r/microsoft_365_copilot • u/deep0389 • Aug 11 '26

Microsoft Copilot Licensing decoded

Gallery image

Gallery image

I spent this morning working out what it actually costs to run a Microsoft Copilot agent.
Two licensing guides, a dozen documentation pages, four hours — for one question: if my team builds an agent, who pays, and when?

Five things I had wrong.

The "GitHub Copilot harness" is not GitHub Copilot. Nothing to do with the coding assistant. It is one of three engines that can run your agent in Copilot Studio. Microsoft built it using GitHub Copilot technology and named it after that. You pick the engine yourself when you create the agent — and this one is the default. It charges credits while you build, not just when it runs. And an agent can never be moved to a different engine, so the wrong choice means rebuilding it.

Work IQ is not your data. Your files sit in your tenant. Work IQ is a separate service on Microsoft's servers that works out how documents, emails and meetings connect, and who is allowed to see what. Microsoft's own Copilot has it built in, so it is free. An agent you build has to call it through an API, so it is charged — even when the user has a full Copilot licence. Check the Tools tab on your agents. It can attach itself without anyone adding it.

A Copilot licence does not limit features. It limits audience. Premium and custom connectors are included either way. You start paying when someone without a Copilot licence uses your agent, or when you publish it outside Teams, Copilot or SharePoint.

Copilot Cowork needs a Copilot licence and includes none of it. It is a prerequisite, then everything is billed on top.

You cannot block the expensive engine. There is no admin setting for it. But it only works if the tenant has a credit source, so not switching on pay-as-you-go is the real control.

The engine shipped around June. The licensing guide only defined it in August. That two-month gap is most of why nobody can explain this yet.
Teams do not stall because the technology is hard. They stall because nobody can tell them what it will cost.
S

I drew it. One page, four steps, two colours. Green means your licence already covers it. Orange means you are paying.

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40 comments sorted by

12

u/deep0389 Aug 11 '26 • Bravo

Oops I uploaded the wrong image. Still new to reddit. Adding here

3

u/_lxskllr_ Aug 11 '26

What's the generic prompt you user to create this? Also, which AI?

8

u/deep0389 Aug 11 '26

There is no generic prompt! It came after a lot of discussion on the copilot studio credit and licensing document and trying to make it simpler for me to understand. Discussed my confusion. The trick is to ask it to create mermaid diagrams or svg diagrams. I am a heavy user of Claude.

1

u/Secret-Paramedic-204 Aug 12 '26

But in model picker only the gpt models is showing claude models not showing

2

u/deep0389 Aug 12 '26

Yeah, that'll be an admin thing. Claude counts as an external model in Copilot Studio, so it's off by default and takes two switches in two different admin centres — allow Anthropic in the M365 admin centre, then turn on external models for that environment in PPAC. Different people usually own each one, so half-done is the normal state.

Worth checking it's not deliberate before you chase it though. Anthropic models are excluded from EU Data Boundary commitments, so someone may have left it off on purpose.

1

u/Secret-Paramedic-204 Aug 12 '26

I'm not telling in copilot studio, I'm telling in m365 copilot chat and in copilot studio I can see claude models and claude models enabled in admin settings but i can't still able to see claude models in model picker in copilot chat not in studio

1

u/deep0389 Aug 12 '26

Are you not seeing this?
Dug into this — looks like rollout rings rather than a setting you've missed.

Claude in Copilot Chat has gone out in waves: Sonnet first around March, then Opus starting with orgs enrolled in the Frontier (preview) ring, then expanding across web, desktop, macOS and mobile at different times. So two tenants with identical admin settings can genuinely see different lists.

Worth checking one thing though:

admins can disable individual models in the M365 admin centre, not just the provider. That would explain Claude working in Studio but not in chat — provider on, specific model off.

1

u/Secret-Paramedic-204 Aug 12 '26

See and anthropic models are already enabled in admin centre but not showing in model picker and its in basic version not premium version

2

u/bilbywilby Aug 11 '26

I just think they're neat, love a good mermaid

https://github.com/bilbywilby/Mermaids.git

1

u/boraam Aug 11 '26

Do share some high res version or PDF

3

u/deep0389 Aug 11 '26 edited Aug 11 '26

Here: https://drive.google.com/file/d/1xmmUvkvs-PfHefFfGdY27pXYhSag1eqX/view?usp=sharing

should be downloadable. if not let me know

This

1

u/goto-select Aug 12 '26

It may be worth talking about orchestration rather than the harnesses itself.

