Copilot Credits & Usage-Based Billing MC1479276: What Admins Must Do
Microsoft is splitting Copilot into two billing tracks under Message Center item MC1479276 - a flat per-user licence for everyday AI, and usage-based billing (UBB) through Copilot Credits for frontier models and advanced AI.
UBB starts rolling out in Q4 CY2026, and nothing is billed in your tenant until an admin creates a spending policy in the Microsoft 365 admin center.
Action needed now: decide your spending policy, model/effort-level assignments, and budget limits before end users start seeing frontier-model prompts.
What Is Changing in the Copilot Pricing Model? (MC1479276)
Microsoft is introducing a second Copilot billing track. Everyday AI stays on the existing per-user licence; advanced AI and frontier models move to consumption-based Copilot Credits.
Today, every Microsoft 365 Copilot user pays a fixed per-user, per-month price through the Copilot user subscription licence (USL). That licence already includes model selection and Auto, the routing logic that weighs accuracy, speed, and cost on each request to pick the best model and reasoning effort for the job.
As AI models get more capable, and more expensive to run for longer, more complex work, Microsoft is layering a second track on top: usage-based billing (UBB), consumed through Copilot Credits. Users will encounter UBB in two situations:
- When they deliberately use a frontier model or an advanced AI capability
- When they hit a usage limit on their everyday AI allowance and choose to extend it with credits
Why Does Microsoft Need Usage-Based Billing for Copilot?
Frontier models cost significantly more to run than the models covered by the standard licence, so Microsoft is decoupling "everyday" AI cost from "advanced" AI cost instead of raising the price for everyone.
This keeps the USL price predictable for the bulk of day-to-day AI use, while letting organisations opt into (and pay for) heavier workloads like Copilot Code, Autopilot, and large-scale agentic work in SharePoint and OneDrive only where they actually want it. It also means cost now maps more directly to consumption, which is the whole premise behind the new FinOps for AI tooling below.
How Does Usage-Based Billing (UBB) Actually Work?
UBB entry points are visible to every user by default, but nothing is billed, and nothing works, until an admin explicitly creates a spending policy.
- UBB capabilities are visible in-product to all users with a Microsoft 365 Copilot licence, regardless of tenant configuration
- Until an admin creates a spending policy, users without one will see either a "Request access" or "Learn more" message when they click into a UBB-gated capability — the older admin setting that hid usage-based experiences entirely is being removed
- Once a spending policy exists, users assigned to it can consume Copilot Credits for the capabilities within scope
- End users can see their own UBB spend inside the Cowork experience: credit usage, remaining credits, credit history, and banners as they approach their limit
- Admins can edit billing methods on existing spend policies after they're created. This isn't a one-time, set-and-forget configuration
What Are the New FinOps for AI Capabilities?
Alongside UBB, Microsoft is shipping a matching set of admin tools to control spend, assign cost by team, and connect Copilot usage to business value, not just track it.
- Cost management in the Microsoft 365 admin center is expanding beyond Copilot Cowork and Work IQ APIs to cover Copilot Code, Copilot Managed Runtime, and advanced SharePoint/OneDrive work in Copilot with Copilot Studio agents joining the same umbrella from October 2026
- Spending policies let admins assign models and effort levels by group, balancing cost against business impact including which models Auto is allowed to select in Cowork
- Consumption dashboards in Viva Insights give leaders a view of how Cowork drives completed work, not just usage frequency, so credit consumption can be connected to outcomes
- Editable billing methods: admins can now change the billing method on an existing spend policy without recreating it
USL vs. UBB: How the Two Copilot Billing Tracks Compare
| User Subscription Licence (USL) | Usage-Based Billing (UBB) | |
|---|---|---|
| Covers | Everyday AI, Auto model routing | Frontier models, advanced AI, Copilot Code, Autopilot |
| Billing | Fixed price per user, per month | Copilot Credits consumed per use |
| Activation | Included automatically with licence | Requires an admin-configured spending policy |
| Visible to users by default | Yes | Yes (entry points visible; consumption blocked without a policy) |
| End-user visibility into spend | N/A | Credit usage, remaining credits, and history in Cowork |
| Admin controls | License assignment | Spending policies, budget limits, model/effort assignment by group, editable billing methods |
| Rollout | Already generally available | Rolling out from Q4 CY2026, including as part of the Frontier public preview |
What Admin Actions Are Required Before Copilot Credits Roll Out?
The single highest-priority action is configuring a spending policy before users start hitting UBB-gated features — everything else follows from that decision.
- Go to Microsoft 365 admin center → Copilot → Cost management and review the current usage-based billing settings for your tenant
- Decide whether users without a spending policy should see "Request access" or "Learn more". This replaces the old all-or-nothing toggle for hiding usage-based experiences
- Assign models and effort levels by group so higher-cost models and frontier AI are only available where the business case justifies it
- Set budget limits and alerts so Copilot Credit spend doesn't run ahead of finance's expectations
- Brief finance and FinOps stakeholders directly. This is a genuine billing model change with real invoice impact, not a feature flag
- Review the Copilot Credits licensing guide and the AI cost dashboard in Viva Insights before end users start asking questions
- Read the related Message Center item MC1479277, which layers Copilot's new Home, Code, and Autopilot experience and general availability of Copilot in SharePoint and OneDrive directly on top of this same spending-policy gate
Don't Let a Billing Model Change Catch You Off Guard
Copilot's move to usage-based billing is the most consequential change to Microsoft 365 AI costs since Copilot licensing launched — and it lands with new admin surfaces to configure, not just a new invoice line. ChangePilot tracks Message Center and Roadmap changes like this across your tenant, so spending-policy decisions like this one never slip through with everything else Microsoft ships in a given month.
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Frequently Asked Questions
Do we need to configure anything before usage-based billing starts?
Yes, if you want any user to be able to consume Copilot Credits. UBB entry points are visible by default, but no credits can be consumed until an admin creates a spending policy in Microsoft 365 admin center → Copilot → Cost management.
Will this change what we pay for our existing Copilot licences?
No. The existing per-user Copilot subscription licence continues to cover everyday AI and Auto model routing at its current price. UBB is an additional, optional track for frontier models and advanced AI on top of that licence.
What happens to users who don't have a spending policy assigned?
They'll see either a "Request access" or "Learn more" message when they try to use a UBB-gated capability, depending on the option an admin selects. Education tenants only see "Learn more" and cannot request access.
Can we control which teams get access to the most expensive models?
Yes. Spending policies let admins assign models and effort levels by group, so you can restrict frontier models and higher-cost reasoning effort to the teams where the business case justifies it.
Does this affect Copilot Studio agents too?
Not yet, but it's coming: cost management for Copilot Studio agents joins the same FinOps umbrella from October 2026, alongside the related cost visibility in Agent Evaluations roadmap item.
Where can we see how much we're actually spending?
End users can see their own credit usage, remaining credits, and history inside the Cowork experience. Admins get a broader view through the consumption dashboard in Viva Insights and the cost management view in the Microsoft 365 admin center.
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