Beginning 1 December 2026, new Microsoft 365 Copilot and Microsoft 365 Copilot Business offers can be purchased without a qualifying Microsoft 365 base subscription, and the new offers are priced the same as the current offers, Microsoft told its partners in a Partner Center announcement dated 14 October 2026.
In a second announcement, updated on 14 October, Microsoft said usage-based billing will be enabled by default from the same date for new Microsoft 365 Copilot Business licenses bought through its Cloud Solution Provider (CSP) channel, with a default spending limit of 4,000 Copilot Credits per user per month.
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A one-minute explainer of usage-based pricing: paying for work done rather than for seats. It teaches the general idea only and says nothing about any company in this story.
The key insight: As we read it, Microsoft is separating the purchase of Copilot from the Microsoft 365 suite while keeping the price, and for Copilot Business licenses sold through CSP it is switching the usage meter on by default: from 1 December 2026, new licenses start on pay-as-you-go with a 4,000-credit per-user monthly limit unless an admin changes it.
Update, 16 Oct 2026: UK CMA proposes special status for Microsoft, with Copilot in scope
Two days after Microsoft’s Partner Center notice, the UK Competition and Markets Authority said on 16 October that it is proposing to designate Microsoft with strategic market status in its businesssoftware ecosystem and will consult before deciding (CMA press release). The CMA found Microsoft has a strong position across the five areas it investigated: PC operating systems, productivity suites, security software, server operating systems and relational databases. It names Word, Excel, Outlook, PowerPoint, Teams “and increasingly Copilot” among the products, used by over a million UK businesses and public-sector organisations.
The first area on the CMA’s indicative roadmap is “assessing whether customers can freely choose the best AI tools and functionalities for their needs, and whether alternative AI providers have a level playing field to compete with Microsoft’s Copilot”. The others are how Microsoft bundles its security products and whether customers can choose which cloud to run their licences on. Views are due by 5pm on 13 November 2026, and the CMA says a final decision comes by the February 2027 statutory deadline (CMA case page). Its findings are provisional, and it stresses that designation does not assume wrongdoing.
As we read it, the timing matters for this piece: Microsoft is taking Copilot out of the 365 bundle at the same price just as the UK regulator puts the question of AI-assistant choice inside that bundle on its roadmap.
The new offers have their own product and SKU IDs and are “priced the same as the current offers,” Microsoft says. From 1 December they replace the add-on offers for new Microsoft 365 Copilot and Microsoft 365 Copilot Business purchases, across all channels, including CSP, for commercial, education, government and nonprofit customers.
For the billing change, Microsoft says “Pay-as-you-go will be the default billing configuration” for new Copilot Business licenses in CSP, to help customers access eligible usage-based experiences, including Copilot Cowork, Work IQ APIs and GitHub Copilot Harness.
The default spending limit of 4,000 Copilot Credits per user per month can be adjusted by admins. Microsoft gives its own example: “a customer with 100 M365 Copilot Business users could consume up to 400,000 Copilot Credits per month under the default spending limit, with UBB charges based on actual usage.”
The announcements we read do not state a price per Copilot Credit or a per-seat price. Microsoft says new product and SKU IDs will be shared ahead of a price list preview on 1 November 2026.
From 1 December 2026, Microsoft says pay-as-you-go is the default billing for new Microsoft 365 Copilot Business licenses bought through CSP, with a default spending limit of 4,000 Copilot Credits per user per month that admins can adjust. The same day, new Copilot offers can be bought without a Microsoft 365 base subscription, priced the same as the current offers.
What Was Posted on X
Microsoft is on track to pay Anthropic more than $2 billion annually to power Copilot, even as it increasingly switches to OpenAI models to cut costs and improve margins.
The Information, 17 October: its post repeating its 12 October report that Microsoft is on track to pay Anthropic more than $2 billion a year to power Copilot while shifting more work to OpenAI models to cut costs. The figure is The Information’s reporting; Microsoft has not published it.
What Changes, and When
From 16 October 2026, the current offers that require a qualifying Microsoft 365 base subscription carry “(add-on)” in their names, for example “Microsoft 365 Copilot (add-on)” and “Microsoft 365 Copilot Business (add-on).” Microsoft asked partners to update scripts and automations that rely on offer names by that date.
The add-on offers reach end of sale in CSP on 1 December 2026. “End of sale isn’t end of life; existing customers can continue to renew and adjust seat quantities,” Microsoft says. No action is required for existing subscriptions, and their pricing and renewal terms remain unchanged.
Microsoft frames the first change as a purchasing change: it “affects how customers purchase Copilot, not the underlying Copilot capabilities.” It adds that Copilot experiences continue to depend on the Microsoft 365 apps and services a customer is licensed for.
The billing default was first communicated for 2 November 2026; Microsoft moved the effective date to 1 December. It applies to new purchases of Copilot Business licenses, “including standalone offers and bundles.” Partner Center sandbox environments are due on 2 November.
Where the Meter Starts
Microsoft says the billing default will initially not be available in Australia, Belgium, Brazil, France, Germany, India, Italy, Korea, the Netherlands, Poland and Spain, and that it will share more as availability expands.
In a post on 25 September 2026, Nicole Herskowitz of Microsoft described Copilot pricing as combining “predictable per-user pricing with usage-based pricing.” Everyday AI is covered by the Copilot user subscription license, “priced per user per month,” while advanced work such as Cowork runs on usage-based billing with Copilot Credits.
