Microsoft 365 remains one of the most capable and convenient productivity subscriptions on the market, but the recent price reshuffle tied to Microsoft’s push to bundle Copilot and Designer has exposed real friction between perceived value and the reality of usage limits, regional pricing, and vendor lock‑in — a tension that many long‑term users now find hard to ignore.
Microsoft 365 started life as Office 365 and over more than a decade has evolved from a set of desktop apps into a broad, cloud‑centric subscription that bundles productivity apps, security tools, cloud storage, and — increasingly — AI features. In January 2025 Microsoft announced that Copilot (its generative AI assistant) and Microsoft Designer (AI image creation and editing) would be included in Microsoft 365 Personal and Family subscriptions, and simultaneously raised U.S. consumer prices by $3 per month (to $9.99 for Personal and $12.99 for Family). Microsoft framed the move as expanding access to AI capabilities for consumer subscribers, while also signaling a shift in the product’s roadmap toward AI‑first features.
Those two changes — bundling AI and increasing prices — are technically straightforward. The practical, user‑facing consequences, however, are multi‑layered: Microsoft introduced a new AI credits system, limited access for Family plan members, preserved a paid Copilot Pro tier for heavy users, and offered limited‑time “Classic” plans for existing subscribers who prefer the pre‑AI pricing and feature set. The combinations of these changes are what have provoked the strongest reactions from customers worldwide.
Key points to note:
The episode highlights a systemic tension in modern software bundles: vendors now pair feature rollouts with subscription incentives that can both add value and constrain choice. Consumers facing this reality should audit how they use Microsoft 365 today, measure AI usage objectively, and consider alternatives — whether downgrading to a Classic/basic plan (if available), adopting Copilot Pro only for power users, or exploring open alternatives to reduce future lock‑in risk. The core lesson is simple and practical: stay informed, run the numbers for your household, and don’t let convenience morph into an accepted annual shock without reassessing the real value delivered.
Source: Neowin Microsoft 365 is still my favorite Microsoft product, but it is getting way too expensive
Microsoft 365 started life as Office 365 and over more than a decade has evolved from a set of desktop apps into a broad, cloud‑centric subscription that bundles productivity apps, security tools, cloud storage, and — increasingly — AI features. In January 2025 Microsoft announced that Copilot (its generative AI assistant) and Microsoft Designer (AI image creation and editing) would be included in Microsoft 365 Personal and Family subscriptions, and simultaneously raised U.S. consumer prices by $3 per month (to $9.99 for Personal and $12.99 for Family). Microsoft framed the move as expanding access to AI capabilities for consumer subscribers, while also signaling a shift in the product’s roadmap toward AI‑first features. Those two changes — bundling AI and increasing prices — are technically straightforward. The practical, user‑facing consequences, however, are multi‑layered: Microsoft introduced a new AI credits system, limited access for Family plan members, preserved a paid Copilot Pro tier for heavy users, and offered limited‑time “Classic” plans for existing subscribers who prefer the pre‑AI pricing and feature set. The combinations of these changes are what have provoked the strongest reactions from customers worldwide.
What exactly changed for consumers?
Copilot and Designer are now part of consumer plans
- Copilot is now integrated into Word, Excel, PowerPoint, Outlook and OneNote for Microsoft 365 Personal and Family subscribers. It can draft, summarize and rewrite text, analyze Excel data, build PowerPoint slides and help with email composition inside Outlook.
- Microsoft Designer — image generation and AI editing — is bundled into the consumer plans, enabling creative workflows inside the Microsoft 365 ecosystem.
Monthly AI credits: not unlimited, not shared, not rollable
Microsoft introduced a monthly AI credits allotment that governs usage of Copilot and Designer in consumer plans:- Microsoft 365 Personal and Family subscribers receive 60 AI credits per month. These credits can be used across Word, Excel, PowerPoint, Outlook, OneNote, Designer and other AI‑enabled apps like Photos, Notepad, Paint, and more.
- Family plan caveat: AI credits are available only to the subscription owner and cannot be shared with additional Family members. Other users on the plan do not receive their own 60‑credit allotment unless they purchase their own Personal plan or Copilot Pro.
- Credits reset monthly and do not roll over. Unused credits are forfeited when the monthly reset occurs.
