Microsoft Delays Default Copilot Usage-Based Billing To Dec. 1, Adds Spending Cap Option

Originally set to start Nov. 2, usage-based billing (UBB) by default is now set to start Dec. 1.

Microsoft has delayed its plan to enable usage-based billing by default for new Microsoft 365 Copilot Business subscriptions purchased through the Cloud Solution Provider (CSP) program while also providing more details on the plan, which could affect what artificial intelligence products and services customers use and how customers use them.

Originally set to start Nov. 2, usage-based billing (UBB) by default is now set to start Dec. 1, according to the Redmond, Wash.-based vendor. Instead, on Nov. 2, Microsoft will release Partner Center sandbox environments so that solution providers and other members of its 500,000-member ecosystem can become technically ready and test UBB.

Microsoft also revealed that Copilot Business licenses will have an adjustable default spending limit automatically set at 4,000 Copilot Credits per user per month and a geographical rollout plan. The vendor also made adjustments to its “Copilot in 30” offer to try out Copilot Business licenses and issued more explainers for how Copilot Credits work with various Microsoft products and services.

[RELATED: Microsoft Usage-Based Billing In Copilot Business: 5 Things To Know]

CRN has reached out to Microsoft for comment.

Chris Regan, managing partner at Spring Lake, N.J.-based Microsoft solution provider B&R Business Solutions, told CRN previously that the shock to clients of consumption-based Microsoft AI tools has subsided after Microsoft Copilot Cowork became generally available in June.

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.

The move to make usage-based billing by default for certain Copilot licenses tracks with Microsoft executives, including CEO and Chairman Satya Nadella, publicly predicting a license-plus-consumption pricing model for Copilot and AI tools.

Under that pricing model, users receive a certain amount of compute under the license—Copilot Business plans range from $18 to $32 per user per month—with Microsoft charging users based on consumption for more advanced AI usage, akin to how cloud vendors can price their products and services.

Partners can also use this as an opportunity to tell customers about the value that usage-based products like Cowork in Copilot can bring, according to the vendor. The goal with consumption enabled by default is less effort by solution providers and other partners on multistep billing configuration and more time spent activating more advanced Copilot and AI use cases.

Microsoft Delays UBB Rollout

A frequently asked questions (FAQ) document updated by Microsoft on Wednesday explains that UBB will apply to purchases of Microsoft 365 Copilot Business, Microsoft 365 Business Premium with Copilot, Microsoft 365 Business Standard with Copilot, Microsoft 365 Business Basic + Microsoft 365 Copilot Business and other “B” forms of Copilot, according to the vendor.

Partners and customers that buy new Copilot Business subscriptions, buy additional Copilot Business seats for an existing subscription and upgrade to Copilot Business licenses will fall under usage-based billing enabled by default starting Dec. 1.

Partners who receive a new Copilot Business subscription from a customer’s prior solution provider after the start date will also see UBB on by default.

Generally available products and features that fall under usage-based billing include Copilot Cowork, Work IQ APIs and GitHub Copilot Harness. Copilot in SharePoint and other long-running agentic AI capabilities also count.

Some limited access products through Frontier Early Access and other programs also use usage-based billing. Those include Code and Autopilot, formerly known as Scout.

Automatic Azure Subscriptions

The document also explains how Copilot Business licenses impact users with existing subscriptions to Microsoft’s Azure cloud service and customers who don’t have Azure subscriptions.

Azure subscriptions will be set up by default once the Copilot Business license is purchased, whereas before, partners and customers had to set up Azure subscriptions when they wanted to enable usage-based billing for Copilot products, according to the vendor.

If the customer didn’t have an Azure subscription or spending plan before, the customer will receive an Azure plan, an Azure subscription, a resource group and a default usage-based spending policy that defines constraints once the Copilot Business license is purchased.

For customers with existing Azure subscriptions, partners can assign billing to that existing subscription. If the existing subscription isn’t selected, a new subscription is created. Partners can later change which subscription captures usage-based charges through spending policy edits.

Partners don’t have properties to identify subscriptions created automatically or manually, but the subscription will have the spending plan aligned to it. Partners can call the API to get the Azure subscription, resource group and other spending plan details.

CSP partners can have different Azure plans for a single customer, but that rarely happens, according to Microsoft. Distributors might have multiple resellers managing a single customer’s different subscriptions. In these cases, distributors can create the spending policy under whichever reseller they select.

