Microsoft 365 Copilot Pricing: Paul Thurrott on paying for AI vs productivity

Paul Thurrott’s short, wry response in Ask Paul: October 3 crystallizes a tension millions of Windows users are feeling right now — admiration for what AI can do, coupled with reluctance to pay a new recurring premium for features many believe used to be “just part of the product.” His position — that he’ll pay for productivity where it adds clear, standalone value but balks at expensive AI add‑ons bundled onto existing subscriptions — is both practical and illustrative of a much larger market reckoning.

Background​

The past 12–18 months have seen legacy productivity vendors repackage AI as a paid value-add rather than a free enhancement. Microsoft has been the most visible example: integrating Copilot into Word, Excel, PowerPoint, Outlook and other apps, raising consumer Microsoft 365 prices by $3/month for Personal and Family plans, and offering higher‑usage or unlimited access behind Copilot Pro and — more recently — a new Microsoft 365 Premium tier. Those moves are reshaping the economics of everyday desktop productivity.
At the same time, device makers and platform operators are using hardware bundles and store promotions to seed AI subscriptions — Google ships certain Pixel 10 Pro models with a year of Google AI Pro, while Samsung partnered with Perplexity to give Galaxy owners a year of Perplexity Pro via the Galaxy Store. Those device subsidies complicate the narrative: some users get premium AI access as a perk, others must still decide whether to pay.

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What Paul Thurrott actually said — and what he meant​

Paul revisited his earlier stance — captured in his piece “I Will Not Pay for AI” — in the October 3 Ask Paul column and explained that his position hasn’t shifted dramatically. He still subscribes selectively: he buys LanguageTool (a standalone writing aid) because it fills a function his workflow lacks, and he accepts bundled AI perks where they came as an unavoidable device benefit (a year of Google AI Pro tied to his Pixel 10). But he draws a line between paying for a productivity platform like Microsoft 365 and paying an extra premium for Copilot features that, to him, feel like app features rather than a distinct product. That distinction — between paying for a platform versus paying for an add‑on product with clear, discrete value — is central to his argument.
Two practical disclosures are worth noting: Paul reports he has Google AI Pro via a Pixel 10 device, Perplexity Pro via a Galaxy Store promotion, and Microsoft 365 Family as the account holder. He also admits he almost never uses these AI features despite having access, which puts his stance in the “skeptical consumer” category rather than the “outright anti‑AI” camp. Those are self‑reported usage patterns and should be treated as the author’s perspective rather than independently verified behavior.

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Microsoft’s AI monetization: facts, figures, and recent changes​

Microsoft’s strategy is now unmistakable: mainstream Copilot functionality is being woven into Microsoft 365 and charged for through subscription price adjustments and tiered access limits.

• Microsoft raised the price of consumer Microsoft 365 Personal and Family plans by $3/month, citing the addition of Copilot AI features as part of the justification. This was the first consumer price increase for these plans in many years.
• For Personal and Family subscribers, Microsoft initially introduced an AI credit model — users receive a monthly allotment of AI “credits” (commonly reported as around 60 credits for core Office features) that gate usage of embedded AI across apps like Word, Excel, PowerPoint, Notepad, Paint and Designer. Heavy users can pay for higher limits.
• Copilot Pro was positioned as the unlimited/high‑usage upgrade at roughly $20/month for individuals who needed more than the bundled limits. More recently, Microsoft consolidated offerings under a new Microsoft 365 Premium plan that bundles advanced Copilot features and the highest usage limits into a single $19.99/month plan while winding down Copilot Pro as a standalone SKU. That repositioning reflects rapid product experimentation as Microsoft tries to balance consumer clarity with monetization.

Taken together, these moves show Microsoft shifting from “AI as occasional extra” to “AI as premium differentiator.” That shift has consequences for billing, expectations, and consumer trust.

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Cross‑platform comparisons: Google, Perplexity, and the device angle​

Microsoft is not the only company monetizing AI; the ecosystem has split into a mix of paid tiers, device perks, and free (but limited) access.

