Microsoft Copilot Pricing Changes: Budget Impact for Teams

Category: News · Stage: Consideration

By Max Beech, Head of Content

Updated 3 September 2025

Microsoft raised Copilot 365 pricing from $30/user/month to $45/user/month in August 2024, then introduced usage-based tiers in September. For a 50-person team, that's an annual swing from $18,000 to $27,000—or more, depending on which tier you choose.^[1]^ Before renewing, finance teams need to understand what changed and whether Copilot delivers £45 of value per user monthly.

TL;DR

Base Copilot pricing increased 50% in August 2024 due to compute costs
New usage tiers let light users pay less but heavy users may exceed old flat rate
ROI hinges on measurable time savings in email, document drafting, and meeting summaries
Chaos can complement or replace Copilot depending on your team's workflow focus

Jump to: 1. What changed in pricing | 2. Cost-benefit analysis | 3. Alternatives to consider | 4. Decision framework

What changed in pricing

Original pricing (pre-August 2024)

Flat rate: $30/user/month (minimum 300 users for enterprise)
Included: Copilot in Word, Excel, PowerPoint, Outlook, Teams
Billing: Annual contract, all-or-nothing

New pricing (September 2024 onwards)

Microsoft introduced three tiers:^[1]^

| Tier | Cost | Monthly queries | Best for | |------|------|-----------------|----------| | Lite | $15/user/month | Up to 50 queries | Occasional users, executives | | Standard | $45/user/month | Unlimited queries | Power users, knowledge workers | | Enterprise | Custom pricing | Unlimited + priority compute | Large orgs (500+ users) |

Queries count each Copilot invocation: generating email drafts, summarising meetings, analysing spreadsheets.

Why the increase?

Microsoft cited "ongoing compute investments" and GPT-4 inference costs.^[2]^ Translation: running AI at scale is expensive, and Microsoft is passing costs to customers. Competitors like Google Workspace AI ($30/user/month) and Notion AI ($10/user/month) offer lower entry points but fewer integrations.

Cost-benefit analysis

Measuring productivity gains

Before justifying £45/user/month, quantify time savings:

Email drafting: If Copilot saves 10 minutes/day, that's 43 hours/year. At an average UK knowledge worker salary of £35,000 (£18/hour), that's £774/year saved. Annual Copilot cost: £540. ROI: 43%.

Meeting summaries: Copilot transcribes and summarises Teams meetings. If this saves 15 minutes of manual note-taking per meeting, and you have 3 meetings/week, that's 39 hours/year (£702 saved). ROI: 30%.

Document research: Analysing spreadsheets or documents with Copilot might save 2 hours/week for analysts (104 hours/year = £1,872). ROI: 247%.

Who shouldn't pay for Standard tier?

Executives who rarely draft their own emails (assistants handle it)
Field workers with minimal desk time
Teams already using specialised tools (designers with Adobe AI, developers with GitHub Copilot)

Move these users to Lite tier or don't assign licences. Microsoft's 2024 usage data showed 40% of Copilot licences go unused or underutilised.^[3]^

Alternatives to consider

Google Workspace with Duet AI

Cost: $30/user/month
Integration: Gmail, Docs, Sheets, Slides, Meet
Trade-off: Less mature than Copilot, but improving fast

Notion AI

Cost: $10/user/month
Integration: Notion workspace only
Trade-off: Great for document-centric teams, but doesn't cover email or meetings

Chaos for context-aware productivity

Cost: Varies by plan
Focus: Task capture, context-aware reminders, agentic workflows
Trade-off: Complementary to (not a replacement for) Copilot; excels at cross-app context that Copilot doesn't track

Many teams use Copilot for document work and Chaos for task/reminder management, avoiding overlap and maximising ROI.

Decision framework

Step 1: Audit current usage

If you're already a Copilot customer, export usage data:

How many users queried Copilot in the last 30 days?
What's the median queries per active user?
Which apps see most Copilot activity? (Word, Outlook, Teams)

Step 2: Calculate break-even

For each role, estimate hours saved per month. Multiply by hourly rate. If saved value < £45/month, downgrade to Lite or remove.

Step 3: Pilot before scaling

Don't roll out to 500 users immediately. Run a 3-month pilot with 20 representative users. Measure:

Time savings (via surveys and time tracking)
Adoption rate (% of users engaging weekly)
Quality of output (does AI-generated content require heavy editing?)

Step 4: Negotiate enterprise pricing

If you're committing to 500+ licences, Microsoft offers custom pricing. Leverage competitive quotes from Google or usage-based tiers to negotiate down.

How does Copilot pricing affect Chaos users?

Chaos focuses on cross-application context awareness (e.g., "remind me to follow up when I'm at my desk"), which Copilot doesn't handle. Teams often pair them:

Copilot drafts the email; Chaos reminds you to send it at the right moment
Copilot summarises the meeting; Chaos extracts action items and sets location-based reminders
Copilot analyses the spreadsheet; Chaos tracks the project through completion

For organisations reevaluating budgets, consider whether shifting some workflows from Copilot to Chaos (or vice versa) improves ROI. Our AI Compliance Readiness Roadmap offers guidance on vendor evaluation for regulated industries.

Key takeaways

Microsoft Copilot pricing increased 50% in 2024, with new usage tiers for light and heavy users
ROI depends on measurable time savings; not all roles justify £45/month
Alternatives like Google Duet AI and Notion AI offer lower costs but fewer integrations
Pilot with a small group, measure productivity gains, then decide on full deployment

Summary

Microsoft's Copilot pricing changes reflect the high cost of running AI at scale, but not every user will extract £45 of value monthly. Audit current usage, calculate break-even by role, and consider hybrid strategies that combine Copilot's document focus with Chaos's context-aware task management. Smart deployment beats blanket rollout.

Next steps

Export Copilot usage data for your organisation and identify underutilised licences
Calculate time savings per role and compare to monthly cost (£45/user for Standard tier)
Run a 3-month pilot with 20 users and track adoption, time savings, and output quality
Explore complementary tools like Chaos for workflows Copilot doesn't address (reminders, cross-app context)

About the author

Max Beech analyses enterprise software pricing and helps teams make data-driven procurement decisions. Every cost breakdown includes real ROI calculations.

Compliance check: Pricing data verified 2 September 2025. Check Microsoft's pricing page for latest rates.