For months, Microsoft has struggled to drive adoption of Copilot, its AI-powered productivity assistant for Microsoft 365. Originally launched as a $30 per month premium add-on, Copilot faced slow uptake as customers questioned whether it provided enough real value to justify the cost. Now, rather than fixing its pricing, positioning, or customer experience, Microsoft has taken a different approach: bundling Copilot into Microsoft 365—and quietly using it to justify a 30% price increase on personal and family subscriptions.
This isn’t just about bundling. It’s a stealthy price hike disguised as an AI upgrade, one that lacks transparency, clear customer value, or the proven effectiveness that would make the increase feel worthwhile. Instead of positioning Copilot as an indispensable productivity tool, Microsoft is forcing customers to pay for it—whether they want it or not.
For product leaders, this situation is a case study in how NOT to roll out AI-driven pricing changes.
So where did Microsoft go wrong? And what can product managers learn from their missteps?
What Microsoft Did—and Why It’s a Problem
Microsoft announced that Copilot will be bundled into Microsoft 365 Personal and Family plans starting in 2024. At first glance, this might seem like good news. Because who wouldn’t want AI-powered enhancements in their Office apps?
But here’s the catch: Microsoft is also raising the price of these plans by 30%—from $70 to $90 per year for Personal users and from $100 to $120 per year for Family plans.
While Microsoft frames this as a major upgrade, the price increase is mandatory—even for users who don’t want or need Copilot. There’s no option to keep the same subscription at the original price.
This creates three major issues:
1. A price hike disguised as innovation
Rather than being upfront about raising subscription prices (and Microsoft was likely justified in raising the price of Microsoft 365 as they had not done so for the last 12+ years), Microsoft is presenting Copilot as a value-driven upgrade. But AI features that users didn’t ask for should not be the justification for a 30% price increase—especially when Microsoft hasn’t clearly demonstrated that Copilot delivers a meaningful boost to productivity for everyday users.
Instead of giving customers the choice to opt into Copilot at an additional cost, Microsoft is forcing everyone to pay for it, whether they use it or not.
Lesson for product managers: Transparency matters. If you’re increasing prices, customers deserve a clear explanation of the value they’re getting—not a vague promise that AI will make their experience better someday.
2. AI features that aren’t ready for prime time
The biggest flaw in Microsoft’s approach is that Copilot still isn’t delivering consistently strong results for most users – especially the personal and family users who are paying for this bundle/price increase.
Even in enterprise settings, where Copilot has been available as a premium add-on, many users have reported mixed results, inconsistent AI performance, and unclear use cases. The AI is still evolving, and while it shows potential, it’s not yet the game-changer Microsoft is making it out to be.
Now, Microsoft is rolling Copilot out to millions of personal and family users who haven’t asked for it and may not even know what to do with it. Instead of refining the experience and ensuring AI genuinely enhances productivity, Microsoft is treating Copilot as a marketing bullet point to justify higher subscription fees.
Lesson for product managers: Don’t use customers as beta testers for an unfinished product while charging them more for it. Test, refine, and prove the value first. If customers see real benefits, they’ll be willing to pay for it voluntarily—no bundling required.
3. A one-size-fits-all approach that ignores customer needs
Copilot’s potential varies dramatically by user type. Enterprise users might benefit from AI-generated emails, summaries, and workflow automation. But what about everyday personal users?
- A retiree using Word for casual writing? Probably won’t need Copilot.
- A student using PowerPoint for class projects? Might get some AI-generated slides—but will that be worth a 30% price increase?
- A family sharing Excel sheets for budgeting? Will they ever use Copilot’s AI?
Rather than tailoring Copilot’s rollout to the users who would get real value from it, Microsoft is forcing the AI onto all users, regardless of whether it fits their needs. This increases frustration and could drive customers toward alternative solutions like Google Workspace or free office apps.
Lesson for product managers: Understand your customer segments. Just because AI can enhance some workflows doesn’t mean it’s valuable for all users. If your new feature isn’t relevant to everyone, don’t force everyone to pay for it. They gain optionality—the ability to pivot, adjust, and optimize based on real-world learning instead of just blindly following a roadmap.
What Microsoft Should Have Done with Copilot Instead
Microsoft’s current approach is a short-term revenue grab that risks long-term customer trust. A better strategy would have included:
1. An opt-in pricing model
Rather than a mandatory 30% price increase, Microsoft could have offered Copilot as an optional add-on for Personal and Family users. Let customers choose whether they see enough value to pay for AI-enhanced features.
2. A freemium Copilot experience
Instead of a blanket rollout, Microsoft could have introduced a limited free Copilot experience, allowing users to try AI features before committing to a higher subscription fee. This would have helped customers see real value before they were asked to pay more.
3. More proof of Copilot’s impact
Microsoft should have focused on gathering real-world success stories, improving AI accuracy, and refining user experience before attaching Copilot to a price hike. If customers were already seeing undeniable value, they would have demanded more AI—not been forced into it.
What’s the Lesson? Price Increases Must Be Earned, Not Imposed
Microsoft’s decision to bundle Copilot into Microsoft 365 Personal and Family—while increasing the price by 30%—is a prime example of putting business needs ahead of customer value.
Rather than transparently communicating a price increase, Microsoft is using AI as an excuse to charge more—before proving that AI actually delivers value.
For product managers, the lesson is clear:
- Don’t use bundling as a sneaky way to justify higher prices.
- Ensure your product delivers real, proven value before asking customers to pay more.
- Give users control—forcing changes on them will only push them away.
Unless Microsoft quickly proves that Copilot meaningfully enhances productivity, this move could backfire—eroding trust and driving customers toward more transparent alternatives. AI isn’t a magic word that justifies higher prices. Customers need to see real impact, not just new billing terms.
Your Next Step to Smarter AI-Powered Pricing Strategies
AI can be a game-changer for product experiences—but only when it’s introduced with clear value, customer choice, and transparent pricing. Microsoft’s missteps with Copilot serve as a critical lesson for product leaders: price increases must be earned, not imposed.
For product managers navigating AI-driven feature rollouts, strategic pricing decisions, or major product updates, understanding how to communicate value, test adoption, and align business goals with customer needs is key.
- Download our Productside Playbook for templates and tools to optimize your product management process.
- Join our next webinar to learn more strategies from industry experts.
- Enroll in our training to master advanced time management and leadership skills.
What’s your take on Microsoft’s approach? Have you seen similar missteps in AI product rollouts? Share your thoughts in the comments or connect with us on LinkedIn.
