Microsoft has changed how it charges businesses for Copilot. In a post on its Copilot blog dated 25 September 2026, the company said Copilot pricing now combines a fixed per-user licence with usage-based billing, metered in Copilot Credits. Routine assistance stays inside the monthly seat. Longer, more autonomous work, which Microsoft calls "advanced AI", is billed by consumption.
For a small business that already pays for Copilot seats, nothing has to change on day one. The question is what happens when staff start using the new agent features, and who has set a limit before they do.
What Microsoft announced
The blog post, "Evolution of the Copilot pricing model", splits Copilot into two commercial layers:
- Everyday AI, covered by the Copilot user subscription licence (USL) and "priced per user per month". Microsoft says this layer includes GPT-5.6 and Sonnet 5, with newer models such as Opus 5 "included with limits", and an Auto model picker that routes each request to a suitable model at no extra cost.
- Advanced AI, which runs on usage-based billing. Microsoft lists agents and long-running workflows, Cowork, Code, Autopilot and its frontier models in this group.
Microsoft's own metaphor is that the licence is "the battery: it covers most of your driving at a fixed monthly cost", while usage-based billing "is the gas tank, there when a task needs more range than the battery can give."
The same day, Microsoft's Partner Center announcements introduced what it calls "the new Copilot", combining Home (chat and Cowork alongside the Office apps), Code and Autopilot, described as "a persistent, proactive, and personal agent hosted in the cloud". The note says the commercial model pairs user subscriptions for everyday use with usage-based billing for "advanced capabilities", and that the new Copilot is rolling out through Microsoft's Frontier early-access programme.
What consumes credits
Microsoft's administrator documentation, Usage-Based Billing and Cost Management for Copilot Credits, describes Copilot Credits as "a common currency for eligible Microsoft services with usage-based billing". At the time of writing the page lists these services as managed by usage-based billing: Cowork, advanced work in SharePoint, advanced work in OneDrive (the first three require a Copilot licence), the Work IQ API for custom apps and agents, the Copilot Managed Runtime, and Teams Phone Agent. Microsoft says it "will add more agents and services over time".
Credits can be paid for in several ways: pay-as-you-go through an Azure subscription, a Copilot Credit Pre-purchase Plan, or prepaid capacity packs. On its Copilot Studio pricing page, Microsoft lists capacity packs of 25,000 Copilot Credits at $200 per pack per month at the time of writing. How many credits a given task uses depends on the work; Microsoft points administrators to a Copilot Credit Estimator for planning rather than publishing a per-task price.
The controls that matter
According to the blog post, "UBB services stay off until an admin creates a spending policy." Microsoft's setup guide walks through what that policy contains, and several defaults deserve attention:
- Organisation limit. When activating the default spending policy, the administrator chooses between "Don't limit monthly spending" and "Limit monthly spending". The first lets the policy draw on the organisation's billing method without restriction.
- Per-user limit. A monthly limit per person is optional, but Microsoft itself advises setting one "to prevent runaway spending of Copilot Credits by one individual user."
- Auto-apply new services. This setting is on by default, which means future Copilot services and agents that Microsoft adds are covered by the policy automatically. Administrators who want to review each new service before staff can use it have to turn it off.
- What happens when prepaid credits run out. The guide states that when prepaid credits are exhausted, "usage automatically continues on a pay-as-you-go basis."
There is a separate trap for businesses that already use pay-as-you-go billing for Copilot Chat or SharePoint agents. Microsoft's pay-as-you-go setup page says that a budget set there "triggers email notifications" but "doesn't enforce the budget or prevent your organization from exceeding it." A budget is an alert, not a ceiling.
Why it matters for smaller businesses
A flat seat price was easy to plan around. Usage-based billing is not. The analyst firm Futurum Group wrote that the change gives buyers "a predictable floor for broad deployment" but shifts the hardest forecasting problem, the cost of long-running agents, onto the customer's finance and IT teams. Large companies have staff to watch cloud bills. A ten-person firm usually has one administrator who also does everything else.
The timing also matters. The independent blog topedia, which tracks Microsoft 365 roadmap changes, notes that the advanced features are scheduled to roll out between October and December 2026. The features most likely to consume credits are arriving now, so this is the time to set limits.
What to do now
- Check whether a spending policy exists. In the Microsoft 365 admin center, go to Copilot, then Cost management. If nobody has activated a policy, the credit-based features stay off.
- If you activate one, set both limits. Choose "Limit monthly spending" for the organisation and add a per-user cap. Start low; it can be raised.
- Decide on auto-apply. If you want to approve each new agent or service before it can spend money, turn off "Auto-apply new services".
- Set alerts to a mailbox someone reads. Alerts are sent daily once a threshold is reached until the month resets or the policy changes.
- Do not rely on Copilot Chat budgets as a cap. On the pay-as-you-go service, Microsoft says budgets only notify.
- Ask your reseller in writing. If you buy through a Microsoft partner, ask whether any new Copilot purchase comes with usage-based billing already switched on, and what limit applies.
Microsoft's per-user licence remains the predictable part of the bill. The new part is metered, and the controls that keep it predictable are in the admin center, not on by default in every case. A short check now costs less than finding out from an Azure invoice.