That post said that “For enterprise customers, UBB services stay off until an admin creates a spending policy in the Microsoft 365 admin center, and nothing is billed before that.” The CSP announcement sets pay-as-you-go as the default for new Copilot Business licenses, with the 4,000-credit limit preset.
Microsoft tells partners the change means less setup friction, because new Copilot Business licenses include the Azure subscription setup needed for usage-based billing, and that “Early usage can create a natural path to expanded consumption, upsell conversations” and a Copilot Cowork activation incentive.
The Copilot change sits on top of Microsoft’s existing revenue mix. Our 60-second video walks through how Microsoft makes money in fiscal 2026.
How Microsoft Makes Money in 60 Seconds (Fiscal 2026) (The Business Engineer on YouTube)
Update, 17 October: What Copilot Pays Anthropic
The Information reported on 12 October that Microsoft is on track to pay Anthropic more than $2 billion a year to use its Claude models inside Copilot, even as it increasingly switches to OpenAI models to cut costs and improve margins; it repeated the point in a post on 17 October. According to Crypto Briefing’s account of the report, Microsoft brought Anthropic’s models into Copilot in the summer of 2025 after clients complained about results inside Office, and Claude now sits alongside OpenAI’s models across Word, Excel, Outlook and PowerPoint.
The same account says Microsoft’s internal spending on Anthropic had reached roughly $1 billion on an annualized basis earlier in 2026, and that the company then cut that spending by more than 33%. Its main tool for managing the bill is an in-house model router that sends each request to the cheapest model that can handle it. Corporate Copilot users number more than 30 million, it adds. Microsoft has not published what it pays Anthropic.
As we read it, this is the cost side of the unbundling above: a router that picks the model per request lets Microsoft price Copilot on its own while shopping for the supplier underneath.
The Structural Read
As we read it, the default differs by buyer: Microsoft’s 25 September post says that for enterprise customers UBB services stay off until an admin creates a spending policy, while the CSP announcement makes pay-as-you-go the default for new Copilot Business licenses, with the limit preset.
As we read it, the 4,000-credit default sets a ceiling, not a bill: Microsoft says UBB charges are based on actual usage, and the pages we read give no price per credit, so the dollar value of the ceiling cannot be worked out from them.
As we read it, the partner notes point to consumption: Microsoft tells partners that early usage “can create a natural path to expanded consumption, upsell conversations”, and that new Copilot Business licenses include the Azure subscription setup needed for usage-based billing.
Microsoft Partner Center, 14 October 2026
“This purchasing change affects how customers purchase Copilot, not the underlying Copilot capabilities”
Three Implications
SMALL-BUSINESS BUYERS From 1 December 2026, Microsoft says new Copilot Business licenses bought through CSP default to pay-as-you-go with a 4,000-credit per-user monthly limit that admins can adjust, though not at first in the markets it lists, such as France and Germany.
PARTNERS Microsoft asked CSP partners to update scripts, catalog mappings and automations that rely on offer names by 16 October, when current offers gain the “(add-on)” label, and says new product and SKU IDs come ahead of the 1 November price list preview.
EXISTING CUSTOMERS Microsoft says no action is required for existing subscriptions: product and SKU IDs, pricing, renewal terms, auto-renew settings and service remain unchanged, and add-on customers can continue to renew and adjust seat quantities.
The framework opens: “For two years, AI was a CIO line item and a CEO talking point. In 2026 it became a CFO problem, because the economics finally turned legible”.
As we read it, Microsoft’s two changes put that line item into the default setup for small-business Copilot buyers: Microsoft says the license is priced per user per month, while advanced work such as Cowork draws Copilot Credits on pay-as-you-go up to a preset limit. The framework predates the announcement and does not discuss Microsoft’s offers.
The default monthly ceiling under Microsoft’s 4,000-credit per-user limit for new Copilot Business licenses in CSP from 1 December 2026. The 100-user figure, 400,000 credits, is Microsoft’s own example; the 1-, 10- and 50-user figures are our arithmetic (4,000 times users). Microsoft says charges are based on actual usage.
What Is Not Established
The Microsoft pages we read give no price per Copilot Credit and no per-seat price for the new offers beyond saying they are priced the same as the current ones, and they do not say what share of customers buy Copilot through CSP.
We read the two Partner Center announcements, the 25 September pricing post and the MS Learn page on Copilot Credits in full. We did not read the partner FAQ, the partner presentation or the Copilot Credits Guide, and we did not contact Microsoft or its partners.
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From 1 December 2026, Microsoft says new Microsoft 365 Copilot and Copilot Business offers can be bought without a Microsoft 365 base subscription, priced the same as the current offers, which become “(add-on)” offers from 16 October and reach end of sale in CSP on 1 December.
On the same date, pay-as-you-go becomes the default billing for new Copilot Business licenses in CSP, with a default limit of 4,000 Copilot Credits per user per month that admins can adjust. Microsoft says it will roll out in supported markets and initially not in the markets it lists (eleven, by our count), including France, Germany and India.
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A note on sourcing. The 16 October Update draws on the CMA’s press release and case page, read in full. We read in full two entries on Microsoft’s Partner Center announcements page for October 2026, “Copilot offers and name updates” (14 October) and the usage-based billing update (1 October, updated 14 October), plus Microsoft’s 25 September post on the Copilot pricingmodel and its Microsoft Learn page on Copilot Credits; every quotation and figure comes from those pages. We did not read the partner FAQ, the partner presentation or the Copilot Credits Guide, and we did not contact Microsoft or its partners. The references to 25 September and 15 October link to our own earlier reporting.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
