- Pay as you go billing for agents built in the M365 Copilot app and SharePoint is managed in the M365 admin center.
- Controls for managing costs and access are not fully deployed, so cost overruns can occur.
- Volume prepurchases of “Copilot Credits” offer lower costs, but credits for M365 Copilot services are difficult to allocate to specific agents and departments.
- Agents requiring more granular control and cost management should be built using Copilot Studio.
Pay as you go (PAYG) billing for M365 Copilot services, which include M365 Copilot Chat and SharePoint agents (lite agents), provides an option to use custom agents without purchasing M365 Copilot licenses. PAYG billing also can be helpful when rolling out new agents or responding to rapid increases in demand. Admins will need to configure billing policies to control who can access M365 Copilot services and to monitor PAYG costs. M365 Copilot services’ agents are hosted in an M365 service environment and should not be confused with Copilot Studio agents hosted in Power Platform environments.
What Is Pay as You Go Billing for M365 Copilot?
PAYG for M365 Copilot is configured in the M365 admin center to enable tenancy-wide consumption of M365 Copilot Chat and SharePoint agent services, avoiding the need to purchase and assign M365 Copilot licenses. These services include agents created in the M365 Copilot app and the SharePoint agent designers but not agents created in Copilot Studio. Additionally, PAYG does not apply to Microsoft-built agents like Analyst and Researcher.
Enabling PAYG billing requires connecting the M365 tenant to an Azure subscription to track consumption and bill usage. Billing policies created in the M365 admin center define teams and departments that can charge against the policy and determine whether the policy applies to M365 Copilot Chat and SharePoint agents.
Charges are billed using “Copilot Credits,” a Microsoft-defined unit that costs US$0.01. The number of credits consumed varies based on the service or how the agent is built. Discounted Copilot Credits for PAYG billing can be purchased in advance through Copilot Credit packs and a Pre-Purchase Plan.
Why Use PAYG Billing?
There are several reasons for using PAYG billing, including the following:
- Enabling users without an M365 Copilot license to use advanced Copilot features
- Allowing organizations not licensing users with M365 Copilot to use custom agents
- Determining usage patterns when deploying new agents
- Adjusting rapidly to changes in demand.
Billing Policies and M365 Copilot Services
Billing policies in the M365 admin center use groups to restrict access to M365 Copilot services, helping manage costs. Although policies can be assigned to “All users,” admins should use specific groups until usage patterns and costs are well understood. There is also a limit of 50 billing policies, so larger organizations should plan how to use them effectively.
Admins can connect a billing policy to M365 Copilot Chat, SharePoint agents, or both.
- The Microsoft 365 Chat service uses PAYG to enable advanced capabilities such as agents grounded in internal business data.
- The SharePoint agents service uses PAYG to enable access to the default SharePoint agent and user-built SharePoint agents.
Budgets can be configured on each policy with alerts that trigger when thresholds are met. However, these budget limits do not stop consumption, and it can take up to 24 hours for alerts to process. Billing policy properties cannot be changed, although their budgets can be modified.
Agent-level controls are rolling out in the next few months in the M365 admin center for granular management of user access, availability of metered usage, and billing policies.
Payment Options and Licensing
Several options are available for purchasing Copilot Credits:
- PAYG is the default option and must be enabled before other options can be applied
- Copilot Credit packs offer a 20% discount on a pack of 25,000 credits that must be used within a month of purchase
- Pre-Purchase Plan (P3) is an annual plan with tiered discounts from 5% to 20% based on the number of credits purchased
- M365 Copilot licenses include the usage of lite agents, so no credits are necessary.
Despite M365 Copilot being an M365 service, the “Microsoft 365 Copilot Chat” environment is accessed through the Power Platform admin center. Credits can be allocated, and overage protection can be configured using available capacity from the tenant and a PAYG billing policy (billing plan in Power Platform) for uninterrupted service. Agent-level controls for M365 Copilot services should be rolling out, similar to the agent controls in Power Platform environments.
However, buying bulk credits for a department’s or team’s M365 Copilot agents is difficult because M365 Copilot Chat and SharePoint agents share the environment and a common credit pool across the organization.
Reporting and Insights
Charging back usage to teams and departments is more feasible for organizations as new capabilities roll out for reporting on granular usage:
- The M365 admin center contains Copilot usage reports, which Microsoft is enhancing over the next few months to show the cost and number of credits by agent and billed credits per user, per agent, and by billing policy
- The Viva Insights Copilot Dashboard hosts the preview of the Agent Dashboard, which tracks Copilot Credit usage and is scheduled for general availability in Mar. 2026
- Microsoft Cost Management in Azure provides insights into Copilot Studio and SharePoint agents usage.
Technical Considerations
PAYG billing for M365 Copilot and SharePoint agents requires an Azure subscription, and only one billing policy can be assigned to a resource group, which helps categorize costs in Microsoft Cost Management. Admins must be a contributor or owner in the Azure subscription to set up billing policies. Each billing policy supports one group for access, so new groups may need to be created to assign appropriate user access.
When a billing policy is created to use prepaid credits in the M365 admin center, a “Microsoft 365 Copilot Chat” environment is automatically created in the Power Platform admin center. After it is created, subsequent M365 Copilot billing policies are connected to it, and it cannot be deleted.
Directions Recommends
Plan billing policies to manage costs and access to M365 Copilot agents. Since there is a limit of 50 billing policies, organizations should plan how to deploy them, particularly if they plan to charge back usage. Billing policies can apply to either Copilot Chat agents or SharePoint agents, and new groups may have to be created to manage access.
Anticipate cost overruns initially while understanding usage and cost models. New controls are rolling out, but cost overruns are likely to occur in the early phases of agent adoption and when deploying new agents. Leverage groups, not “All users,” in the billing policies to limit users accessing agents and expand membership gradually. Consider purchasing credit packs and the Pre-Purchase Plan to maximize discounts. Set the Copilot Credit consumption limit and overage protection on the M365 Copilot Chat environment to minimize risk of overage, and if available use individual agent limits to prevent excess usage.
Transition heavy users of agents to an M365 Copilot license. Heavy usage of agents may indicate a user who is a candidate for an M365 Copilot license. Agent usage is included with the license in most scenarios, eliminating cost variation, but agent usage should be evaluated against providing the additional M365 Copilot features to the user.
Prepare for changing cost models. Although PAYG is typically used as an alternative to M365 Copilot licenses, Microsoft may require PAYG in addition to an M365 Copilot license for some agents to offset the increased cost of AI services. Alternatively, Microsoft may license some agents similarly to users.
Resources
Details of Copilot Studio agent pricing are discussed in the Directions report “Deciphering Copilot Studio Licensing.”
Details about the Pre-Purchase Plan are discussed in the Directions report “How Microsoft’s New Agent Pricing Option Affects Costs.”
SharePoint agents are discussed on the Directions report “Understanding SharePoint Agents.”