Microsoft Sets Default 4,000-Credit Spending Limit

Along with the rollout delay, Microsoft revealed that partners will have a default billing cap of 4,000 Copilot Credits—about $40—per user per month for M365 Copilot Business licenses. Partners can set the spending limit to zero to turn off usage-based billing.

As an example of what 4,000 Copilot Credits can get a user in a month, that amount of credits would allow a user four weekly Cowork customer meeting preparation and follow-up sessions, four weekly inbox triaging sessions, four weekly commit and pipeline risk reviews, two request for proposal (RFP) responses and compliance matrix completions and a generated branded customer pitch deck.

Those credits also allow for Cowork to prepare paid time off (PTO) backfill documents twice a year, according to Microsoft.

Microsoft hasn’t enabled a scale configuration for solution providers to disable UBB across customers instead of tenant by tenant, but partners can automate scaling through API support for purchase and spending policy management.

Solution providers can change the cap. Partners also have the ability to determine who can use usage-based Copilot services, what services they can access, how much they can spend and which billing method pays for that usage, according to Microsoft.

Billing is pay-as-you-go, so customers will be charged for actual usage, according to Microsoft. An example the vendor used is that a customer with 100 Copilot Business users can consume up to 400,000 Copilot Credits per month under the default spending limit, with charges based on actual usage.

Users are notified when they hit their limit and can request more directly from the user interface (UI). Administrators can then review and approve the request based on cost, policy and compliance. Users receive an approval notice by email and within the application.

Partners Can Expect API Changes, Continued Financial Responsibility

Solution providers don’t need to change the application programming interfaces (APIs) they use to make purchases. Partners will gain a new property for using catalog APIs to detect whether a Copilot product has usage-based billing on.

Partners will also have a new API to enable and edit spending policy properties created at purchase. Partners can choose to pass inputs to purchase if they want to define details about the Azure artifacts and placement of the subscriptions capturing the usage-based consumption charges, according to Microsoft.

Partners who need months to enable API changes won’t be blocked for purchases. They can use the Partner Center portal to make updates to spending policies after a purchase. Only direct-bill solution providers and distributors submit transactions through Partner Center. Resellers using distributors do not.

Consumptive charges still flow through the CSP’s invoices. The transacting partner that receives the bill is ultimately responsible for all charges under the CSP transacting account, including unexpected consumption. Partners have escalation procedures for incorrect subscription mappings and other billing disputes.

IT administrators can also turn off Cowork and usage-based products to make sure end users don’t discover them. Admins can keep Copilot Credits and usage-based billing off in the Microsoft 365 admin center, avoid creating spending policies for UBB capabilities and periodically review the admin center’s Cost Management tool to make sure UBB services are off.

Phased Geographical Rollout

For the rollout, Microsoft said usage-based billing will roll out first into “supported markets,” although the vendor did not list the supported markets.

Microsoft did share a list of countries that won’t initially support usage-based billing. Those countries are Australia, Belgium, Brazil, France, Germany, India, Italy, Korea, the Netherlands, Poland and Spain.

“We’ll share additional information as availability expands to these markets,” according to Microsoft.

“Copilot in 30” Trial Updates

On Wednesday, Microsoft updated a document focused on its “Copilot in 30” trial option to say that only customers new to M365 Copilot are eligible for the trial, which provides 25 users with 30 days of Copilot access and gives solution providers a chance at showing customers targeted Copilot scenarios, adoption guidance, measurable usage outcomes and more.

Microsoft updated the documents to say that “customers with existing Copilot seats are not eligible” for Copilot in 30. Microsoft’s version of the document from Sept. 23, reviewed by CRN, allowed Copilot Business trials “for eligible SMB customers with at least 50+ seats of Microsoft 365 Business Basic, Business Standard, or Business Premium subscriptions.”

The old version of the document said that “while not required, partners should prioritize customers who are new to Microsoft 365 Copilot so the trial can clearly demonstrate business value and support conversion planning.”

The old version also said that “partners should prioritize customers who are new to Microsoft 365 Copilot because they are most likely to benefit from a structured evaluation period, targeted enablement, and clear measurement of business value,” although “both new and existing customers may be eligible” for trials.

Microsoft also updated its Copilot Credits Guide Thursday to add details around how Copilot Credits work under additional workloads. Microsoft added explainers for Copilot Code, Copilot in SharePoint and Teams Phone Agent.

Microsoft already had explainers for how credits work in Copilot Cowork, Work IQ APIs, Microsoft Copilot Studio, Copilot Managed Runtime and business applications.