The billing shift starts Nov. 2, according to Microsoft.
Microsoft solution providers will soon have to navigate the new on-by-default usage-based billing for eligible services used under Microsoft 365 Copilot Business licenses aimed at small and midsize businesses with up to 300 seats per tenant.
The Redmond, Wash.-based technology giant revealed the new billing configuration, which starts Nov. 2, just as it starts to roll out new capabilities and ways to experience its flagship Copilot artificial intelligence tool. Copilot is getting a new Home starting point, a Today command center and a Code tool for creating applications with natural-language prompts, among other innovations.
Chris Regan, managing partner at Spring Lake, N.J.-based Microsoft solution provider B&R Business Solutions, told CRN in an interview that the shock to clients of consumption-based Microsoft AI tools has subsided after Microsoft Copilot Cowork became generally available in June.
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More Microsoft customers have been demanding Cowork, with B&R seeing an increase in business in educating customers on Cowork and how consumption pricing works.
“It’s definitely a new revenue stream for us,” Regan said.
A majority of his customers are still accomplishing AI tasks under the basic compute allotment from licenses, but B&R is increasingly turning on pay-as-you-go services for client users leveraging agents and performing more advanced AI tasks, with B&R setting spending quotas to keep AI budgets in check. He’s even found himself surprised by the types of users that have leaned heavily into AI agents.
“We are finding that there are users who we would have never expected in a million years that are using this stuff,” Regan said. “They are hitting the quota. And then they’re a week into the month, and then they’re like, ‘I need to increase the quota. I need to increase the quota. I need to increase the quota.’”
For Microsoft solution providers, consumption by default should result in a simpler customer on-boarding experience with less “billing friction,” Nicole Dezen, Microsoft’s chief partner officer and corporate vice president of global channel partner sales, said in a statement Friday.
Usage-based billing by default should make “it easier to activate eligible experiences such as Copilot Cowork, Work IQ application programming interfaces, and GitHub Copilot Harness in Copilot Studio,” Dezen said. “Partners can focus less on billing configuration and more on driving adoption, demonstrating business value, and expanding customer consumption over time.”
CRN has reached out to Microsoft for comment.
Microsoft’s License-Plus-Consumption Model
New usage-based billing by default will apply for stand-alone and bundled M365 Copilot Business licenses purchased through Microsoft’s Cloud Solution Provider (CSP) program many solution providers participate in, according to the vendor.
Nicole Herskowitz, corporate vice president of Microsoft 365 and Copilot, said in a statement Friday that everyday AI activities will continue to be covered by the Copilot user subscription license priced per user, per month. Everyday AI tasks include turning a meeting transcript into bullet points and summarizing documents—activities where a more capable model doesn’t change the result, and so Microsoft can charge a fixed price under a license.
Copilot’s Auto model picker ability routes user queries based on accuracy, speed and cost, but license-based users can also pick from some models including GPT-5.6 and Sonnet 5. Microsoft expects to add more models with limits, including Opus 5, Herskowitz said.
The Copilot licenses have usage limits, but most users never reach them, she said. Heavy users can receive limit warnings and a choice to switch model selection to Auto at no additional cost or move to consumption-based credits.
Microsoft usage-based billing is based on Copilot Credits. Microsoft charges 1 cent per Copilot Credit, with credits used based on the models leveraged for each task, the runtime, the context needed for the agent to perform the work and the actions the system needs to take to complete the work.
Although new Copilot Business licenses will be consumption by default starting Nov. 2, customers can keep usage-based billing services off until administrators create a spending policy in the Microsoft 365 administrator center. Nothing is billed before that, according to Microsoft.
Administrators can set tenant- and group-level budgets, including user-level caps inside group policies. Administrators can set alerts when spending hits a threshold and control whether users reaching a limit receive a warning, a way to request more or no prompt at all.
Users who manage departmental costs through Azure subscriptions or resource groups can assign usage so AI spend shows up in the same place as everything else. They can receive reporting by user, group, workload, policy and payment method.
New Revenue Opportunities For Partners?
The new Copilot capabilities promise solution providers ways to build differentiated software, end-to-end transformation services and recurring revenue, Dezen said in her Friday statement. Users moving from individual AI assistance use cases to delegated, automated, agent-powered work are ripe for partner-built products, services delivery, consumption expansion and other ways to engage.
Systems integrators can leverage the new offers for identifying high-value adoption areas for clients, redesigning processes as AI-led workflows, establishing data security and governance foundations, securing agentic estates, building and deploying prebuilt and custom agents, managing consumption spend and training clients’ employees among other engagements, according to Microsoft.
Building and managing an AI Center of Excellence offers partners a repeatable source of revenue, according to Microsoft.
Microsoft is expecting more than double the growth year on year in expected revenue for its agent solution area and more than double the growth in managed services revenue across Microsoft AI, notable opportunities for solution providers diving into the AI opportunity, according to the vendor.
Solution providers with development arms can build products and leverage shared connectors, skills and plug-ins for consistent experiences across Copilot, according to Microsoft. Products including Copilot Studio and GitHub Copilot Harness aim to bring down the cost and effort of building agents while maintaining the Microsoft identity, governance and life-cycle management side.
Partners can package skills and connectors as M365 applications and publish them on Microsoft’s marketplace.
Along with the licensing changes, Microsoft revealed a host of product advancements and updates, some of which might help solution providers with forecasting and managing clients’ Copilot and AI costs.
Microsoft has moved more workloads under Copilot’s cost management feature as part of the product changes. Cost management now adds Code and Managed Runtime alongside Cowork and Work IQ. Copilot Studio agents will get added in October, with more AI workloads to follow, according to Microsoft.
Administrators will receive the ability to match models to users, groups and scenarios, with a Cowork option rolling out now and more workloads to come, according to Microsoft. Admins can also see which scenarios drive credit consumption and what they produced for evaluating what work to keep the same, expand or optimize.
Microsoft Graph API can manage spending policies at scale in business intelligence and FinOps tools of choice for automation enablement. And end users themselves can see credit usage, remaining credits and usage history within Copilot for self-management.
Some capabilities starting in usage-based billing can move under license use as they get better, more efficient and more economical, according to Microsoft. They also might have a usage limit so that users can still experiment with the models.
And Microsoft introduced a cost governance tool called FinOps for AI for solution providers to use with Code and Copilot Managed Runtime. Support for Copilot Studio custom agents is expected in October, according to the vendor.
With the FinOps for AI tool, solution providers can establish budgets, limits and policies for the new usage-based capabilities, according to Microsoft.
Microsoft may not be “the flashiest AI company out there,” Jared Spataro, Microsoft chief marketing officer for AI at work, wrote in a blog post Wednesday, but the vendor is “purposefully understated, because the work that runs a company isn’t a demo, and it doesn’t reward hype.”
“It rewards systems that show up every day and do the job,” Spataro said. “We build with the conviction that AI should expand human agency, not narrow it—giving your people better tools to do their best work and take on harder problems. Our job is to give you the platform, the economics, and the partnership to choose well, and to make AI matter where it matters most: in the work, and the people that move your business forward.”
