Two GenAI services from Microsoft moved into “general availability” status on February 1st. Microsoft Copilot for Sales connects with a company’s CRM system to extract insights and accelerate sales. Microsoft Copilot for Service employs insights derived from a broad array of data sources to spark AI-powered conversations between contact center agents and customers. Both are enhancements of OpenAI’s GPT-infused Microsoft 365 Copilot tailored for frontline employees.

Microsoft’s product managers signaled that these products were on the path to general availability (GA) last July as I reported here. At that time, more than 600 companies were taking advantage of the Early Access Program (EAP) to gain experience with Microsoft 365 Copilots, putting personal assistants on their employee desktops for $30 per month. Last week witnessed the launch of tailored versions of the Copilots and marked a $20 bump on the basic price of a more generic personal assistant.

In the ensuing months, a significant change took place in the price that Microsoft expects its enterprise customers to pay for its specialized virtual assistants.

A Precarious Pricing Strategy for the Enterprise Software Giant

With a $10 billion investment in OpenAI, whose current rendition of GPT is the foundation model for its full range of GenAI offerings, Microsoft has a vested interest in charging a hefty retail price for its AI-infused enterprise offerings. Free versions of ChatGPT, Bard, Claude, Perplexity and a few other GenAI services are readily available. “Premium” renditions of these services start around $15 per month for individual users. Service providers justify the premium by offering access to more recent foundation models and additional tools for refining responses or entering new queries.

The lowest form of life for enterprise renditions of OpenAI products, Bing Chat Enterprise, carries a $5/month/user price even though individuals who access the Bing search engine using the Microsoft Edge browser have access to Copilot for free. A premium rendition, ChatGPT “Plus” carries a $20 per user monthly charge for individuals seeking an AI-infused resource to spark productivity. There’s also a “Team” version that costs between $25-$30 per month to improve productivity on a collaboration platform, like Microsoft Teams. This option, in particular, feels excessive when one considers that an offering like the Zoom AI Companion is offered for zero additional charge over the fees charged for a paid account plan, which starts at $16 per month (discounted to $150 per year) for Pro Level of Zoom One.

Next Step: Linking Price to Business Value

Pricing software and services is part art and part science, with a considerable amount of weight attached to market presence. Microsoft has been in the field with Copilot for nearly a year and has quite a list of blue chip clients. It has a good idea of the business value to be gained from accelerating the speed to close a sale or simply make more sales. Ditto in the contact center/service realm where there are concrete gains to be made from employing a copilot to summarize conversations and initiate follow up actions. Today, Microsoft’s $50 per seat model amounts to the price that competing offerings will routinely try to beat.

The next, emerging trend is toward value-based pricing. A good example is Verint’s “bot-based” approach to offering Conversational AI-infused solutions. They do not have a simple per user or per bot model. Instead they take into account the complexity of the tasks that it is expected to perform, anticipated volumes of transactions and links or interactions with multiple channels and multiple back-end systems. Yet pricing primarily reflects the tangible business value that each bot delivers.

Categories: Conversational Intelligence, Intelligent Assistants, Articles