• Google: Some Pixel 10 Pro models include a year of Google AI Pro as a device incentive, effectively defraying the cost of the premium AI tier for buyers. The hardware tie‑in is an important distribution strategy that gives Pixel buyers immediate access to Gemini Pro capabilities and other Google AI features without a separate subscription.
• Perplexity: Samsung’s Galaxy Store promotion has given U.S. Galaxy owners a one‑year Perplexity Pro subscription in many cases. That promotion validates the device-bundling approach seen with Google and offers a path to trial advanced AI without incremental consumer spend. It isn’t universal or permanent, but it materially affects early adoption.
• OpenAI / ChatGPT Plus and others: Several competitors operate on consumer‑facing monthly plans (e.g., ChatGPT Plus); pricing parity and feature comparisons remain messy because each vendor differentiates on model access, latency, and integrations rather than just headline price. This makes direct apples‑to‑apples comparisons difficult beyond the fact that premium AI access now typically costs in the low‑to‑high‑teens per month for individuals.

The result: pockets of users get AI for “free” through promotions, others pay per month for direct access, and many more face bundled price increases in platforms they already pay for.

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Why Paul’s distinction — paying for productivity vs. paying for features — matters​

Paul’s dividing line is not merely rhetorical: it’s a useful mental model for consumers evaluating whether an AI subscription is worth it. He pays for tools that:

• Provide a discrete, standalone productivity gain (e.g., LanguageTool for writing in a Markdown editor), or
• Replace a missing capability in his workflow (e.g., paid storage bundled with Microsoft 365), or
• Are acquired indirectly (device bundles, trial promotions).

He pushes back against paying more for features that feel like they used to be part of the base subscription — for example, improved spell check, grammar suggestions, or basic drafting help inside Word. That pushback resonates because consumers have long equated their base Microsoft 365 subscription with a known set of capabilities; suddenly paying extra for things that look conceptually similar to existing app features feels like a bait‑and‑switch.
This framing matters for how companies design pricing. If AI features are perceived as simple enhancements rather than new standalone products, customers will resist additional charges. If instead vendors create clearly differentiated, premium AI experiences with unique workflows and measurable outcomes (e.g., a “researcher” mode that saves professional users hours), those offerings are easier to justify as paid tiers.

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Strengths in Microsoft’s approach — and real risks​

Microsoft’s strategy has obvious strengths:

• Deep integration. Copilot inside Office apps can automate complex workflows (Excel data analysis, high‑quality slide decks, long‑form summarization) in ways point‑solutions can’t. This has real productivity potential for power users and enterprises.
• Enterprise monetization. Many business customers are willing to pay for time‑savings and compliance features, so bundling AI into enterprise contracts drives durable revenue.
• Device and partner distribution. Google and Samsung’s device incentives show one effective route to broad adoption without direct consumer resistance.

But the approach carries risks:

• Perception of an “AI tax.” Consumers who rarely use AI features can view price increases as paying for experiments they don’t want, creating churn risk or motivating moves to free alternatives. Paul’s reaction is emblematic: having access but not using it, he questions the added cost.
• Feature creep and opt‑out friction. Embedded AI that can’t be fully disabled or is too intrusive (constant assistant windows, unsolicited prompts) erodes user control and trust. Community forums already show users searching for ways to disable or avoid Copilot.
• Privacy and data use. AI features often require sending content to cloud models. Users and organizations rightly worry about what is stored, how it’s used to train models, and how long logs persist. This is a sensitive topic for creators and legal teams.
• Competitive arbitrage. Free or lower‑cost alternatives — Google Workspace, LibreOffice, Zoho, or even specialized AI assistants — may siphon users who don’t see the ROI in Microsoft’s bundled premium model. The market’s response could force pricing rethinks.

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The economics of “AI credits” and what they mean for real use​

One mechanic Microsoft tested — and that has also been reported by independent outlets — is monthly AI usage credits for Personal and Family subscribers (commonly reported in the 60‑credits/month range for baseline access). Credits are consumed by actions such as long document summaries, image generation, or more sophisticated transformations that require greater compute.

