What Microsoft Copilot actually costs.

Copilot has two cost models that confuse people: a flat per-seat license for the everyday assistant, and brand-new usage-based billing in Copilot Credits for agentic work like Cowork. The second one — metered, pay-as-you-go — is where finance teams get nervous. Here's how both work, what a task costs, and exactly how to cap spend. Real July 2026 numbers, including the July 1 bundle shake-up.

01 The flat part: per-seat licenses

The core Copilot assistant (in Outlook, Word, Excel, Teams) is priced per person, per month — predictable and flat, no metering.

With per-seat, an individual prompt has no marginal cost — you've already paid for the seat. Simple and budgetable.

02 The new part: Copilot Credits (usage-based)

For agentic experiences — starting with Cowork (and the Work IQ API) — Microsoft now bills by actual usage in Copilot Credits, a common currency priced at $0.01 per credit. This is the model to understand, because it scales with use rather than seats.

A "task" is a whole multi-step job the agent runs — and it burns credits by complexity:

Billing went live July 1, 2026. Tenants with a Frontier-program user who used Cowork between March 30 and June 16 get a grace period and aren't billed until then. The model you assign to a task (OpenAI, Anthropic, Google, or xAI) also affects how many credits it burns — heavier models cost more per task.

03 Prepaid vs pay-as-you-go

• Pay-as-you-go: maximum flexibility — you pay for exactly what you use at $0.01/credit.
• Prepaid (P3): commit to a usage volume up front in exchange for a discount — better if you can forecast usage.

04 How to not get a surprise bill

This is the part that matters most for businesses, and Microsoft built real controls into the M365 admin center's Cost Management dashboard:

• Hard caps — set a spending ceiling so usage simply stops at your limit.
• Budgets & alerts — get warned before you approach a threshold.
• Policies — control who can consume credits, how much, and where it's allocated.
• Consumption reporting — drill into usage by user, group, or service to find cost drivers.

New in the August 11, 2026 release notes: there is now a second place to watch the meter. Viva Insights gained a Consumption Dashboard that tracks Copilot credit usage across AI services — currently Cowork and the WorkIQ API — and puts budget information in front of the people who own the budget. Two caveats matter before you rely on it: it only reports once usage-based billing is set up via Cost Management in the Microsoft 365 admin center, and access is scoped to managers with at least five direct reports, Insights analysts, and Global administrators — tenant-wide leader access is not in this release. Insights analysts and Global admins also get a Cost Management query template in Advanced Insights.