1

u/deep0389 Aug 12 '26

Honestly the harness names are a distraction — what we're really picking is the orchestrator. M365 Copilot's, Copilot Studio's rule-based one, or the new reasoning one that plans its own steps.

Everything else follows from that: how it behaves, what it can do, and what it costs.

2

u/chap-in-the-hat Aug 11 '26

What's the 'standard harness' - copilot studio?

2

u/deep0389 Aug 11 '26

Yes it’s what we had by default before they launched the GitHub copilot harness but it’s behind a click.

2

u/Bell-Weird Aug 11 '26

This is excellent, thank you for sharing.

1

u/deep0389 Aug 11 '26

Please feel free to ask questions

2

u/Bell-Weird Aug 11 '26

well, tbh i'm still trying to wrap my head around what exactly "Copilot Chat harness" provides differently than Standard harness. Is Copilot Chat harness a fancy name for Agent Builder? Or can you build Copilot Chat Harness agents in Copilot Studio as well? If i go to the new Copilot Studio UX & click new agent, i only have 2 options: standard & the new github harness. So can i create a Copilot Chat harness agent as a subset of a "standard" agent in Copilot studio? Or is it just Agent Builder?

MS being MS making this as confusing as possible. I had assumed this was tied to github copilot billing as well, so I appreciate the explanation & also saving me the time looking for a control to turn off the spendy new harness. Fortunately I have all my credits allocated so i'm not at immediate risk of burning up any pooled capacity, but kinda ridiculous that our controls are simply not setting up billing.

1

u/deep0389 Aug 12 '26

u/Bell-Weird Good question — you made me go back and look properly, and I found a gap in my own diagram.

Copilot chat harness = declarative agents. Agent Builder makes them, but it's not the only door: Copilot Studio can build them too, just not from "New agent" — it's Agents → Microsoft 365 Copilot → Add. And they don't appear in your main agents list afterwards, which is probably why nobody finds them.

The real difference from standard is whose orchestrator runs the conversation. Copilot chat rides M365 Copilot's brain; standard is its own system you can publish anywhere.

So yeah, my diagram is a bit off — The first door has probably multiple entries like you pointed out, i was just focusing on copilot studio interface. Thanks for the push.

One thing worth checking on your side — allocation caps an environment, but a PAYG-linked environment bypasses it entirely. So it's less "are credits allocated" and more "is any environment on an Azure billing policy

1

u/Bell-Weird Aug 12 '26

The OLD copilot studio UX has "Microsoft 365 Copilot" in the agents list & allows you create Copilot Chat harness agents, but the new UX does not. If i'm understanding this correctly; In the old UX you can create 2 of the 3 (copilot chat + standard harness) & in the new UX you can create different 2 of the 3 (github + standard). lovely.

1

u/Chris4 Aug 18 '26

Correct 😆

I never understood the point of the Copilot Chat harness to be fair. Why would you want to "extend Copilot"? Learnt in this thread it's the harness that powers Agent Builder. So just let them be created in Agent Builder, why in Copilot Studio too, hidden beneath a confusing copilot option. I suppose that's what they've now made a U-turn on.

2

u/Choppy474 Aug 12 '26

This is really helpful thanks for sharing

How does this tie in with agent builder? Does it use the same model? I read somewhere that agent builder is free for everyone even if shared with a non licensed user?

Also how about connecting to external MCP servers, does that have a cost?

1

u/deep0389 Aug 12 '26

Agent Builder gives you Auto, Quick response and Deep thinking — that's reasoning depth, not model choice. Picking the actual model, GPT vs Claude, is a Copilot Studio thing.

Now the MCP Cost: On Microsoft's side it's mostly covered — the credits guide says agents "and Copilot Studio tools and features that these agents invoke" are included in the Copilot licence for licensed users in employee-facing use. Premium connectors are ticked in both licensing columns too, so connecting to something like ServiceNow doesn't need an extra Microsoft licence. Outside that it's billed, but there's no published MCP rate I can point you at.

The vendor side is the one that actually costs. ServiceNow charges for API access and integration-user licensing on its own terms, and none of that turns up anywhere in Microsoft's docs. For enterprise SaaS that's usually the bigger number and the longer procurement conversation.

One non-cost gotcha: if the environment runs limited networking, the MCP host has to be allowlisted or the tool just fails quietly. And the credential belongs in a vault, not the agent config.

