Copilot Pricing Is Changing: USL, Usage-Based Billing and Copilot Credits Explained

Did you budget for Microsoft 365 Copilot per user, per month? Good, because that part isn't going away. But on September 25, 2026, Microsoft explained that Copilot now has two ways of paying: a fixed price for everyday AI and a meter for agentic AI. In this post, I'll explain the difference, what stays the same, and what you need to set up before your first Copilot Credit is spent.

What is changing in Copilot pricing?

Together with the new Copilot app, Nicole Herskowitz published Evolution of the Copilot pricing model on the Tech Community. The short version: Copilot pricing now has two layers. Microsoft explains it with an analogy I actually like:

"Think of our commercial model as a plug-in hybrid. The USL is the battery: it covers most of your driving at a fixed monthly cost. UBB is the gas tank, there when a task needs more range than the battery can give."

Everyday AI: the user subscription license (USL)

The user subscription license (USL) is the Copilot licence you already know, priced per user per month. Microsoft says plainly that there are "no changes to the value you already have". It covers Copilot in Chat and across Word, Excel, PowerPoint, Outlook and Teams, model selection, and new capabilities and models.

Microsoft's reasoning here is called saturation. Summarising a meeting transcript doesn't get better with a bigger model, because the task never needed one. That's why Auto in the model picker weighs accuracy, speed and cost on each request and picks a suitable model for you. If you'd rather choose yourself, you still can: GPT-5.6 and Sonnet 5 are included, and new models like Opus 5 will be included with limits.

Agentic AI: usage-based billing (UBB) with Copilot Credits

Usage-based billing (UBB) covers work you hand off, like agents that run for hours or workflows that run without supervision. According to Microsoft, that includes:

• Cowork, Code and Autopilot, the new agentic parts of the Copilot app.
• New agentic experiences in apps like SharePoint.
• Frontier models like Fable and Astra, for when you want the best possible model for a task.

UBB is billed in Copilot Credits, and it builds on top of the USL. In other words, you need a USL before you can use UBB at all. Both run on models from multiple labs, which today means OpenAI and Anthropic, with more labs and open-weight models coming.

But wait? Is there a limit on my licence now?

Yes, and there always has been. The USL has always come with fair use, and Microsoft is now setting usage limits "so that the vast majority of people never reach a limit". The heaviest users get a clear warning first and then a choice: switch to Auto at no extra cost, or move to credits.

This is the part I'd watch closely. Your power users are exactly the people who will pick a specific model instead of Auto, and they'll be the first to hit that warning. Make sure your helpdesk knows what the message means before the first ticket comes in.

Why this matters to you

The good news is that nothing gets billed by surprise, at least not for enterprise customers. UBB services stay off until an admin creates a spending policy in the Microsoft 365 admin center, and nothing is billed before that.

But do note two things. First, Microsoft says UBB capabilities are "visible in the product" on purpose. Your users will see Cowork, Code and Autopilot and ask why they can't use them. The pressure to turn it on comes from inside your organisation.

Second, the Tech Community post says the off-by-default rule applies to "enterprise customers". It doesn't say how this works for Business customers. If you're in an SMB tenant, check this in your own admin center before you assume the same default.

How to stay in control of Copilot spend

The spending policy is where you make the decisions. According to Microsoft, you can set:

• Budgets: at tenant and group level, including user-level caps inside group policies.
• Alerts: a notification when spend reaches a threshold you choose.
• What users see at the limit: a warning, a way to request more credits, or no prompt at all.
• Chargeback: assign usage to Azure subscriptions or resource groups, so AI spend ends up in the same budget as the rest of that department's costs.
• Reporting: broken out by user, group, workload, policy and payment method.

On top of that, Microsoft is rolling out new FinOps capabilities now:

• More workloads under cost management: Code and Copilot Managed Runtime, alongside Cowork and the Work IQ APIs. Copilot Studio agents follow in October.
• Model choice per group: choose which model families each group can use. This also limits which models Auto can pick. It's rolling out in Cowork first.
• Consumption insights for Cowork: see which scenarios use the most credits and what they produced.
• Microsoft Graph API: manage spending policies at scale from your own BI and FinOps tools.
• Credit requests into your own workflows: route user requests for more credits into your existing approval process.
• Spend visibility for end users: users can see their credit usage, remaining credits and usage history in Copilot.

Pro tip: start with one spending policy for a small pilot group with a low cap and an alert at, for example, 50% of the budget. You'll learn more from a month of real consumption data than from any pricing calculator. If you're starting with Cowork, my Cowork access and cost article helps with that pilot.

What's next?

Microsoft says some capabilities will start on UBB and move into the USL as the economics allow. Sometimes they'll first arrive with a usage limit. So what's metered today isn't necessarily metered forever.

Final thoughts

Personally? I think Microsoft made the right call by keeping everyday AI at a flat price. Their own argument makes sense: if every prompt costs money, companies ration access and only a few people get to use AI. And I like that UBB is off until you create a spending policy.

My Take: the real challenge isn't the pricing. It's the conversation that follows. Once Cowork, Code and Autopilot are visible to your users, "can we have it?" is only a matter of time. Set up your spending policy on your terms, with a pilot group, before that question lands on your desk.

How are you going to handle Copilot Credits in your organisation? I'd love to hear your thoughts in the comments!

Learn more

• Evolution of the Copilot pricing model | Microsoft Community Hub
• Usage-Based Billing and Cost Management for Copilot Credits | Microsoft Learn
• Introducing the new Copilot with Home, Code and Autopilot - The Official Microsoft Blog