Microsoft unbundles Copilot on 1 December, then makes metered billing the default in 2027

Four changes in three weeks, and the dates that matter

Microsoft announces licensing changes to partners first, on its Partner Center announcements pages. Between 14 October and 5 November 2026 those pages carried four changes to how Copilot is sold, billed and limited. Together they change the default economics of Copilot for small and mid-sized organisations, and most of the detail sits in partner-facing text that buyers rarely read.

One date has already moved. Usage-based billing by default was originally due on 1 December 2026 and was pushed back on 3 November, after partners asked for more time. The dates in this table are Microsoft's current plan, not fixed commitments.

This piece covers Copilot only. The 5% charge on annual software subscriptions paid monthly is a separate change, explained in Microsoft's 5% CSP uplift.

Copilot without a Microsoft 365 base licence, from 1 December

Microsoft's 14 October announcement is direct: "Beginning December 1, 2026, new Microsoft 365 Copilot and Microsoft 365 Copilot Business offers can be purchased without a qualifying Microsoft 365 base subscription." The new offers are available through every channel, including CSP, for commercial, education, government and nonprofit customers. They carry new product and SKU IDs and are "priced the same as the current offers."

From the same date, the new offers replace the add-on offers for new purchases. The existing offers, renamed with "(add-on)" from 16 October, reach end of sale in CSP on 1 December. Microsoft adds the sentence that matters most to current customers: "End of sale isn't end of life; existing customers can continue to renew and adjust seat quantities."

What does not change for existing customers

Microsoft says no action is required. Product and SKU IDs, pricing, renewal terms, auto-renew settings and service stay as they are, and no migration or licence reassignment is needed. If you already have Copilot as an add-on, 1 December changes nothing on your invoice.

The one practical task is for anyone who automates licensing. Microsoft told partners to update "scripts, catalog mappings, and automations that rely on offer names" by 16 October, because the names changed that day. Licence reports and SaaS management tools that match on names rather than SKU IDs may now be miscounting.

Read the caveat before buying Copilot on its own

The same announcement contains a qualifier that is easy to skip: "Copilot experiences continue to depend on the Microsoft 365 apps and services a customer is licensed for." Removing the purchase prerequisite does not remove the functional one. Copilot in Word, Excel, Outlook and Teams needs those apps and the mail, files and meetings they hold. An organisation that buys Copilot without Microsoft 365 gets a Copilot licence with less to work on.

The clearest beneficiary is a business that runs Microsoft's ERP but another suite for email and documents, the case the Business Central bundles below are built for. For an organisation already on Microsoft 365, the change is administrative.

Promotions that end before the new offers start

Microsoft's 29 October partner note lists two Copilot Business promotions that run until 31 December 2026: 25% off Microsoft 365 Business Basic with Copilot Business for eligible customers, and 15% promotional pricing on Copilot Business bought as a standalone offer for 1 to 300 seats on an annual subscription with annual billing. If you are buying in December, ask your partner which promotion applies to which offer ID, because the note itself warns partners to "confirm the relevant offer and Promo ID when quoting."

Usage-based billing on by default, now from January 2027

The change with the largest potential effect on cost is the one with the least precise date. On 3 November Microsoft wrote: "Usage-based billing is now enabled by default for new Microsoft 365 Copilot Business subscriptions purchased in Cloud Solution Provider (CSP) during Microsoft's FY27 Q3 (January-March 2027), instead of December 1, 2026, as previously announced." Rollout is "planned to begin" in that quarter. No specific day has been given.

What switches on, and the default ceiling

Usage-based billing pays for AI experiences that cost more than a seat licence covers, measured in Copilot Credits. Microsoft's partner note names Copilot Cowork, the Work IQ APIs and GitHub Copilot Harness as eligible experiences, and its admin documentation adds advanced work in SharePoint and OneDrive, the Copilot Managed Runtime, Teams Phone Agent and Code. With billing on by default, Microsoft automatically creates the Azure resources required and applies "a default spending limit for all eligible services of 4,000 Copilot Credits per user per month for all users in the customer's organization."

Pay-as-you-go is the default billing configuration. The limit is adjustable in Partner Center or the Microsoft 365 admin center, and Microsoft warns that "disabling usage-based billing might limit access to AI experiences."

Why the scope sentence matters more than the date

The announcement says this applies to new purchases of Copilot Business licences in CSP, standalone and bundled, and then adds: "New purchases enable usage-based billing by default for existing Microsoft 365 Copilot Business licenses in the tenant." Read literally, a tenant with 50 existing Copilot Business seats that buys a 51st during the rollout has usage-based billing switched on for all 51.

Microsoft's own worked example shows the scale of the ceiling: a customer with 100 Copilot Business users "could consume up to 400,000 Copilot Credits per month under the default spending limit." The partner note does not state a price per Copilot Credit, so the ceiling cannot be converted to currency from the announcement alone. Get that price from your partner or Microsoft's Copilot Credits licensing guide before the rollout.

