Microsoft drops M365 Copilot price for SMBs, upgrades free Copilot Chat

Microsoft will reduce the price of Microsoft 365 Copilot for small and mid-sized firms beginning next month.

As of Dec. 1, 2025, Microsoft 365 Copilot for Business will cost $21 per user, per month for customers with any Microsoft 365 Business plan. That’s down from the current $30 price per month set when the tool debuted in 2023.

The new Microsoft 365 Copilot Business subscription will be available to organizations with 300 or fewer employees and includes the same features as before. This means access to the AI assistant in apps such as Excel, Teams, and Outlook, as well as Copilot agents and tools such as Notebooks. 

“We heard from smaller companies that they wanted a version that would fit their needs and budgets, too,” a Microsoft spokesperson said in a blog post Tuesday. “So we’re making that happen.”

The announcement came during the company’s annual Microsoft Ignite conference this week in San Francisco.

It’s not clear whether existing customers will be automatically moved to the lower-cost plan; Computerworld asked Microsoft, but did not immediately receive a response.

Despite strong interest among IT leaders in M365 Copilot, uptake remains at an early stage. Most customers are still in pilot projects or have deployed the tool to a small subset of employees as they grapple with challenges around data governance, user adoption, and uncertain value. The lower price could ease some of those concerns for small and mid-size businesses (SMBs).

The introduction of M365 Copilot Business expands the range of options for accessing Microsoft’s AI assistant. Alongside the two main M365 Copilot subscriptions, businesses can subscribe to Teams Premium ($10 per user/month), which includes “intelligent recap” and other collaboration-focused AI features such as automated notetaking and live translation.

Then there’s Copilot Chat, available at no extra cost to Microsoft 365 customers.  Essentially a lite version of M365 Copilot, it features a chat interface (grounded in web data rather than a customer’s own files), limited management controls, and pay as you go access to agents. 

In September, Microsoft announced that Copilot Chat will be available inside Office apps such as Word, Excel and PowerPoint. This will let users to ask the AI assistant for help drafting documents or analyzing spreadsheets, for instance.  

At Ignite, Microsoft also announced an enhancement to the Copilot Chat integration with Outlook that will be “content-aware” across an entire Outlook inbox, calendar, and meetings, not just individual email threads. It is slated to be available in preview in March 2026. 

Agent Mode in Word, Excel, and PowerPoint agents — announced for paid M365 Copilot users in September — will enable content creation directly from the Copilot Chat interface. The AI assistant asks clarifying questions before producing a draft that users can direct it to iterate on or jump to the app to work on it themselves.

Agent Mode in Copilot Chat will also be available in “early 2026.”

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