Microsoft Copilot licensing in plain English: what each level gives you

The three levels at a glance

Level 1: Copilot Chat, included with Microsoft 365

Copilot Chat comes with Microsoft 365 Business Basic, Business Standard, and Business Premium at no additional cost. Think of it as a secure version of a public AI chat tool, signed in with your work account.

What it gives you:

• Answers and drafts based on the web
• Analysis of files you upload to the chat
• Enterprise data protection, the same commitments Microsoft makes for your email and files
• Limited help in Outlook with your inbox and calendar
• Agents your company builds. Simple ones that use only instructions and public websites are free. Ones that use your company's files or data are billed per use, and your admin has to turn them on.

What it doesn't do: it can't reason across all of your company's files, email, and meetings, and it doesn't include the full Copilot experience inside Word, Excel, PowerPoint, and Teams. That's Level 2.

Level 2: A Microsoft 365 Copilot license for each person

This is the full Copilot experience, licensed one person at a time. Businesses with up to 300 users can buy it as an add-on, called Microsoft 365 Copilot Business, or as part of a plan that includes it: Business Standard with Copilot or Business Premium with Copilot. Larger organizations use Microsoft 365 Copilot.

What it gives you:

• Copilot inside Word, Excel, PowerPoint, Outlook, and Teams, for drafting documents, working with spreadsheets, and catching up on meetings
• Chat that works across the email, files, meetings, and chats that person can already open
• Built-in agents such as Researcher and Analyst
• Your company's own assistive agents, at no extra charge

What's not included: Microsoft now bills some advanced experiences with Copilot Credits, even for licensed users: Copilot Cowork, advanced work in SharePoint and OneDrive, the Work IQ API, Managed Runtime, and Teams Phone Agent. They turn on only after your admin activates usage-based billing and sets up a spending policy. A cap in that policy is optional, so set one if you want a firm limit.

What to know first: Copilot shows each person only what they already have permission to see. That also means if files are overshared, Copilot will find them and bring them up. Once at least one person in your company is assigned a Copilot license, Microsoft makes a set of SharePoint oversharing reports and controls available to your admin in your tenant. How we get businesses ready for Copilot

Level 3: Copilot Credits, for agents and AI in your workflows

Copilot Credits are Microsoft's metered currency for agents and for AI inside Power Platform. They work like a utility meter: you buy monthly packs or pay as you go, and each AI action uses a set number of credits.

You need Copilot Credits for:

• Agents that use your company's data, when people without a Copilot license use them
• Agents published on your website or offered to customers
• Agents that act on their own, such as responding when a new email or request arrives. These usually need credits even for licensed users.
• AI steps in Power Automate and Power Apps, like reading invoices and forms or running AI prompts
• Advanced Copilot experiences for licensed users, such as Copilot Cowork and advanced work in SharePoint and OneDrive, once your admin turns on usage-based billing

AI steps in workflows are changing for many businesses right now. Premium Power Platform licenses stop including AI Builder credits, and Copilot Credits replace them. Read what changes on November 1, 2026

Two examples of usage: reading one page of an invoice uses 8 credits, and pulling plain text from one scanned page uses 0.1 credits.

Microsoft list prices as of October 2026

Prices are U.S. list prices with annual billing. Microsoft changes Copilot plans, names, and prices often, so confirm current details before you buy.

Which mix is right for your business?

• Start everyone on Copilot Chat. It's already part of your plan, and it's a safe way for your team to learn what AI is good at.
• License the people who live in Word, Excel, Outlook, and Teams. A Copilot license pays back fastest for people who write, analyze, and meet all day.
• Add Copilot Credits when you automate. You'll need them for agents that serve unlicensed staff or customers, AI steps in your workflows, and advanced Copilot features. Your admin can set spending limits, so costs stay predictable.
• Fix permissions before you license anyone. Copilot is only as good, and as safe, as the files and permissions underneath it.