Microsoft 365 CoPilot: Licensing, Cost, ROI

As everyone's eyes are set on the much-anticipated Microsoft M365 CoPilot and especially after Microsoft announced its upcoming price and its availability date, we're all eager to understand the economic benefits of this fairly expensive AI add-on when it finally launches.

Key points:

• It will become available to "enterprise customers" on November 01, 2023. This probably means that smaller clients will have to wait longer.

• The current price is $30 per user per month. Will it change? Maybe.

• There's currently a minimum of 300 seats. It means a minimum investment of $108,000 per year.

• Enterprise Agreement clients will perhaps pay less than $30 per user per month, but Microsoft keeps saying it'll be $30 for everyone – soon to be seen.

• ROI can be significant if CoPilot is properly implemented, but CFOs should brace for a shocking cost increase.

• There's room for negotiation with reasonable arguments.

Unverified rumour: The actual price won't be available on the public price list and will be decided case-by-case. We'll keep you updated as we learn more.

What is Microsoft 365 CoPilot?

It's a "generative AI" like ChatGPT but built into Microsoft 365. It is your virtual assistant that, if used properly, will save you an incredible amount of time and free you from "writer's block" and other frustrations.

It seamlessly integrates with Microsoft 365 applications: Word, Excel, PowerPoint, Outlook, and Teams.

In addition, there is a new "hero experience". Microsoft 365 Chat is more than just a Q&A feature for Microsoft 365 Copilot. It scans all your data—emails, meetings, chats, documents, and even the web—to help you solve your most challenging work issues.

How much is Microsoft 365 CoPilot?

As it was announced at Microsoft Inspire and then confirmed multiple times in other Microsoft announcements, CoPilot will cost $30 per user per month (£25).

But is it that simple? How will it affect your bottom line? Are the benefits worth the price? And what clever tactics can you use to maximise return and keep the cost under control?

Firstly, and importantly, Microsoft 365 CoPilot is not yet "broadly available". It is promised to become available on 01 November 2023 to enterprise customers only, with a minimum of 300 seats. Which means things can change. However, we already have enough information to start strategising and preparing for one of the most significant uplifts in the history of IT budgets.

To understand the total impact, let's look at the complete cost structure, not just the cost of CoPilot itself.

Understanding the cost impact

Not every license is eligible for CoPilot

Fact #1. Microsoft 365 CoPilot is an add-on license. It works "on top" of the following packages:

• Microsoft 365 E5,

• Microsoft 365 E3,

• Microsoft 365 Business Premium,

• and Microsoft 365 Business Standard.

The last two were finally confirmed at Microsoft Inspire. So, small businesses won't be cut out of CoPilot's benefits and won't have to upgrade to more expensive enterprise plans.

M365 CoPilot is an additional cost for everyone

Fact #2. As you can rightfully infer from the above, CoPilot will not be included in any of the M365 packages. Regardless of what you already pay for, it will be an additional cost.

The relative increase is stunning

Fact #3. The announced price is the same regardless of the underlying M365 license. Therefore, if you, hypothetically, decide to license every user with CoPilot, the relative growth of your Microsoft 365 licensing budget will depend on your current licenses: 

Giving CoPilot to frontline workers

Fact #4. Frontline workers licensed with M365 F3 won't be able to use CoPilot. If you decide to give them CoPilot, you'll have to migrate them to at least M365 E3, which means a total increase of 8.25x.

Yes, you read that right. It's an 8.25x increase. I can almost hear the collective gasp.

Now, it's not all doom and gloom! We may have given CFOs around the globe a mild heart palpitation with the figures above, but let's talk about positives and strategic manoeuvres to keep the costs in check.

You don't have to buy it for every user

Let's make one thing clear upfront. CoPilot isn't a compulsory purchase for every user in your organisation.

This is where you can play your first strategic card – you decide who needs it. Maybe it's your top-tier executives, the sales hotshots, data wranglers, or anyone who spends more time with spreadsheets than humans.

On that note, is rolling CoPilot out to every white-collar worker justified, as some workers may never use it? Some enterprises we work with are already considering going all-in.

At this moment, it isn't easy to assess the possible return of a company-wide deployment without seeing and using the final product. When considering that path, consider investing in training and adoption, including associated costs.

