New Copilot Business Licences Now Bill by Usage – the Settings to Check

If you buy new Microsoft 365 Copilot Business licences from 19 October (2 November if you buy through a partner), usage-based billing comes switched on. That is convenient, because extra AI features work straight away – and risky, because it creates costs that sit in no licence budget until someone deliberately sets the limits.

Microsoft announced the change on 21 September 2026 in the Microsoft 365 Message Center (post MC1476200, "Simplifying AI access: introducing usage-based billing"). It mostly affects smaller companies: Copilot Business is the offer for organisations with fewer than 300 employees.

What exactly changes

Until now, Copilot Business was a classic licence: a fixed price per person per month. That part stays. What is new is a second layer, switched on by default for new purchases:

• Direct from Microsoft: New purchases from 19 October 2026.
• Through a partner (CSP): New purchases from 2 November 2026 – standalone or as part of a bundle.
• What Microsoft sets up automatically: The Azure resources needed for billing and a spending policy with default limits.
• The default limit: USD 10 per person per month for the billable AI features.
• Existing contracts: Unchanged. What your licence includes today stays included.

You are not billed for the chat your staff already use. The charges apply to features Microsoft meters in so-called Copilot Credits – according to Microsoft, these include Copilot Cowork, the agent that completes multi-step tasks on its own, and the Work IQ API. On pay-as-you-go, one credit costs one US cent. How many credits a task uses depends on the model doing the work, how much data it searches, how many tools it calls and how long it runs. A short summary and an hour-long analysis are therefore far apart.

Why this is more than a billing detail

A USD 10 limit sounds harmless. Scale it up anyway: with 50 licences, that is up to USD 500 a month, or USD 6,000 a year – on top of the licence, without anyone placing an order. That is a ceiling, not a forecast. But it is a figure your finance team should know before the first invoice arrives.

More important than the amount is who decides. With the new default, Microsoft makes a budget decision on your behalf: everyone may use paid AI agents up to the default limit. According to Microsoft, the spending policy also covers future eligible services. What affects only Cowork today may include further features tomorrow, without anyone asking you again.

That is no reason to refuse usage-based billing. Agents like Cowork are exactly the kind of AI that takes real work off people's desks – more on that in our article on agentic AI. But a tool that costs money per task needs a rule for who uses it, and for what.

A budget is not a limit

One point that is often confused in practice: Microsoft offers two ways to steer costs.

• Spending limits: In the spending policies in the Microsoft 365 admin center, you set limits for the whole organisation and for individual users. This is the actual cost cap.
• Budgets: A budget on the billing policy only triggers email notifications. According to Microsoft, usage does not stop when it is exceeded.

If you set only a budget and feel covered, you get a warning, not a limit. So check which of the two is actually in place. The cost management dashboard in the Microsoft 365 admin center shows both in one place.

Who the default suits – and who it does not

The default is not wrong. It is just not tailored to anyone.

• Likely a fit: Small teams that already use Copilot actively and want to try agents. A moderate per-person limit is a sensible starting point here.
• Likely not a fit: Companies where many people hold a licence but only a few use Copilot regularly. A blanket limit for everyone is needlessly broad – better to set zero for most and a higher limit for a defined pilot group.
• Needs clarifying: Anyone working with customer data, HR data or confidential documents. Agents that search data on their own raise a permissions question as well as a cost question. If you are unsure how well prepared your organisation is, our AI Readiness Check gives you a first assessment.

One caveat: the new default applies only to new purchases. If you are renewing or adding to existing licences, ask your licensing partner whether that specific purchase counts as new.

What to do now

• Review planned purchases: Find out whether new Copilot Business licences are planned between mid-October and year-end – direct or through a partner.
• Assign ownership: Decide who in the company is responsible for AI usage costs. It is a budget question, not just an IT one.
• Set limits deliberately: After purchase, adjust the spending policy in the Microsoft 365 admin center – for the organisation and per person. Do not accept the default unchecked.
• Add alerts on top: Pair the limit with a budget and notifications, so you see rising usage early.
• Review after a month: Use cost management to see who uses which features, then adjust the limits.

If you want to put your Microsoft 365 environment and licence costs in order more broadly, Cloud & Microsoft 365 gives an overview of how we approach it.