Copilot Pro remains the heavy‑use option
For subscribers who rely on Copilot frequently, Copilot Pro is available at $20 per user per month, offering priority model access, higher usage and more creative boosts in Designer (for example, higher daily boosts for image generation). Copilot Pro is positioned as the paid path for heavy, persistent AI usage in the consumer space.How the economics actually play out
The core complaint many users — including the Neowin author whose piece we’re expanding on — raise is that the price rise feels disproportionate to the AI access actually provided in the bundled plans.- U.S.: Family moved from $99.99/year to $129.99/year — a $30/year increase. That buys 60 credits/month, or 720 credits/year. The marginal cost of the increase is $30 ÷ 720 ≈ $0.0417 per credit, or roughly 4.2 cents per AI prompt/interaction (assuming one credit per prompt). Put another way, the bill increased by roughly $1 for every additional 24 prompts you can make across the entire family per month.
- For a light AI user — someone who issues a few Copilot prompts occasionally — the bundled credits may be more than sufficient and the price increase will feel manageable.
- For a heavy AI user (a power user, content creator, researcher, or family with multiple AI users), the Family plan’s single‑owner credit model and the 60‑credit cap can be constraining; the only upgrade pathway is Copilot Pro at $20/month per person, which quickly multiplies costs.
Regional pricing and real world impact: the Pakistan example
Microsoft’s global pricing policy and local currency fluctuations mean that the effective cost for consumers can diverge sharply between countries. The Neowin editor recounted paying PKR 15,000/year for Microsoft 365 Family in 2022 and PKR 28,999 in 2025 — a near‑doubling over three years that hit because regional prices increased independently of the U.S. headline increase. That lived experience mirrors the pricing shown on Microsoft’s Pakistan storefront: Microsoft’s official Pakistan store lists the Microsoft 365 Family price at Rs 28,999/year and Microsoft 365 Personal at Rs 22,999/year (store current listings).Key points to note:
- Microsoft’s U.S. headline increase was $3/month, but local prices have been adjusted unevenly, and in some regions multiple increases or currency adjustments have compounded the cost. The impact is acute in countries where currency depreciation or local pricing strategy causes steeper nominal increases for consumers.
- Historical local price points (e.g., the author’s PKR 15,000 in 2022) are harder to independently confirm via archive searches; Microsoft’s store pages reflect current prices and not necessarily the entire change history. The claim that regional users have experienced repeated hikes is credible and aligned with public reports of phased global price adjustments, but specific past figures should be treated as user‑reported unless confirmed by archived store pages or receipts.
Strengths: why Microsoft 365 still matters
Despite the complaints, Microsoft 365 continues to deliver substantial, unique value to many users:- Deep integration across desktop apps, OneDrive storage, mobile apps and Windows. Copilot’s integration into Office apps is seamless for workflows that already rely on Word, Excel and PowerPoint, reducing context switches.
- Feature breadth: Defender protections, Clipchamp, Designer, the Microsoft 365 Copilot app and 1 TB of OneDrive storage per user in Family plans create a package that is convenient and, for many households, easier than assembling separate tools.
- Enterprise‑grade infrastructure: Microsoft has invested heavily in the cloud and AI infrastructure that powers Copilot. For users needing compliance, tight integrations and business continuity, the Microsoft stack remains compelling.
Weaknesses and risks: why the backlash is understandable
- Perception of forced bundling
Microsoft’s decision to fold Copilot into consumer plans — while simultaneously limiting usage by credits and blocking sharing inside Family — feels like bundling without delivering full utility to all household members. A Family plan that centralizes AI credit to one account undermines the “shared” nature of the bundle for AI features. - Opaque downgrade path and limited "Classic" plans
Microsoft offers Personal Classic and Family Classic for a limited time to migrate existing subscribers to pre‑AI pricing, but those options have been reported as hard to find in account portals and are presented as limited offerings. That limited visibility and temporary availability frustrates subscribers who prefer to opt out. - Vendor lock‑in and switching costs
The more deeply households and organizations embed themselves in Microsoft formats, OneDrive, Teams and paid services, the harder switching becomes. Organizations such as The Document Foundation have long warned about vendor lock‑in and promoted open formats (ODF, LibreOffice) as alternatives to preserve data portability and digital sovereignty. Microsoft’s bundling of AI inside its ecosystem increases the switching cost for users who now rely on AI workflows tied to Microsoft’s apps. - Value mismatch for heavy users
Heavy users face a stark choice: accept low per‑user credits in a Family plan (and pay for Copilot Pro for each additional user), or absorb the inconvenience of multiple Personal subscriptions. That arithmetic can make the $20/month Copilot Pro a de‑facto tax for serious users. - AI reliability and privacy concerns
Copilot is useful, but not infallible — issues like hallucinations, incorrect data summaries, or inappropriate tonality persist across generative AI systems. Microsoft’s assurance that Copilot prompts and files aren’t used to train foundation models addresses one privacy angle, but broader concerns around model behavior, data residency, and where compute occurs remain for some users.
