more raises revenue by 14% in the simulation, but 23% of people without AI buy nothing (question 2).
- Price: $9.99 is at the optimum of the overall range, and is where AI users' revenue peaks (questions 3 and 4).
- Risk: for people without AI, $9.99 is the top of their range and only 37% would buy Personal at that price (questions 3 and 4). With Classic on offer, most of them take it, and the gain shrinks to +9% (question 2).
What this study can't tell you: whether people would find or ask for Classic, which Microsoft offered for a limited time, or what they would do instead. "No plan bought" is not a measured move to a free suite or a rival, and Copilot Pro bought without Microsoft 365 is not modelled. That is the next thing to test, with real respondents. Microsoft hasn't published what happened (see Result).
How each method works, and how many respondents you need: Van Westendorp · Gabor-Granger · MaxDiff · Conjoint · Sample size
Find out what your buyers will pay, before you change the price
Microsoft 365 and Copilot are trademarks of Microsoft Corporation. Albi has no affiliation with Microsoft, and this teardown is not endorsed by it.
Sources
- Microsoft 365 blog, "Copilot is now included in Microsoft 365 Personal and Family", January 16, 2025: prices up $3 a month in the US, the first rise since launch; a monthly allotment of AI credits; Classic plans for a limited time; the stated reason. microsoft.com
- Computerworld, "Copilot AI comes to Microsoft 365 plans: Everything you need to know", January 22, 2025: annual prices $70 to $100 (Personal) and $100 to $130 (Family); about 60 AI credits a month; Copilot Pro at $20 a month. computerworld.com
- Microsoft Support, "Frequently asked questions about Copilot in Microsoft 365 subscriptions": AI features in Family
are only available to the subscription owner
. support.microsoft.com - PCWorld, "Microsoft launches 365 Premium for consumers, retires Copilot Pro", October 1, 2025: Microsoft 365 Premium at $19.99 a month; standalone Copilot Pro discontinued. pcworld.com
We'd rather do this on your pricing than Microsoft 365's.
Same method, your own data behind it, and a proposal you approve or don't.