CEO Satya Nadella says Microsoft's software business is rethinking its pricing model to …

Microsoft's software business is planning to adjust its pricing model. Satya Nadella, the software giant’s CEO, has revealed the company is shifting from charging "per user" to "per agent" as artificial intelligence (AI) systems increasingly perform autonomous work alongside human employees. Speaking on the "Dwarkesh Podcast", Nadella explained that Microsoft's business is transitioning from an end-user tools company to an infrastructure provider supporting AI agents that can complete tasks and make decisions independently. Nadella said: “Our business, which today is an end-user tools business, will become essentially an infrastructure business in support of agents doing work. The way to think about the per-user business is not just per user, it's per agent.”

The shift reflects a broader industry transformation as companies reconsider how to charge customers, adopting agentic AI systems that run software rather than simply being powered by it. Nadella noted Microsoft's services, including the Microsoft 365 suite, which already earns $100 billion in revenue per year, would serve as the core workspace for AI agents

“All the stuff we built underneath M365 still is going to be very relevant. You need some place to store it, some place to do archival, some place to do discovery, some place to manage all of these activities, even if you're an AI agent," Satya Nadella noted. He also suggested that this new infrastructure business would “grow faster than the number of users.”

Earlier this year, Microsoft introduced a pay-as-you-go pricing model for its AI agents. The metered system sits on top of a free Copilot chat experience for Microsoft 365 users, allowing companies to pay based on the work their AI agents perform.

Other tech companies, such as Anthropic, also bill customers based on usage, charging for their Claude models per million tokens processed. Google uses a comparable pay-as-you-go approach for its Gemini API.

Read what Satya Nadella said about adjsuting software business pricing model

Discussing how Microsoft is planning to adjust the pricing models of its software business, Nadella noted: “Don't think of the tool as the end thing. What is the entire substrate underneath that tool that humans use, and that entire substrate is the bootstrap for the AI agent as well, because the AI agent needs a computer that's kind of one. So in fact, that's why I think we're going to have essentially an end-user computing infrastructure business, which I think is going to just keep growing because guess what, it's going to grow faster than the number of users. So in fact, that's kind of one of the other questions people asked me is ‘hey, what happens to the per-user business?’ At least the early signs may be the way to think about the per user business is not just per user, it's per agent, and if you sort of say it's per user and per agent, the key is what's the stuff to provision for every agent, a computer, a set of security things around it, an identity around it and all those things are observability and so on are the management layers. And that's I think is going to get baked into that.”

What Satya Nadella said about how AI agents being integrated in Microsoft’s tools

At the podcast, Nadella explained: “Well, let's take even this little thing we built called Excel Agent. Excel Agent is not a UI-level wrapper in this case because we have all the IPs from the GPT family. We are taking that and putting it into the core middle tier of the office system. I need to see both, not just see the pixels; I need to be able to see. Oh. I got that formula wrong, and I need to understand that. So I'm giving it essentially a markdown to teach it the skills of what it means to be a sophisticated Excel user. That's the type of stuff that will get built by everybody. So even for the model companies, they're allowed to compete, right? So if their price stuff high, guess what if I'm a builder of a tool like this? I'll substitute you. And so as long as there's competition where there's multiple models and there's an open source check, there is enough room here to go build value on top of models.”

Nadella highlighted: “Don't worry about the Excel integration. After all Excel was built as a tool for analyst. So whoever is this AI, that is an analyst.”

“I'm building an analyst as essentially an AI agent, which happens to come with an a priori knowledge of how to use all of these analytical tools,” he added.