WorkSmart-AI briefing
Copilot licensing decoded
Nine products share the name. Three pricing models sit underneath them. This is what each one actually is, what it costs, and what you get.
Why everyone is confused
The confusion is not your fault. Four things happen at once.
One word, nine products
Copilot names a free chatbot, a paid seat, an agent builder, a governance layer and a coding tool. They share a brand and almost nothing else.
The names keep changing
Microsoft 365 Copilot became the Microsoft Copilot app in August 2026. The old name still appears across Microsoft's own documentation.
Free and paid look identical
Copilot Chat and the paid seat share a window. Staff who have one and expect the other conclude the product is broken.
The pricing model changed
A seat used to cover everything. Since 2026, delegated tasks and custom agents are metered separately on top of it.
A licence is now permission to start spending, not a bill already paid.
The decoder
When someone says "we have Copilot", the useful question back is: which one, and can you see your own files in it?
| The name you'll hear | What it actually is | How it's paid for |
|---|---|---|
| Copilot Chat | Free AI chat for anyone with a work account. Grounded in the public web, with enterprise data protection. | Included |
| Microsoft Copilot was Microsoft 365 Copilot | The paid seat. Copilot inside Word, Excel, PowerPoint, Outlook and Teams, grounded in your own tenant data. | Per user |
| Microsoft Copilot Business | The same idea, packaged for organisations under 300 seats. | Per user |
| Copilot Cowork | Long-running, delegated multi-step tasks. Needs a seat, but the seat does not pay for it. | Metered |
| Copilot Studio | The tool for building your own custom agents. | Metered |
| Work IQ API | The data and context layer, exposed to developers building their own agents. | Metered |
| Agent 365 | Governance and security for AI agents. Not an AI tool: a control plane. | Per user |
| Security Copilot | Copilot for the security operations team. Now included in E5 and E7. | Included |
| GitHub Copilot | Code completion for developers. An entirely separate product and bill. | Per user |
| Copilot Pro / Microsoft 365 Premium | The consumer subscription. Does not apply to work accounts. | Personal |
What you actually get
Almost every conversation reduces to three tiers. They are cumulative: each one needs the one before it.
- AI chat grounded in the public web, not your organisation's files
- File uploads, image generation, Copilot Pages
- Prompts and responses are not used to train models
- Since July 2026, also inbox and calendar awareness plus Word, Excel and PowerPoint agents
The limit that mattersIt does not know your organisation. It cannot answer "what did we agree in Tuesday's meeting" or "summarise this year's applications".
- Copilot inside Word, Excel, PowerPoint, Outlook, Teams and OneNote
- Chat grounded in your tenant: email, files, meetings and chats
- Enterprise search across work data, with 100+ line-of-business connectors
- Researcher and Analyst reasoning agents, capped at 25 combined queries per user per month
- Copilot Notebooks, Copilot Pages and Agent Mode in the Office apps
- Copilot Analytics and the adoption dashboard for measuring rollout
Worth knowingThis is the tier the demos show. It is what people mean when they say Copilot "understands our work".
- Cowork for delegating a long task and walking away
- Custom agents built in Copilot Studio and run by unlicensed staff
- Work IQ API for developers building against Microsoft 365 context
- SharePoint agents and the Retrieval API on pay-as-you-go
The exemption that saves moneyLicensed users do not pay credits for internal agent use. A fully licensed team can build and use agents without metering, and only spends credits when it reaches for Cowork or the API.
What it costs
Microsoft's published UK list prices, August 2026. Credits and some SKUs are priced in US dollars only, and are shown as published rather than converted.
