Copilot AI comes to Microsoft 365 plans: Everything you need to know

If you’re a Microsoft 365 subscriber with a Personal or Family subscription, Microsoft just flipped a switch and activated Copilot AI features for your account. It’s a new part of your subscription, along with that 1TB of OneDrive storage and access to Office apps like Word and Excel. But there are some big catches — including a price hike and some limits.

Microsoft’s latest changes follow in Google’s footsteps, with AI features appearing in the standard subscription for much less than you’d pay for those AI features separately — but with the standard subscription price also going up at the same time.

Let’s dive into how Microsoft just transformed some of the world’s most popular productivity apps, what you can do now — and how you can avoid paying more.

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How Copilot works in Microsoft 365 plans

First things first, the basics: Microsoft announced that all Microsoft 365 Personal and Microsoft 365 Family plans now include Copilot features as of Jan. 16 in “most markets worldwide.” This won’t affect you when using a Microsoft 365 plan provided by a workplace — businesses still have to pay separately for AI features — but it will affect your individual plans. And plenty of professionals do pay for their own Microsoft 365 subscriptions. (I should know; I’m one of them!)

In other words, if you pay for Microsoft 365 and use apps like Word, Excel, PowerPoint, OneNote, and Outlook, you’ll now find the Copilot button popping up in these applications. Previously, you had to pay $20 per month for a Copilot Pro subscription to unlock these features.

Here’s the first big catch: The newly expanded paid 365 plans don’t give you unlimited access to Microsoft’s AI features. Instead, you get a monthly allotment of credits that Microsoft says “…should be enough for most subscribers.” In practice, that appears to be 60 credits per month — meaning you can use AI features 60 times per month. After that, you’ll need to pay for a $20-per-month Copilot Pro subscription to keep using those AI features.

You’ll see an informational pop-up window the first time you open an app like Word.Chris Hoffman, IDG

Note: These AI credits are actually shared across various other Microsoft apps — including for AI image generation in Designer, Paint, and Photos and text-editing work in Notepad. They’re not just for Word, Excel, and PowerPoint.

Plus, again, Microsoft is raising its 365 subscription prices, with Copilot bundled into the mix. They’re going up by $3 per month in the US, though the exact price increase will vary by country. For the yearly plans in the US, Microsoft 365 Family goes from $100 to $130 per year, and Microsoft 365 Personal goes from $70 to $100 per year.

This is the first time Microsoft has raised prices since launching the subscription service — originally called Office 365 — back in 2013. While it’s true that Microsoft is using these AI features as a way to hike prices, these subscriptions were overdue for a price increase anyway, and it’s nice to at least get something out of it. (In my opinion, between the 1TB of OneDrive storage and access to Office apps, it’s still a good value.)

It’s worth noting that this Copilot change is only for Microsoft 365 plans. If you buy a more traditional “one-time purchase” version of Office like Office 2024, your setup isn’t changing — and you won’t have access to these newer AI features.

Using Copilot AI in Microsoft 365 apps

With the new adjustments in place, Copilot AI is easy to find in Office apps: You’ll find a Copilot icon on the ribbon, or you can also select some text and click the little Copilot icon that appears next to it, or just press Alt+i. Then you can prompt Copilot to write or rewrite text in a document for you. You could also ask it questions about the document you’re viewing from the Copilot sidebar.

For more information on exactly how Copilot works in these Office apps, check out my Copilot Pro review from last year. The new built-in Copilot features are exactly the same as what you get with Copilot Pro; the only difference is that you’re limited to 60 uses per month in the 365 setup.

If you run out of credits, Microsoft will encourage you to upgrade to Copilot Pro. In a way, then, these AI features are a bit of a “trial” for Copilot Pro.

To check how many credits you have left, you can click the little menu icon in the Copilot sidebar in an Office app and then click “AI credit balance.” This will take you to your Microsoft 365 account subscription page, where you can see a running balance of the AI credits you’ve used.

Your AI credit balance is just a few clicks away.Chris Hoffman, IDG

Generating images with Microsoft Designer

The same credit system also applies to Microsoft Designer, which is a useful AI image-generation tool. (At our newsletter-focused small business The Intelligence, we use Microsoft Designer to create some feature image illustrations for our articles — we’re writers, not visual artists!)

That means with any paid Personal or Family 365 plan, you can opt to use your 60 monthly AI image credits directly within Designer, too. This is actually quite a downgrade: Previously, everyone got 15 credits per day for AI image generations. Now, subscribers get a total of 60 credits per month, while free accounts only get 15 credits per month.

If you need more than that, you can upgrade to the $20-a-month Copilot Pro plan, which gives you many more AI image generations in Designer and beyond. (Microsoft says you get “at least 10x more credits” for Designer with Copilot Pro, compared to the 15-credits-per-month free setup — so roughly 150 credits per month, then, compared to the 60 monthly credits in the base 365 subscription.)

AI tools are expensive to create and operate, and companies have lost a lot of money on them. It’s no surprise to see many AI tools offering less for free and looking for more payment from their users; that’s what’s happening here.

How to avoid the AI features (and costs) entirely

There are ways to avoid the Microsoft 365 subscription price increases, if you don’t anticipate using them and don’t want to pay for them. (The price increase doesn’t take effect until your next subscription renewal, by the way.)

If you already have a Microsoft 365 subscription, you can keep your old subscription price and opt out of the AI features “for a limited time.” Microsoft says you can switch by canceling your subscription and choosing one of the “Classic” plans during the cancelation process. Here are Microsoft’s instructions.

You could also buy “perpetual licenses” of Office instead of using the more prominently offered subscriptions. In other words, with a one-time purchase of Office 2024, you could use Office for a few years for that one-time purchase price. It’s not as good a deal as it sounds — that one-time purchase price will only get you access to Office apps like Word and Excel on a single computer, and you won’t have access to the 1TB of OneDrive storage. (Plus, while your license will be good in perpetuity, Microsoft will stop delivering security updates for Office 2024 in October 2029.)

You can also buy Microsoft 365 subscription keys from other retailers. Without getting into the weeds too far here, it’s worth noting that days after Microsoft implemented the subscription price increase, Amazon is still selling Microsoft 365 Personal subscriptions for $70 and Microsoft 365 Family subscriptions for $100 — the old prices. But these are the standard plans and include those AI features. That’s a bargain.

Of course, you could also turn to other office suites — the web-based Google Docs, the open-source LibreOffice, or the Apple-focused iWork suite — but Word, Excel, and PowerPoint are the business standard for a reason. And even with these AI-adding price increases, getting that 1TB of OneDrive storage at those prices is still a great deal.

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