• For light occasional tasks (short rewrites, simple summaries), the bundled credits may be sufficient.
• For regular heavy usage (researching, generating many images, drafting long reports), credits can run out and the marginal cost will push users toward higher tiers like Copilot Pro or Microsoft 365 Premium.

This tiered model can be sensible for Microsoft — it controls compute costs and creates upgrade pathways — but it increases complexity and raises questions about predictability of cost for consumers.

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Practical advice for Windows users and IT decision makers​

• Inventory usage patterns.
• Track how often you use AI‑enabled features and for what tasks. If you never use Copilot, downgrading or switching to a Classic plan (while still offered) may save money.
• Evaluate device promotions.
• If you’re buying a new phone or laptop, check what bundled AI subscriptions come with the device. Those one‑year perks can let you trial higher tier capabilities without immediate spend.
• Treat Copilot as a tool, not a replacement.
• Use AI for drafting, ideation, and data triage, but keep final analysis, legal checks and creative decisions human.
• Watch privacy settings.
• Review vendor documentation for data retention, options to opt‑out of training, and enterprise data protection controls before enabling Copilot for sensitive workflows.
• Consider point solutions.
• If your need is narrow (grammar checking, image generation, code assistance), a standalone paid tool might be more cost‑effective than a broad platform subscription. Paul’s continued use of LanguageTool is a case in point.

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The broader cultural dimension: creativity, deskilling, and user autonomy​

Paul — and many readers — worry about the subtle deskilling that comes with overreliance on AI. When tools start finishing our sentences, reformatting our ideas, and standardizing tone, some cognitive skills atrophy. That isn’t an argument to banish AI, but to use it intentionally.

• For creators, AI should be an accelerant, not an autopilot.
• For enterprises, the risk is not just cost but homogenization of output and potential legal exposure if AI‑generated content inadvertently reproduces copyrighted material.

These are not hypothetical concerns. They are central to why many readers and users are questioning whether AI belongs inside every app by default — or whether access should be a clearly optional, paid tier.

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What remains uncertain — and what to watch next​

While the high‑level direction is clear, several important details remain fluid:

• Pricing and packaging will continue to change. Microsoft’s introduction of Microsoft 365 Premium and the consolidation of Copilot Pro shows rapid iteration; consumers should expect further adjustments.
• Usage models (credit counts, which actions consume credits) may be refined, and limits may be relaxed or tightened based on usage telemetry and backlash.
• Regulatory and enterprise policies around sensitive data, retention, and training will evolve, potentially constraining how freely models can use customer data. This is an area to monitor closely.
• Competitive responses will shape consumer expectations: if Google, Apple or open‑source projects offer a lower‑cost or more privacy‑friendly model, Microsoft will have to adapt.

When vendors iterate this quickly, it’s important for both consumers and IT decision makers to re‑assess subscriptions on a schedule (e.g., every renewal cycle), not just on autopilot.

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Conclusion​

Paul Thurrott’s position — pay for productivity where the product is distinct and clearly valuable; be skeptical of paying more for features that look like old app utilities — is pragmatic and rooted in real consumer psychology. The industry’s rush to monetize AI is understandable: models cost money to train and run. But pricing decisions that feel like retroactive feature extractions risk alienating the users they depend on.
For the moment, the smart consumer response is simple: measure actual benefit, watch for device promotions and limited “free” trials, and be ready to switch plans or vendors if the value proposition doesn’t add up. Microsoft and the broader AI ecosystem are still shaping the rules; the next year will determine whether AI becomes a paid commodity that users willingly adopt, or a surcharge many quietly avoid.
Paul’s closing note — that he owns a few subscriptions he rarely uses and remains wary of paying for every promising new capability — reads less like technophobia and more like disciplined consumerism. That stance will resonate with many readers as the market sorts itself out.

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Source: Thurrott.com Ask Paul: October 3