Microsoft 365 Pricing Changes in 2025: How to Save on Your Subscription
By: Justin Krentz
For businesses and teams using Microsoft 365, upcoming pricing changes will affect how you budget for these tools. Microsoft is introducing a new monthly billing plan and adjusting subscription costs, impacting Microsoft 365 users worldwide. These changes take effect in two key phases:
- December 1, 2024 – In response to customer and partner feedback for more flexible payment options, Microsoft introduced a new monthly billing plan for annual subscriptions of Microsoft 365 Copilot, Copilot for Sales, and Copilot for Service on the new commerce platform. This option costs 5% more than the upfront annual payment plan for these services.
- Starting April 1, 2025 – All new and renewing monthly billing plans for annual subscriptions will be priced 5% higher than the annual billing option for annual subscription plans. In order to keep the same pricing, bills for the year should be paid upfront.
Continue reading to understand these changes, their impact, and how to minimize cost increases.
New Monthly Billing Plan: Flexibility at a Cost
On December 1, 2024, Microsoft introduced a monthly billing option for annual subscriptions to Microsoft 365 Copilot and related products. While this offers businesses better payment flexibility, it comes at a slight premium.
- What’s changing? If you opt for monthly billing instead of an upfront annual payment, you’ll pay 5% more over the course of the year.
- Who benefits? Organizations needing short-term licensing flexibility or those managing fluctuating workforce numbers may find this option useful.
- Who should stick with annual billing? Businesses that prefer cost savings and predictable expenses should continue paying annually to avoid premium pricing.
While Microsoft positions this as a convenience feature, it also aligns with broader industry trends where software vendors encourage annual commitments through pricing incentives.
Standardized Pricing: Monthly Subscriptions Get a Cost Bump
The second phase of pricing adjustments arrives on April 1, 2025, standardizing Microsoft’s approach to monthly and annual billing. This change applies to all new and renewing monthly billing plans for annual subscriptions across Microsoft 365.
- Key impact: Monthly payments for annual plans will cost 5% more than the standard annual rate.
- Reason for the change: Microsoft aims to align its billing structures globally, making it easier to manage subscription pricing across different markets.
- Action for businesses: If you’re on a month-to-month plan, consider switching to an annual payment model before April 1, 2025 to lock in lower rates.
For organizations with stable workforce sizes and predictable licensing needs, committing to annual payments remains the best way to avoid added costs.
Price Increases for Standalone Microsoft Products
In addition to subscription changes, Microsoft is raising prices on several standalone products, also effective April 1, 2025. This marks the first price hike for these products since their launch.
- Teams Phone Standard: Increasing by 25%, from $8/user/month to $10/user/month.
- Power BI Pro: Rising by 16.7%, from $12/user/month to $14/user/month.
- Power BI Premium Per User: Going up by 20%, from $20/user/month to $24/user/month.
These changes will impact businesses using these tools as standalone solutions rather than as part of a broader Microsoft 365 plan. If your organization relies on these services, you may want to evaluate bundling them within a Microsoft 365 Enterprise plan for potential savings.
How to Save on Microsoft 365 Price Increases
With these price adjustments on the horizon, businesses should take proactive steps to minimize cost increases:
- Review Your Subscription Model: If you’re currently paying monthly, consider switching to annual billing before April 1, 2025 to secure better rates.
- Assess Your Licensing Needs: Determine if any standalone products can be bundled into a larger Microsoft 365 package to reduce costs.
- Communicate with Your IT Team: Ensure your team is aware of the changes and plans accordingly for renewals or billing adjustments.
Microsoft’s pricing updates align with broader industry trends toward subscription-based models, but businesses that plan proactively can optimize their costs and maintain flexibility. For ongoing IT support and guidance on managing your Microsoft 365 subscriptions, Vertilocity can help.
By planning ahead, you can secure the best pricing and avoid unexpected costs.
For more details on these pricing updates, see the Microsoft FAQ. If you need assistance navigating these changes, contact us at helpdesk@vertilocity.com, (412) 220-8460 or via the Client Portal.