New M365 Copilot Pricing Model Notes

Below is a reference to an excellent article about the new pricing models coming to Microsoft 365 Copilot. Here are my takeaways from reading it.

• With the introduction of agentic AI capabilities, a monthly subscription alone is no longer sufficient.  There are two categories of AI usage: Everyday and Advanced.
• Everyday AI will continue to be offered at a fixed monthly subscription price. Unlike other vendors, Microsoft does not meter this usage.  Users can have as many chats as they want using internet and Microsoft 365 data under that fixed price.
• Advanced AI involves agentic capabilities in which users delegate work to AI. Think of it as hands-off work that AI performs on the user’s behalf, including long-running, complex, multistep workflows. Capabilities such as Cowork, Code, and Autopilot will require usage-based billing (UBB) through Copilot Credits. This cost is in addition to the monthly Microsoft 365 Copilot subscription.
• Customers may initially experience sticker shock, but this is a fair way to charge for complex AI usage. Below is a helpful chart comparing Microsoft, Anthropic, and ChatGPT. As you will see, the other providers require usage-based purchases for Everyday AI, and their Advanced AI offerings are more expensive. Ultimately, Microsoft provides access to a broad range of AI solutions at a more efficient price point.
• Microsoft is introducing new controls and reporting capabilities to help customers manage UBB.
• First, UBB is turned off by default and must be enabled by an administrator through a spending policy.
• Spending policies allow administrators to set budgets at the tenant and group levels. They can also set user-level caps within a group and configure warning notifications when thresholds are reached.
• Advanced reporting shows how UBB spending is distributed by user, group, workload, policy, and other dimensions.

Reference: https://techcommunity.microsoft.com/blog/microsoft-copilot-blog/evolution-of-the-copilot-pricing-model/4559416

Grok is coming to M365 Copilot

One of the key differentiators of M365 Copilot compared with other AI solutions is that it gives users the choice to select the model that best fits the work they are doing. Today, users can select from major LLMs provided by companies such as OpenAI, which offers ChatGPT, and Anthropic, which offers Claude Sonnet and Claude Opus.

Microsoft is now expanding its model selection to include SpaceXAI, providing access to models such as Grok.

Grok models will initially be released through the Microsoft Frontier Program and will be available in Word, Excel, and PowerPoint.

Reference: https://techcommunity.microsoft.com/blog/microsoft-copilot-blog/expanding-model-choice-in-copilot-with-grok/4555749

New M365 Copilot Announcements

Microsoft made a major announcement about the “reimagining” of Microsoft Copilot. The major changes are:

• New M365 Copilot Launch Experience
• M365 Copilot’s Expanded Context
• New M365 Copilot Spending Models

New M365 Copilot Launch Experience

Today, you are used to seeing the following options: Chat, Cowork, and Code.

These options are now changing to Home, Code, and Autopilot.

So, what are all these changes about?

The new Home experience brings Copilot Chat and Cowork together. The idea is that you use Copilot Chat as you normally would, and your chats can transition at any time into a Cowork activity, where you delegate tasks for M365 Copilot to execute on your behalf. Home remains the launch point for engaging with Copilot.

Code remains an option; however, in the context of M365 Copilot, it extends solution building beyond developers. It is designed for creating small, purpose-built solutions using natural language. Copilot then chooses an approach and builds the solution for you. Code is powered by GitHub Copilot and runs in a sandboxed environment hosted in your tenant. By leveraging Microsoft IQ, everything you create is grounded in M365 data.

Finally, Autopilot (formerly called Scout) is your digital teammate. You can give it instructions to perform tasks for you over time without having to monitor it. Autopilot can monitor Teams channels and email threads, run recurring work, and more.

M365 Copilot’s Expanded Context

Today, M365 Copilot grounds your business data in M365 through Microsoft IQ. Microsoft IQ has already expanded to give Copilot default access to more data across the Microsoft ecosystem. Fabric IQ incorporates data from more than 10 million semantic models in Power BI. Coming soon, Copilot will also be grounded in Dynamics 365 and Power Platform data.

New M365 Copilot Spending Models

Over the past few months, with the introduction of Cowork and Autopilot, we have learned that the per-user, per-month subscription does not cover the cost of these services. Customers need to purchase Copilot credits.

With this new announcement, Microsoft is providing greater clarity about this model, along with new solutions to help organizations manage costs.

First, customers will continue to purchase M365 Copilot either as an add-on or through the E7 license. This has a set subscription cost, and no credits need to be purchased. Think of this as “Everyday AI” usage, which has a fixed, predictable cost.

Second, there is “Advanced AI,” in which automation and autonomous AI assist users. These capabilities can perform long-running, complex activities that assist users, and they require a usage-based model to cover the cost of running them. Agentic AI capabilities such as Cowork, Code, and Autopilot all fall under this category.

To help customers manage this spending, which is not a fixed cost, Microsoft is providing new cost-management capabilities. Admins can establish spending policies to control costs. For instance, they can create thresholds, implement approval processes for requesting access to credits, and create groups of users with access to specific credit thresholds. Reporting is also available, allowing administrators to review credit usage, determine where value is being realized and where it is not, and restrict access to credits for functions that are not delivering value.

Reference: https://blogs.microsoft.com/blog/2026/09/25/introducing-the-new-copilot-with-home-code-and-autopilot/