Publicly traded companies could use the momentum for a usual capitalist trick of adopting CoPilot company-wide and increasing capitalisation by riding the AI hype. We could anticipate cases when a $30 million per year investment, cleverly marketed, can drive the company value up by billions.

Understand the benefits of M365 CoPilot

Microsoft demonstrated exciting use cases that improve work experience, remove creative blocks and speed up decision-making.

CoPilot can help write emails. In recent news, Octopus Energy in the UK increased customer satisfaction from 65% to 80% by using AI to write emails.

CoPilot can help with data analysis in Excel. You can use human language instead of writing formulas yourself.

You can ask it to create proposals in Word and presentations in PowerPoint.

By the way, if you already have plans and ideas of how you will use CoPilot, please let us know, as well as your thoughts about the price.

Estimating the ROI

Here is a sketch ROI assessment. Imagine a busy sales executive or a data analyst on a $50,000 annual salary. Crunch the numbers, and you'll see that each hour of their time costs you about $30. If CoPilot can help them save just one hour a month, you've got a 1:1 return on investment. And with advertised CoPilot's capabilities, they'll be shaving off much more than just one hour.

For our consulting business, we have been using an alternative AI, ChatGPT, since its commercial introduction. Our ROI is 30:1 on a $20 subscription. And that is without the enterprise data integration that CoPilot offers out of the box. It uses your enterprise data to learn about you so it can help you better.

Speaking of data privacy concerns, Microsoft states in its AI usage terms that your confidential data will not be used to train or retrain their AI models, which means that your data remains yours and won't leave the boundaries of your enterprise.

Cost planning and cost avoidance

Most of you will be challenged to justify the exploding costs, regardless of how good your business case and the ROI predictions are.

You don't need to be a rocket scientist to understand that Microsoft and its partners will start aggressively selling M365 CoPilot to you already this calendar year. If your Microsoft Enterprise Agreement expires soon, expect CoPilot to be included in one of the renewal options even if you don't ask for it.

So, let's talk about cost planning and cost avoidance.

Will it definitely be $30 per user per month?

Here are a few things to consider:

1. Microsoft made a preliminary announcement. There is not yet an entry in the Microsoft price list. Moreover, rumour has it that it won't be on the public price list for a while, and the price will be quoted case by case.

2. Rest assured, Microsoft is listening to the feedback. The price may be adjusted on the official release date. Many enterprises use this tactic, and Microsoft has done that before, too.

3. Microsoft may keep the price as-is for a while and then adjust it based on the sales success. Previous example? Microsoft halved the price of Power Platform licenses in 2022 when they ran out of early adopters, and the pipeline began to dry out.

4. If you are large enough and have an Enterprise Agreement, expect your CoPilot licenses to be discounted already. Let me explain.

As you probably know, the Microsoft Enterprise Agreement programme has "programmatic levels" – company-size-dependent discounts. Therefore, we would not expect enterprises to pay the same $30 per user per month. However, Microsoft keeps saying the price will be the same regardless of the EA level. That is very soon to be seen.

Prepare to negotiate a discount, but watch out for hidden traps

Regardless of your predefined EA discount, negotiate, and don't hesitate to negotiate aggressively. The salesperson on the other side of the table is handsomely rewarded for selling flagship and hot-off-the-press products. You, on the other hand, are facing the risk of investing in an unknown.

As one of the options, Microsoft may offer "step discounting": pay less in the first year and gradually increase the payments every subsequent year. If they don't offer that, ask them to include it as an option. It is only logical that there is an adoption curve, and you won't see the same return in Year 1 as you could achieve in Year 3 or Year 5 of your Enterprise Agreement.

Procurement usually prefers this option as it is a quick win, but we find it less attractive to CFOs. Consider it carefully, and compare it with a flat discount for the entire term of your agreement.

Whatever you choose, think strategically. The discounts you get the first time won't translate into a similar deal at the next renewal. You've probably already learned that lesson when you migrated to M365 E5.

Start slowly, deploy gradually

Some of you will choose a more cautious approach: procuring a few licenses for a proof-of-concept deployment.

CoPilot is not an "enterprise product". You don't have to purchase it for everyone. So, assign it to a little group of those who will use it the most: early adopters, data analysts, chief salespeople, and anyone else who is keen to try or maybe already understand how to use AI.

