Microsoft 365 Copilot pricing has been announced and it is more than most were expecting – $30 per user per month.

Given the aim of Microsoft Copilot – to increase user efficiency and productivity when working with Microsoft 365 Apps such as Excel, PowerPoint, and Word – it’s very unlikely that EVERY user in an organisation would be given a license. It will instead be what Microsoft call “Knowledge Workers” i.e. those who spend most of their time creating content in Office…presentations, documents, spreadsheets etc. However, for many organisations that is a considerable proportion of their business and still equals a large outlay.

There are 2 scenarios I can see happening:

1. Microsoft take note of the “it’s too expensive” feedback and, when M365 Copilot actually becomes available to buy, they announce a lower price based on “listening to customers and partners“. This “put it out there and see what people say” approach has become a somewhat common strategy for Microsoft over the last few years.
2. They keep the price high for the first 12-18 months for early adopters who are willing to pay to get access to the potential business gains asap. Once adoption and new purchases hit a plateau, they then announce a price decrease to make it more attractive to a new, wider set of customers <– they did this with Power Platform back in October 2021 and it certainly seems to have worked.

What about Office 365 users?

A slight tangent perhaps but it must be noted that Copilot is only an add-on for Microsoft 365, not Office 365. Thus, if you have the latter, you will need to first upgrade from O365 to M365 and then add Copilot on top…making any concept of value and ROI even more complex.

Difficulty for customers

There are a few points that will be tricky for customer organisations:

1. Defining who needs a Copilot license
2. Defining what success looks like
3. Measuring and reporting on success
4. Tracking & quantifying ROI

Defining who needs a Copilot license

It won’t be every user in the organisation…but which users will it be?

1) Do you base it on existing license allocation i.e. “everyone with M365 E3/E5 gets Copilot as standard”? This is the easiest way but may well lead to over-licensing of Copilot, just as there is probably already over-licensing of M365 E3/E5.

2) Do you base it on job role i.e. “all team managers, accountants, and sales people get Copilot as standard”. There are a few things to consider here:

• How many different job roles are there within your organisation?
• Does everyone with the same title do the same thing or does it vary by team/department perhaps?
• Will you make exceptions for certain people in other roles?
  • If so, how do you define the criteria?
• How do you manage people who feel left out/under-valued if they don’t get a license?

3) Does each individual user who wants a license need to pass a kind of test to show that they perform relevant tasks and will benefit from Copilot? If so, how do you define the criteria:

• Do they need to use multiple parts of Office or just one?
• How heavily must they use it?
• Are there certain outputs they must produce i.e. customer facing docs, exec reports etc.?
• How do you track they are actually using it in the agreed way?

What does success look like?

Whatever process you use to decide how you allocate licenses to users, you will need to have a definition of success to know if your investment is worthwhile. This will vary between organisations and market sectors but some options include:

User satisfaction

Are users happier? Do they feel less stressed when they have Copilot to help them on a daily basis?

Output

Are users generating more output faster than before? This could be customer proposals, setting appointments, internal reports/dashboards, pitch decks, marketing collateral and a whole range of other things that your users create on a regular basis?

Do you use quantitative data i.e. “there are more of X thing in Y time than without Copilot” or do you go more qualitative i.e. “they’re not producing more but what they are producing is better” so quality over quantity? Will it be different for different business units?

Measuring and reporting on success

Once you’ve defined your metrics, you need to measure and report on them.

Each of the above options has pros and cons and will require different approaches to measuring success.

User Satisfaction

If you base it on user satisfaction, you will need to develop a way to accurately measure this for users and to account for changes over time.

For example, satisfaction will likely be sky high at first – they have this new tool that’s doing all sorts of cool stuff, helping them and making each day easier. Over time though – that will all become normal, just a regular part of work…so that satisfaction may well drop off somewhat. How do you account for that?

Output

It’s a similar story for output. What was once better/faster will become normal and so measurements will need to be calibrated for this over the years following a Copilot deployment. While you need to make sure, as an organisation, that you’re not paying for licenses that aren’t delivering (enough) value – you must also avoid the opposite. That once Copilot becomes “normal”, the business forgets what it was like BC (Before Copilot) and decides to save money by dropping those add-on licenses.

If Copilot is being used correctly, that will cause a variety of issues – likely including people being unable to do parts of their job anymore! It will be similar to executives trying to save money by dropping Software Assurance…

Reporting

You also need to think about how this data is collected and analysed and who makes any necessary decisions.

• How do you identify if people are no longer making “proper” use of their Copilot licenses?
• Is this a constant rolling process or something done once ever 3/6/12 months?
• Who decided to remove licenses from a user?
  • Their manager
  • HR
  • Finance
  • A designated Copilot Tsar?
• How are you identifying users who may need a Copilot license part way through the year?

Quantifying Return on Investment (ROI)

• $30 per user per month
• $360 per user per year
• $1,080 per user per 3-year agreement

It’s almost a given that enterprise customers will be paying less but the list price gives us a good base.

How you look at ROI is the first thing to define and that will be related to how you define success. If it is based on hourly rate and time saved then you can calculate it like so:

Tony gets $100,000 p/a so roughly $48 per hour. That’s $0.80 per minute so, if Copilot saves Tony 38 minutes a month then it’s paid for itself.

If it’s user satisfaction then you’ll probably see a wider range of positive results. GitHub Copilot has been available for a while and they released some interesting research last year (2022) that looked at quantifying the ROI.

For many organisations it would be great to see similar results from your “knowledge workers”. That said, adding Copilot for 5,000 users will be, at list price, $1,800,000 per annum and not all organisations will see that dollar value as worth the above results.

The adoption of Copilot may well be a fairly strong indicator of a company’s ethos and approach to employee wellbeing – at least for certain roles!

Conclusion

For some organisation, Microsoft 365 Copilot at this price point will be a no-brainer. For others, it’s a definite no, and for others it will be a definite no at any price point. However, I’d say that most organisations stand to be convinced…particularly if they’re able to get discounts etc.

As with any software product, make sure you understand why you want it, how you’ll use it, and how you’ll know if you aren’t. Work out what makes it good value for you and measure against that.

If you have questions, feedback, and/or would like to talk about you Microsoft strategy in more depth, get in touch here.