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.
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:
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.
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.
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.
| 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 |
The single highest-priority action is configuring a spending policy before users start hitting UBB-gated features — everything else follows from that decision.
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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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.