Microsoft Raised the Price of This Product for the First Time in 12 Years — What Could It Mean for the Stock?
Written by
David Nadelle
Edited by
Amber Barkley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
For the past dozen years, Microsoft’s 365 Personal and Family cloud-powered app, storage and security subscription bundles, have been priced at $6.99 and $9.99 per month, respectively, which fits neatly into many budgets. It’s basically the Costco rotisserie chicken of productivity platforms.
However, the tech giant has announced that it’s adding its Copilot AI assistant to the Word, Excel, PowerPoint, Outlook and OneNote applications for consumers who subscribe to the 365 suite — and increasing subscription costs accordingly. Microsoft is increasing the cost of the popular software bundle by $3 per month.
How will this affect the future of Microsoft stock?
Price Increase Details
“We’re building on those 12 years of innovation by bringing Microsoft Copilot and Microsoft Designer to Microsoft 365 Personal and Family subscribers in most markets worldwide,” wrote Bryan Rognier, vice president of Microsoft 365 Consumer, in a January Microsoft blog post. “These changes bring the transformative power of AI to the personal productivity tools that millions of people use every day.”
Microsoft 365 Personal will cost $9.99 per month and $99.99 per year, which is up from $6.99 per month and $69.99 per year. Microsoft 365 Family will cost $12.99 per month and $129.99 per year, increasing from $9.99 per month and $99.99 per year.
The annual Personal plan will now be almost 43% costlier, while the annual Family plan will be over 30% more expensive.
Although most existing Microsoft 365 Personal and Family subscribers will automatically have access to Copilot and Microsoft Designer in their apps upon release of the latest version — and will automatically be billed for it upon renewal — you’ll be able to opt out of subscribing to the AI assistant.
“Existing subscribers with recurring billing enabled with Microsoft can switch to plans without Copilot or AI credits, like our Basic plan, or, for a limited time, to new Personal Classic or Family Classic plans,” wrote Rognier.
In May 2024, Statista reported that Microsoft 365 was being used by over a million companies worldwide, and TipRanks said there were 84 million consumer subscribers last year, which was up 10% from 2023. Moving forward, in the short-term, Microsoft stock values will be partially dependent upon whether those subscribers will renew or opt out.
How Will 365’s Price Increase Affect Microsoft’s Stock?
All stocks are priced into a company’s value based on available information. To gain the upper hand on the market, you have to possess information it doesn’t have — or be extremely lucky with timing your investments. And your stakes are always subject to the law of supply and demand and external factors.
Instead of speculating how much a stock’s price might go up and when, you should be monitoring performance over time. When it comes to Microsoft (MSTF) — which, with the exception of 2022, has grown spectacularly over the past 10 years — there is a growing consensus on a healthy upside, and many experts are recommending buying stock, despite the 365 cost increase.
According to TipRanks, MSFT is a “Strong Buy,” according to 28 Wall Street analysts — 26 Buy recommendations, plus two Holds. This rating is based on recommendations over the past three months.
Projecting over the next 12 months, the average price target is $506.96, with a high forecast of $550 and a low of $425, as of Feb. 13. The stock closed at $408.43 on Feb. 1, according to Yahoo Finance.
Zacks is taking a more conservative view on Microsoft, assigning it a Rank 3/Hold and a middle-of-the-road VGM (Value, Growth, Momentum) Score of C.
On MarketWatch, the stock is a consensus Buy, according to 58 current analyst ratings — 45 Buy, 10 Overweight and three Hold.
Introducing Copilot to subscriptions many help boost Microsoft’s value, but the company will likely see revenue growth from the 365 price increase anyway. However, the stock value could potentially take a hit if enough existing customers see this move as nothing more than a Copilot fee — a subscription charge for a product they didn’t request and may never use — and cancel their subscriptions in favor of alternatives.
More From GOBankingRates