Learn from their experience, develop an adoption strategy, and then slowly roll out CoPilot to other users in your organisation.

And that's the approach that we recommend to medium-sized and small businesses.

And again, regardless of how many licenses you procure first, negotiate a discount. It's a new product. You have all the right to do so.

Will there be Microsoft 365 E7 with bundled CoPilot?

Maybe. We have been speculating about the possible introduction of the next level "all-inclusive" Microsoft 365 plan since the beginning of 2022.

Microsoft 365 E5 quickly stopped being all-inclusive almost from the point of its introduction. Microsoft introduces new add-on licenses and services nearly monthly. It went relatively unnoticed until the end of 2022 when Microsoft brought Teams Premium. Even more widely anticipated add-ons were introduced at the beginning of 2023. But Microsoft kept holding off with the new Microsoft 365 plan introduction. Partially, it can be explained by the fact that the Microsoft 365 E5 adoption isn't yet going at a satisfactory rate.

However, many experts see M365 CoPilot as the "scale-tipping" reason for the new "all-inclusive" plan. If Microsoft brings in something like Microsoft 365 E7, it needs to rethink the positioning of its lesser plans, E3 and E5, and we don't think it'll be an easy transition.

Frequently asked questions

What exactly is Microsoft 365 CoPilot?

Microsoft 365 CoPilot is an AI add-on designed to enhance your work experience by aiding in tasks such as email drafting, data analysis in Excel, and creating proposals in Word and presentations in PowerPoint. It integrates with your enterprise data to understand and assist you better, promising a significant return on investment if implemented strategically.

How much does M365 CoPilot cost?

The announced price is $30 per user per month, but Enterprise Agreement customers will receive discounts. It is worth noting that the price is not final until the official release on November 01, 2023.

When will M365 CoPilot be available?

November 01, 2023. But only to "Enterprise Customers", which probably means that smaller clients will have to wait a bit longer.

Is the $30 per user per month price tag for CoPilot fixed?

No, the $30 price point per user per month is not set in stone. It was announced as a preliminary figure and might change based on feedback and market response. Moreover, if you have an Enterprise Agreement with Microsoft, you can expect a discounted rate. It's crucial to keep an eye on updates and be prepared to negotiate for the best deal.

Can CoPilot be added to any Microsoft 365 package?

CoPilot is compatible with several Microsoft 365 packages, including Microsoft 365 E5, E3, Business Premium, and Business Standard. However, it's an additional cost and will not be included in your existing package. The relative increase in your Microsoft 365 licensing budget will depend on your current licenses, and it's not available for frontline workers with the M365 F3 license.

How can I ensure a reasonable ROI when investing in CoPilot?

To maximise ROI, it's recommended to start with a strategic deployment, identifying the teams or individuals who would benefit the most from CoPilot's features. Consider the potential time-saving and productivity boost it can bring to roles like sales executives or data analysts. Moreover, you might explore opportunities to increase company value by leveraging AI capabilities company-wide.

Is CoPilot included in E5?

No, CoPilot is not included in the E5 package. It's an add-on that comes at an additional cost, irrespective of the Microsoft 365 package you are currently subscribed to. This means that even if you are on the E5 plan, you will need to budget for CoPilot separately if you decide to implement it.

Will Microsoft 365 CoPilot be free?

As of the information available, Microsoft 365 CoPilot will not be available for free. It's positioned as a premium add-on with substantial benefits, and it comes with a cost. The initially announced price is $30 per user per month, but it's essential to note that this price is not yet official and might change.

Is CoPilot free with Office 365?

No, CoPilot is not available for free with Office 365. It is an additional feature that aims to enhance productivity and streamline tasks, and it comes with its own separate cost. If you are considering adding CoPilot to your Office 365 suite, be prepared to negotiate the pricing based on your specific needs and the scale of deployment.

Work with an independent negotiation expert

With the scale of the impact on your IT budgets, profitable CoPilot implementation is not an easy task. Find an expert who is not dependent on license sales, and assess your deployment roadmap from various angles.

We would be delighted if you consider SAMexpert to be your trusted advisor on this journey. Message us using the form below, and one of our senior negotiation experts will be in touch with you as soon as possible. We usually respond in one business day.