A ceiling is not a budget

4,000 credits per user is a default chosen to keep features working, not to reflect what a typical user needs. The admin tools are reasonable: the cost management dashboard sets policy and per-user limits, sends alerts and shows consumption by user, group, agent and service. One default deserves attention. Spending policies have an "Auto-apply new services" setting that is on by default, so a policy you write for Cowork will also cover services Microsoft adds later unless you turn it off.

The partner incentive is worth knowing too. Microsoft's note tells partners that "early usage creates a natural path to expanded consumption, upsell conversations" and points them at a Cowork activation incentive. Your partner may be paid to encourage the consumption you are trying to budget, which is a reason to set your own limits.

The Business Central and Copilot Business bundles

On 5 November Microsoft announced two permanent CSP bundles that pair Dynamics 365 Business Central with Copilot Business for customers with up to 300 seats. They appear in the CSP price list preview on 1 December 2026 and go on sale on 1 January 2027, and they can be bought without a Microsoft 365 base subscription.

Prices are US dollar list prices and "subject to change"; local currency prices are promised before release. Microsoft is explicit about the target: existing Business Central customers without Microsoft 365 or Copilot, and new Business Central customers not on Microsoft 365. For Business Central customers who already have Microsoft 365, Microsoft tells partners to lead with Business Standard or Business Premium with Copilot instead.

Is $6 a user worth it?

A saving of under 6% is modest, and the bundle should not be the reason to buy Copilot. The more important point is the same caveat as the standalone offers: Copilot depends on the Microsoft 365 apps a customer is licensed for, and the bundle targets customers who do not have them. A Business Central shop on Google Workspace would be paying for Copilot without Word, Outlook or Teams to use it in, so test what it does in your environment before committing seats. Note also that these bundles count as Copilot Business purchases, so the default-on usage billing above applies to them. Our Dynamics 365 page and Dynamics 365 pricing cover the ERP side, and the wider field is in the ERP category.

Copilot Chat limits for users without a licence

The change most staff will actually notice arrived first. Copilot Chat, the version included with Microsoft 365 for users without a paid Copilot licence, now has limits on more of its features. Microsoft's 4 November partner note says the rollout began on 2 November 2026 for organisations with 2,000 or fewer Microsoft 365 seats and begins on 9 November for larger ones, with admins notified in message centre posts MC1536158 and MC1536163. Image generation already had such limits; the new ones extend the approach to "additional Copilot Chat features and capabilities," which Microsoft does not list.

Copilot Chat "remains included in Microsoft 365 subscriptions," and no admin action is required. The question is how much of it is included, and Microsoft has chosen not to say.

What users and admins see

• Limits apply to Copilot Chat on web, desktop and mobile apps in commercial tenants.
• Limits "can vary throughout the day." Reaching one is described as expected behaviour, and the product tells the user when the feature will be available again.
• Responses already in progress are not interrupted.
• "Admins can't view or adjust them, and Microsoft doesn't publish specific limits because they're subject to change."
• In most organisations the limit message includes an upgrade option that sends a licence request to the admin, who can approve or deny it in the Microsoft 365 admin center. Where self-service purchasing is allowed, users may also see an option to buy a licence themselves.

Read who the announcement is written for

The partner note's subtitle says the limits "create an upsell conversation with your customers," and it tells partners that a view called Users Experiencing Usage Limits shows which customers have users reaching Copilot limits. Your partner can see that your staff are hitting limits that you, the admin, cannot.

What to do this month

Tell the help desk before the tickets arrive; Microsoft recommends this too. Decide whether users may buy Copilot directly, and turn off self-service purchases per product in the admin center if not, so licences do not appear on expense reports. Set a policy for licence requests. And keep a simple record of which teams hit limits and how often. Because the limits are unpublished and can change, your own log is the only evidence you will have when deciding whether paid seats are justified.

What to do before 1 December and before January

Before 1 December

• Check your automation. Anything matching Copilot offer names has been reading "(add-on)" names since 16 October. Switch to product and SKU IDs.
• Decide whether to buy before or after. Price is unchanged, so the decision rests on the promotions that run to 31 December and on which offer ID they attach to. Ask the partner in writing.
• Write down your Copilot Chat policy. Licence requests, self-service purchasing and help desk guidance, as above.

Before January to March 2027

• Get the credit price. Without it the 4,000 credit ceiling is not a number you can budget.
• Time seat purchases deliberately. If any Copilot Business seats will be bought in the rollout window, assume the whole tenant's Copilot Business licences move to usage-based billing on by default, and agree spending limits first.
• Set limits below the default for groups that do not need Cowork or the other metered experiences, and review the "Auto-apply new services" setting on each policy.
• Agree who owns the meter. A variable cost needs an owner before the first invoice, not after. Atlassian buyers faced the same question with Rovo credits from 3 December.

If you are also handling the end of Office 2021 and Windows 11 24H2 servicing, the 13 October retirements are the other Microsoft licensing work likely to land on the same desk this quarter.

Alternatives, and the bigger pattern

None of these changes makes Copilot worse at what it does. They make its cost less predictable and its free tier less generous, which is reason enough to price three alternatives at renewal.