| Product | Annual, paid yearly | Notes |
|---|---|---|
| Copilot Chat | £0 | Included with eligible Microsoft 365 subscriptions |
| Microsoft Copilot enterprise add-on | £23.10 | £24.26 paid monthly on an annual commitment. Requires a qualifying Microsoft 365 plan |
| Microsoft Copilot Business add-on, under 300 seats | £13.80 | Promotional, from a £16.10 list. Promo runs to 30 September 2026. £19.32 on a monthly commitment |
| Business Standard with Copilot | £18.10 | Bundle. £15.60 without Teams |
| Business Premium with Copilot | £24.60 | Bundle. £22.10 without Teams |
| Copilot Credits | $0.01 | Per credit, pay-as-you-go. Prepaid packs at $200 for 25,000 credits |
| Copilot Studio credit pack | $200 | Per month, 25,000 credits. Below roughly 20,000 credits a month, pay-as-you-go is cheaper |
| Agent 365 | $15 | Per user, per month. Requires E5, Business Premium, or Defender + Purview |
Watch the licence underneath
The Copilot add-on is worthless without a qualifying Microsoft 365 or Office 365 plan beneath it, and those rose on 1 July 2026: E3 from $36 to $39, E5 from $57 to $60, Business Standard from $12.50 to $14. A Copilot rollout that also forces a base-licence upgrade costs far more than the add-on price suggests.
The education offer
The academic offering is real, materially cheaper, and almost invisible to anyone pricing it up on the public website.
Microsoft Copilot for Education: $18 per user per month
- Against roughly $30 commercial, so close to a 40% discount
- Available to faculty, staff and students aged 13 and older
- Bought through Enrollment for Education Solutions (EES) or a reseller, not off the website
- Qualifying base plans: Microsoft 365 A1, A3, A5, or Office 365 A1, A3, A5
- Copilot Chat is free on A1, A3 and A5 for faculty, staff and higher education students aged 13+
UK pound pricing for academic licences is not published publicly. It comes through the EES agreement or the institution's reseller, which usually means the procurement team holds a number nobody else in the building has seen.
Which do you need?
| If the goal is… | You need |
|---|---|
| Safe general AI chat, no data risk, no budget | Copilot Chat. You already have it |
| "Summarise my inbox" or "draft from our documents" | A paid Copilot seat. There is no way round this one |
| One team piloting before you commit | Paid seats for that team only. Licences are per user, so a 10-person pilot is a 10-seat cost |
| A custom agent used by people without seats | Copilot Studio and credits |
| Delegating long, multi-step work | Seats plus Cowork credits, with a spending cap set before anyone starts |
| Governing agents somebody else built | Agent 365 |
| Developers building on Microsoft 365 data | Work IQ API and credits |
What catches people out
The seat does not cover Cowork
The most expensive misunderstanding available in 2026. Budget the credits separately, or it arrives as a surprise invoice.
Copilot Chat looks like the real thing
Staff conclude Copilot is useless when they were never given the version that reads their files. Fixing expectations is cheaper than fixing licences.
Researcher and Analyst are capped at 25 queries a month
Combined, not each. Heavy analytical users hit this and assume something is broken.
The promotional prices expire
The £13.80 Copilot Business rate runs to 30 September 2026. Build renewal at list price into any business case.
Base licences went up on 1 July 2026
Price the whole stack, not just the add-on line.
Consumer Copilot Pro is not a work licence
Staff buying it personally get no tenant grounding, and put work data somewhere IT cannot govern.
How much to trust this
Prices and packaging here have changed at least four times in twelve months. Treat this as accurate to 20 August 2026 and re-verify before it goes into a proposal.
- High confidence. UK prices from Microsoft's own pricing pages; licence prerequisites, education eligibility and the pay-as-you-go structure from Microsoft Learn
- Medium confidence. The July 2026 SKU restructure, E7 and Agent 365 pricing, drawn from Microsoft licensing news and partner analysis
- Lower confidence. Anything about how many credits a task consumes. Microsoft publishes no per-task rate, so those figures come from partners running it in production
- License options for Microsoft Copilot, Microsoft Learn
- Microsoft 365 Copilot enterprise pricing (UK)
- Microsoft 365 Copilot business pricing (UK)
- Copilot in Education, Microsoft Education
- Pay-as-you-go service overview, Microsoft Learn
- Usage-based billing and cost management for Copilot Credits, Microsoft Learn
- Copilot Credits licensing guidance, Microsoft
- 2026 Microsoft 365 packaging and pricing updates
- Work IQ general availability, Microsoft
- Researcher and Analyst general availability, Microsoft 365 Blog
- M365 licensing changes July 2026, Orchestry
- Agent 365 licensing, SAMexpert
Briefing prepared 20 August 2026. Prices exclude VAT.