Practical guidance: how to navigate the change
- Review your Microsoft 365 renewal date and billing method; price increases apply at renewal for existing subscribers.
- If you don’t want Copilot or Designer, check whether your account is eligible for the Personal Classic or Family Classic plans at renewal; be mindful these may be limited‑time offers.
- Track AI credit consumption: Microsoft surfaces AI credit balances in the account portal so you can monitor usage and avoid surprises. If you exceed credits often, evaluate Copilot Pro vs. multiple Personal subscriptions for family members.
- For families: consider whether the subscription owner will be the primary AI user. If not, compare the cost of separate Personal plans for frequent AI users vs. the convenience of a single Family plan.
- Backup and export critical documents in open formats (ODF) or local storage to reduce lock‑in risk. Explore LibreOffice and The Document Foundation migration guides if portability is a priority.
Alternatives and where they make sense
- Google Workspace / Google One: If collaboration on Google Docs/Slides/Sheets and Google’s AI features suit your workflows, compare the bundled storage and AI capabilities against Microsoft’s offering. Pricing and capabilities differ, and Google’s family pricing and storage bundling can be advantageous for some households.
- LibreOffice + self‑hosted storage (Nextcloud): For users prioritizing cost control, data sovereignty and avoiding vendor lock‑in, LibreOffice combined with self‑hosted or independently hosted cloud storage is a compelling alternative. It lacks Copilot but avoids subscription creep and provides strong format portability. The Document Foundation explicitly promotes these benefits.
- Pay‑as‑you‑go AI + lightweight office apps: Some users may choose to keep a core productivity suite locally (e.g., Office perpetual licenses, LibreOffice) and pay for AI access only when needed (via Copilot Pro or third‑party AI tools), which can be more economical for intermittent heavy tasks.
Critical analysis: strengths, shortcomings and strategic implications
Microsoft’s strategy is coherent from a corporate perspective: monetize AI at scale, make Copilot ubiquitous in the Office experience, and create upgrade paths for power users. The inclusion of Copilot in Microsoft 365 for consumers lowers the access barrier and raises product stickiness for the platform. At the same time, the execution exposes frictions:- Fairness and optics: Bundling a capped AI allowance into a Family plan but restricting the credits to the owner creates a perception problem; families expect shared benefits across accounts. The optics worsen when regional price increases outpace the U.S. baseline due to currency shifts or local pricing decisions.
- Pricing transparency: The math behind the price rise is straightforward, but the value calculus is not — especially when unused credits vanish each month and heavy users face a steep $20/month Copilot Pro add‑on. Microsoft’s multiple tiers and transient “Classic” options make the consumer choice architecture harder to navigate.
- Lock‑in risk: As AI features become integrated into authoring and data analysis, the cost and practical friction of moving away from Microsoft increase. The Document Foundation’s longstanding warnings about vendor lock‑in gain renewed relevance in an era where AI workflows are stored, used, and refined inside a single vendor’s platform.
- Regulatory and market dynamics: Microsoft must balance investor expectations for monetizing AI with regulatory scrutiny over market power, interoperability and data practices. Broad adoption of Copilot in Office will likely draw attention from competition and data‑protection regulators over time.
Conclusion
Microsoft 365 remains a powerful, productive ecosystem, and Copilot genuinely extends capabilities that will be transformative for many users. Yet the combination of a price increase, a limited monthly AI credit allotment, family‑plan restrictions, and regionally uneven price changes has created a legitimate consumer backlash. For light AI users, the trade‑off may be acceptable; for families with multiple prospective AI users, creators, or heavy consumers of generative features, the math quickly favors pay‑per‑user Copilot Pro subscriptions — and the final cost can be startling.The episode highlights a systemic tension in modern software bundles: vendors now pair feature rollouts with subscription incentives that can both add value and constrain choice. Consumers facing this reality should audit how they use Microsoft 365 today, measure AI usage objectively, and consider alternatives — whether downgrading to a Classic/basic plan (if available), adopting Copilot Pro only for power users, or exploring open alternatives to reduce future lock‑in risk. The core lesson is simple and practical: stay informed, run the numbers for your household, and don’t let convenience morph into an accepted annual shock without reassessing the real value delivered.
Source: Neowin Microsoft 365 is still my favorite Microsoft product, but it is getting way too expensive