Microsoft is consolidating its consumer subscription offerings by launching Microsoft 365 Premium, a new $19.99 per month plan that combines productivity software with AI features previously sold separately. The new tier effectively merges Microsoft 365 Family and Copilot Pro into a single package, while still offering both as standalone options.
The move comes after the company introduced Copilot Pro in early 2024 at $20 per month, focused solely on AI-powered features, while Microsoft 365 Family has long provided access to core Office apps, OneDrive cloud storage, and multi-user support for $12.99 per month. With Microsoft 365 Premium, subscribers gain the functionality of both at a slightly lower combined cost.
In addition to traditional apps like Word, Excel, and PowerPoint, the plan integrates Copilot directly into these tools, enabling AI-assisted writing, data analysis, and presentation design. The subscription also includes higher usage limits for Copilot than the free tier and will soon unlock two advanced AI reasoning agents that were previously restricted to enterprise customers.
Microsoft has been steadily weaving AI into its consumer ecosystem, positioning Copilot as more than just a chatbot. “Other AI tools stop at chat — we deliver that plus so much more,” Yusuf Mehdi, executive vice president and consumer chief marketing officer, said in a statement. The launch also reflects Microsoft’s strategy of aligning pricing more closely with competitors like Google, OpenAI, and Anthropic, all of which have introduced consumer AI subscriptions.
The company is seeing growth momentum in its consumer services business. Microsoft 365 had 89 million consumer subscribers as of June, up 8% year-over-year, with revenue from the segment accelerating to 20% growth in the quarter. By bundling productivity and AI under one plan, Microsoft appears to be targeting not just price-conscious users, but also those who want a single subscription to cover work, personal organization, and creative projects.
The introduction of Microsoft 365 Premium marks another step in the company’s efforts to make Copilot a core part of everyday productivity rather than an optional add-on. Whether consumers embrace the bundle may depend on how much value they place on integrated AI tools, but the consolidation signals that Microsoft sees AI as inseparable from its future subscription business.
