If youre a Microsoft 365 subscriber with a Personal or Family subscription, Microsoft just flipped a switch and activated Copilot AI features for your account. Its a new part of your subscription, along with that 1TB of OneDrive storage and access to Office apps like Word and Excel. But there are some big catches including a price hike and some limits.Microsofts latest changes follow in Googles footsteps, with AI features appearing in the standard subscription for much less than youd pay for those AI features separately but with the standard subscription price also going up at the same time.Lets dive into how Microsoft just transformed some of the worlds most popular productivity apps, what you can do now and how you can avoid paying more.Want to keep track of the latest Windows and Office developments in just a few minutes each week? Sign up for my free Windows Intelligence newsletter. Plus, get free Windows Field Guide downloads as a bonus when you sign up!How Copilot works in Microsoft 365 plansFirst things first, the basics: Microsoft announced that all Microsoft 365 Personal and Microsoft 365 Family plans now include Copilot features as of Jan. 16 in most markets worldwide. This wont affect you when using a Microsoft 365 plan provided by a workplace businesses still have to pay separately for AI features but it will affect your individual plans. And plenty of professionals do pay for their own Microsoft 365 subscriptions. (I should know; Im one of them!)In other words, if you pay for Microsoft 365 and use apps like Word, Excel, PowerPoint, OneNote, and Outlook, youll now find the Copilot button popping up in these applications. Previously, you had to pay $20 per month for a Copilot Pro subscription to unlock these features.Heres the first big catch: The newly expanded paid 365 plans dont give you unlimited access to Microsofts AI features. Instead, you get a monthly allotment of credits that Microsoft says should be enough for most subscribers. In practice, that appears to be 60 credits per month meaning you can use AI features 60 times per month. After that, youll need to pay for a $20-per-month Copilot Pro subscription to keep using those AI features.Youll see an informational pop-up window the first time you open an app like Word.Chris Hoffman, IDGNote: These AI credits are actually shared across various other Microsoft apps including for AI image generation in Designer, Paint, and Photos and text-editing work in Notepad. Theyre not just for Word, Excel, and PowerPoint.Plus, again, Microsoft is raising its 365 subscription prices, with Copilot bundled into the mix. Theyre going up by $3 per month in the US, though the exact price increase will vary by country. For the yearly plans in the US, Microsoft 365 Family goes from $100 to $130 per year, and Microsoft 365 Personal goes from $70 to $100 per year.This is the first time Microsoft has raised prices since launching the subscription service originally called Office 365 back in 2013. While its true that Microsoft is using these AI features as a way to hike prices, these subscriptions were overdue for a price increase anyway, and its nice to at least get something out of it. (In my opinion, between the 1TB of OneDrive storage and access to Office apps, its still a good value.)Its worth noting that this Copilot change is only for Microsoft 365 plans. If you buy a more traditional one-time purchase version of Office like Office 2024, your setup isnt changing and you wont have access to these newer AI features.Using Copilot AI in Microsoft 365 appsWith the new adjustments in place, Copilot AI is easy to find in Office apps: Youll find a Copilot icon on the ribbon, or you can also select some text and click the little Copilot icon that appears next to it, or just press Alt+i. Then you can prompt Copilot to write or rewrite text in a document for you. You could also ask it questions about the document youre viewing from the Copilot sidebar.For more information on exactly how Copilot works in these Office apps, check out my Copilot Pro review from last year. The new built-in Copilot features are exactly the same as what you get with Copilot Pro; the only difference is that youre limited to 60 uses per month in the 365 setup.If you run out of credits, Microsoft will encourage you to upgrade to Copilot Pro. In a way, then, these AI features are a bit of a trial for Copilot Pro.To check how many credits you have left, you can click the little menu icon in the Copilot sidebar in an Office app and then click AI credit balance. This will take you to your Microsoft 365 account subscription page, where you can see a running balance of the AI credits youve used.Your AI credit balance is just a few clicks away.Chris Hoffman, IDGGenerating images with Microsoft DesignerThe same credit system also applies to Microsoft Designer, which is a useful AI image-generation tool. (At our newsletter-focused small business The Intelligence, we use Microsoft Designer to create some feature image illustrations for our articles were writers, not visual artists!)That means with any paid Personal or Family 365 plan, you can opt to use your 60 monthly AI image credits directly within Designer, too. This is actually quite a downgrade: Previously, everyone got 15 credits per day for AI image generations. Now, subscribers get a total of 60 credits per month, while free accounts only get 15 credits per month.If you need more than that, you can upgrade to the $20-a-month Copilot Pro plan, which gives you many more AI image generations in Designer and beyond. (Microsoft says you get at least 10x more credits for Designer with Copilot Pro, compared to the 15-credits-per-month free setup so roughly 150 credits per month, then, compared to the 60 monthly credits in the base 365 subscription.)AI tools are expensive to create and operate, and companies have lost a lot of money on them. Its no surprise to see many AI tools offering less for free and looking for more payment from their users; thats whats happening here.How to avoid the AI features (and costs) entirelyThere are ways to avoid the Microsoft 365 subscription price increases, if you dont anticipate using them and dont want to pay for them. (The price increase doesnt take effect until your next subscription renewal, by the way.)If you already have a Microsoft 365 subscription, you can keep your old subscription price and opt out of the AI features for a limited time. Microsoft says you can switch by canceling your subscription and choosing one of the Classic plans during the cancelation process. Here are Microsofts instructions.You could also buy perpetual licenses of Office instead of using the more prominently offered subscriptions. In other words, with a one-time purchase of Office 2024, you could use Office for a few years for that one-time purchase price. Its not as good a deal as it sounds that one-time purchase price will only get you access to Office apps like Word and Excel on a single computer, and you wont have access to the 1TB of OneDrive storage. (Plus, while your license will be good in perpetuity, Microsoft will stop delivering security updates for Office 2024 in October 2029.)You can also buy Microsoft 365 subscription keys from other retailers. Without getting into the weeds too far here, its worth noting that days after Microsoft implemented the subscription price increase, Amazon is still selling Microsoft 365 Personal subscriptions for $70 and Microsoft 365 Family subscriptions for $100 the old prices. But these are the standard plans and include those AI features. Thats a bargain.Of course, you could also turn to other office suites the web-based Google Docs, the open-source LibreOffice, or the Apple-focused iWork suite but Word, Excel, and PowerPoint are the business standard for a reason. And even with these AI-adding price increases, getting that 1TB of OneDrive storage at those prices is still a great deal.Want more insights and helpful tips? Sign up for my free Windows Intelligence newsletter! Youll also get three new things to try every Friday and free copies of Paul Thurrotts Windows Field Guides as a special welcome gift.