Google Workspace with Gemini

Google includes Gemini in its Workspace business plans rather than selling it as a separate seat. On Google's pricing page, Business Standard and above include Gemini in Gmail, Docs, Sheets, Slides, Drive, Meet and Chat, while Business Starter has more limited access, and the business plans are capped at 300 users. The trade-off is that switching to it means replacing Microsoft 365 itself, not just the assistant, which is a migration rather than a purchase. Higher AI access is also sold separately as an add-on, so Google's model is not free of extra charges either. See Google Workspace pricing and the head-to-head in ChatGPT vs Google Workspace.

ChatGPT Business

ChatGPT Business is sold from two users, billed monthly or annually, and sits alongside whatever office suite you already run. The trade-off is the opposite of Copilot's: it does not live inside Microsoft 365 apps by default, so the integration Copilot sells as its main advantage has to be built through connectors and habit. The OpenAI pricing page we checked did not show a Business per-seat price, so get a quote; our ChatGPT pricing page tracks it.

Claude for Work

Anthropic's team and enterprise plans for Claude occupy similar ground to ChatGPT Business: a separate assistant with its own admin controls, with Claude Code available for engineering teams. The same trade-off applies: it is an addition to Microsoft 365 rather than a replacement for Copilot's in-app features. Compare the two standalone assistants in ChatGPT vs Claude and check Claude pricing before assuming it is cheaper.

The pattern

Copilot is following the arc we described in the AI tier you did not ask for: an included tier that sets the habit, limits on that tier, a paid seat, and a meter on top of the seat. Set your limits before January rather than learning them from an invoice. For the wider market, see the AI category and Microsoft 365 alternatives.

Questions people ask

Do I still need a Microsoft 365 licence to buy Copilot?

Not from 1 December 2026. New Microsoft 365 Copilot and Copilot Business offers can be bought without a qualifying Microsoft 365 base subscription, at the same price as the current offers. Microsoft notes that Copilot experiences still depend on the Microsoft 365 apps and services you are licensed for, so Copilot without those apps has less to work with.

What happens to my existing Copilot add-on subscription?

Nothing you need to act on. The add-on offers were renamed with "(add-on)" on 16 October 2026 and reach end of sale in CSP on 1 December 2026, but Microsoft says existing customers can continue to renew and adjust seat quantities, and product IDs, pricing and renewal terms are unchanged.

When does usage-based billing become the default for Copilot Business?

During Microsoft's FY27 Q3, January to March 2027, for new Copilot Business purchases through CSP. It was originally due on 1 December 2026 and was moved on 3 November. No exact day has been announced.

What is the default Copilot Credit limit?

4,000 Copilot Credits per user per month, applied to all users in the organisation, on pay-as-you-go billing. Admins can change it in Partner Center or the Microsoft 365 admin center. Microsoft's example is 100 users consuming up to 400,000 credits a month under the default limit. The announcement does not state a price per credit.

What are the Copilot Chat limits for users without a Copilot licence?

Microsoft does not publish them. They began on 2 November 2026 for tenants with 2,000 or fewer seats and on 9 November for larger tenants, can vary through the day, and cannot be viewed or adjusted by admins. Users who reach one see when the feature will be available again and usually an option to request a Copilot licence. Copilot Chat remains included in Microsoft 365.

How much is the Business Central and Copilot Business bundle?

From 1 January 2027, for up to 300 seats: Business Central Essentials with Copilot Business at $95 per user per month against $101 bought separately, and Business Central Premium with Copilot Business at $125 against $131. Both are US dollar list prices and subject to change.

What are the main alternatives to Microsoft 365 Copilot?

Google Workspace includes Gemini in its Business Standard and higher plans but means leaving Microsoft 365. ChatGPT Business and Claude team plans work alongside any suite but do not sit inside Word, Outlook and Teams the way Copilot does.

Sources

Every price, limit and date above was checked against these pages on the day shown. Where a figure has since moved, the vendor’s own page is the authority and this one is a snapshot.

1. 1October 2026 announcements, Partner Center · MicrosoftThe 14 October "Copilot offers and name updates" notice (standalone offers, "(add-on)" renaming, end of sale) and the 29 October Copilot Business promotions.Checked 6 November 2026
2. 2November 2026 announcements, Partner Center · MicrosoftThe 3 November usage-based billing date change and 4,000 credit default, the 4 November Copilot Chat limits notice and the 5 November Business Central bundles.Checked 6 November 2026
3. 3MC1536158: Limits in Copilot Chat · Merill Fernando, Microsoft 365 Roadmap and Message Center archiveThe admin message centre post: limits for unlicensed users, no admin visibility or control, help desk guidance.Checked 6 November 2026
4. 4Usage-based billing and cost management for Copilot Credits · Microsoft LearnWhich services are billed in Copilot Credits, the cost management dashboard and the "Auto-apply new services" default.Checked 6 November 2026
5. 5Google Workspace pricing · GoogleGemini features by Workspace plan and the 300 user cap on business plans.Checked 6 November 2026