Microsoft is set to introduce significant pricing changes for its Microsoft 365 services in 2025, impacting businesses and individuals alike. These changes include price increases for various licensing models, AI-powered Copilot feature integration, the discontinuation of certain features, and promotional discounts for select products. This blog provides a comprehensive overview of these changes and how organizations can prepare for the upcoming shifts in Microsoft’s pricing model.
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For further insights on why Microsoft is making these changes, read our article: Why You Can No Longer Purchase Office 365 E1, E3, E5, or Microsoft E3 and E5 Suites with Teams Included.
1. Microsoft 365 Price Increases Effective April 1, 2025
Microsoft has announced a 5% price increase on certain annual commitments paid monthly for Microsoft 365, Office 365, Dynamics 365, Enterprise Mobility + Security, Windows 365, and Power Platform. Organizations that renew or purchase licenses before April 1, 2025, will secure the current pricing for the duration of their contract.
Impacted Services and New Prices:
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Service | Current Price | New Price (April 1, 2025) |
Power BI Pro | $9.99/user/month | $14/user/month |
Power BI Premium (Per User) | $20/user/month | $24/user/month |
Teams Phone Standard | $8/user/month | $10/user/month |
Teams Phone Frontline | $4/user/month | $5/user/month |
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Organizations that pay annually upfront will avoid the 5% price hike, making long-term commitments a cost-effective option for those looking to lock in current rates.
2. Integration of AI-Powered Copilot and Subscription Price Adjustments
Microsoft is making AI a central part of its Microsoft 365 ecosystem by integrating Copilot AI into Microsoft 365 Personal and Family subscriptions. As a result, the monthly subscription fees for these plans will increase by $3 per user per month.
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However, users who do not wish to use AI-powered features can opt for Microsoft 365 Personal Classic or Family Classic, which will retain the current pricing. The downside of these classic plans is that they will not receive future major updates.
Why Is Microsoft Increasing Prices for Copilot?
Microsoft is betting big on AI-driven productivity tools. Copilot AI integrates with Microsoft 365 apps like Word, Excel, PowerPoint, Outlook, and Teams, providing real-time assistance, automation, and enhanced collaboration features. As AI adoption grows, Microsoft is positioning Copilot as a premium service to increase its market share in AI-enhanced workplace solutions.
3. Discontinuation of Free Microsoft 365 VPN Feature
Another key change coming in 2025 is the removal of Microsoft 365’s built-in VPN service, effective February 28, 2025. Microsoft has cited limited user adoption as the reason behind this decision.
Users who rely on VPNs for enhanced privacy and security will need to look for alternative solutions from third-party providers. Microsoft 365 will still offer identity protection features such as credit monitoring and identity theft alerts in the U.S.
4. Microsoft 365 Promotional Discounts in 2025
To encourage new and existing customers to adopt premium plans, Microsoft is offering limited-time promotional discounts for certain services:
Microsoft 365 E5 Discount
- From January 1 to June 30, 2025, new customers signing up for Microsoft 365 E5 can receive a 15% discount on annual commitments for up to 2,400 licenses.
Microsoft 365 Copilot Discount
- Between September 1 and December 31, 2024, organizations purchasing Microsoft 365 Copilot can lock in a 15% discount for up to 300 licenses. If an organization starts its Copilot subscription during this promotional period, it can add more licenses at the same discounted rate for the full duration of the annual term.
These promotions can help businesses offset some of the price increases and explore AI-powered tools at a reduced cost.
5. Key Recommendations for Businesses
With these changes, businesses and IT leaders need to reassess their Microsoft 365 licensing strategies to minimize cost impacts. Here are some key recommendations:
1. Review Your Licensing Agreements Now
- Organizations should assess their current Microsoft 365 subscriptions to determine how these pricing changes will affect them.
- Consider locking in current rates before April 1, 2025, by renewing annual licenses early.
2. Opt for Annual Payments to Avoid the 5% Increase
- Switching from monthly to annual billing can help businesses avoid the 5% price increase on annual commitments paid monthly.
- If your organization has a predictable user base, committing to a three-year term may provide even better cost savings.
3. Consider Alternative VPN Solutions
- If your organization relies on Microsoft’s built-in VPN, start evaluating third-party VPN providers before Microsoft removes the feature on February 28, 2025.
4. Take Advantage of Promotional Discounts
- If you’re considering an upgrade to Microsoft 365 E5 or Copilot AI, plan your purchase within the promotional windows to maximize savings.
- These discounts may provide an opportunity to test premium services before committing to higher costs.
Final Thoughts
Microsoft’s 2025 pricing changes reflect the company’s strategic shift toward AI-powered services while adjusting its licensing models to align with evolving enterprise needs. Organizations that proactively plan for these changes can mitigate cost increases and make informed decisions about their Microsoft 365 investments.
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With careful planning, businesses can optimize their licensing structure, take advantage of promotions, and explore AI-driven productivity tools without unnecessary cost burdens. By staying ahead of these changes, IT leaders can ensure a smooth transition while maximizing value from Microsoft’s ecosystem.
For more information on Microsoft 365 licensing and pricing strategies, contact your Microsoft account representative or consult with an IT service provider to navigate these changes effectively.
