- Microsoft will raise the business application suite price starting October 1 as Copilot penetrates into Dynamics 365.
- The updated terms affect sales, customer service, finance, supply chain management, human resources and other Dynamics 365 ERP and CRM solutions, increasing costs by an average of 11%, the company said in a blog post.
- Microsoft has made Copilot a centrepiece of its generative AI strategy, embedding the chatbot assistant into the Dynamics and 365 application ecosystems.
Price increase has been attributed to cost of running Copilot
Microsoft has steadily built a broad portfolio of generative AI features on the basis of Copilot. The assistant is now deployed across the tech giant’s enterprise solutions, from its 365 General productivity tools to its suite of Dynamics Specific Feature solutions.
Forrester vice president and principal analyst Kate Leggett attributed the price increase to the cost of running Copilot in enterprise products.
“The value these products provide in terms of cost savings and effectiveness for Dynamics users justifies the price increase,” Leggett said in an email.
The company launched Copilots for finance, sales, and customer service in February, and fully rolled out 365 Assistant in September. As part of the branding, Windows 11 computers and Surface devices will be equipped with Copilot keys.
With the proliferation of these tools, Microsoft and its hyperscale competitors are pouring money into large-scale data centre construction, adding AI-optimised silicon hardware and GPU servers designed to run large language model workloads. These investments inevitably drive up costs.
“This is a way for them to reclaim all these data centres and the power consumption associated with generating models,” said Jason Wong, distinguished vice president analyst at Gartner.
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Not just model training
The costs do not end with model training. When organisations take advantage of Copilot capabilities, these workloads run on Azure infrastructure.
“There is a cost to running these business applications, and the price increase may be to pay for some additional calculations,” Wong said.
The Dynamics pricing announcement comes two weeks after Microsoft split its Teams collaboration tool from 365. The move comes amid increasing regulatory scrutiny of the company’s software licensing practices and broader concerns in the European Union about the complexity of cloud billing.
“For enterprise customers, Dynamics is just one aspect of a much larger bill they have to deal with,” Wong said. “There’s usually Azure compute and cloud storage, as well as 365 and Power Platform business intelligence and Microsoft support.
“It can be difficult for customers to understand or predict the cost of some of these services,” he added.