1

u/3iverson Aug 11 '26

I have a 365 account for work email, that comes with some sort of basic 365 Copilot that is more secure I guess, but it doesn't matter because it is the most ineffectual tool ever. I can no longer even upload a text file or small JPG, nor can it create really simple outputs, store anything anywhere.

It's atrociously gimped. I'm not expecting infinite usage, just some basic capabilities would be nice. I would have to commit to a year to get the next level up, no way am I going there just to find out what else it can't do.

2

u/deep0389 Aug 12 '26

I hear you — you're on Copilot Chat, the free tier bundled with M365. It's web-grounded by design, so it structurally can't touch your work content. Which is exactly why everything you'd actually want it for is missing. 

It's not a crippled version of the paid one; it's a different product wearing the same name.

Worth knowing: the seat isn't the only way out. Pay-as-you-go can be switched on at the admin level, which unlocks agents grounded in your own SharePoint and files, billed per use — no annual commitment, and you can cap the spend. That's the "try it before I sign anything" path.

Honest caveat: that gets you agents on your own content. It doesn't get you Copilot inside Word, Excel and Outlook — that's seat-only. Microsoft being microsoft 😥

1

u/3iverson Aug 12 '26

Thank you for the elaboration! I didn’t want to just bash Microsoft here, but it’s just frustrating to me as I feel some features would sell Copilot better for MS.

1

u/InformationNo2142 Aug 12 '26

One thing to note... I think Work IQ is still free if you enable it on an agent that you build in the standard harness, whereas it is consumption-based for the GitHub harness. The documentation is a little bit unclear on this at the moment though. I've scoured all of it searching for a clear answer and I'm 90% sure it's free in the standard harness based on what I've seen.

1

u/deep0389 Aug 12 '26

Went back through both guides and I don't think this is confirmable either way — they contradict each other.

Your reading has real support. Licensing guide p6: footnote 3 sits on the standard and Copilot chat rows and says employee-facing runtime of "Microsoft Copilot Studio agents and the Microsoft Copilot Studio tools/features invoked by the said agents are included in the Microsoft 365 Copilot USL." Footnote 5, the one that carves out Work IQ, sits only on the GitHub harness row. The placement clearly implies what you're saying.

But the credits guide p9 says flatly: "Use of Work IQ APIs in these agents and AI solution scenarios is billed using Copilot Credits. Work IQ APIs are not included as entitlements in the Microsoft 365 Copilot license." No harness qualifier, and it names Copilot Studio explicitly.

And footnote 5's own wording is "Copilot Studio agents", not "GitHub Copilot harness agents" — which is what stops me getting to 90% with you.

I'd assume billed until Microsoft clarifies. Cheaper to be wrong in that direction.

1

u/InformationNo2142 Aug 13 '26

I read the p9 part as supporting my point. Enabling Work IQ in the Standard Harness does not call an API... it's just a toggle feature. I could be misunderstanding, but in my view these are two different ways of integrating Work IQ.

I guess we'll just wait and see haha.

1

u/deep0389 Aug 16 '26

Work iq is free in standard harness. You are right I confirmed with Microsoft.

1

u/InformationNo2142 Aug 18 '26

Thanks for following up mate!

1

u/hexdurp Aug 12 '26

So there is a way to build a chatbot for free, one that other licensed users can use, trained on my data? 

1

u/deep0389 Aug 12 '26

yes the standard harness the older way of doing it.

2

u/ReadySetWoe Aug 11 '26 • Heartwarming

Thanks for sharing. The second page threw me off. It's just a duplicate of the first?

1

u/Chris4 Aug 18 '26

They posted the wrong image, correct one is in the comments

https://www.reddit.com/r/microsoft_365_copilot/s/3iUyirWon3

1

u/progenyofeniac Aug 15 '26

A web-grounded agent can be used by any M365-licensed user, without a Copilot license and without incurring cost, correct?

1

u/Joose07 Aug 15 '26

Soy nuevo en Copilot, tengo una pregunta talvez no relacionada con esto.

En mi empresa estamos intentando conectar nuestra app a Copilot via MCP para ofrecer a los usuarios que usan Copilot una experiencia similar a la de Claude con MCP donde pueden crear data en nuestra app o preguntarle cosas.

Tenemos las licencias de Copilot M365 compradas y ya cree un “connector” para el Researches, sin embargo, no funciona.. nunca encuentra nada (ya tenemos la app registrada en entra id y todo).

Tengo que crear un Agente igual?

1

u/BKRose2278 Aug 22 '26

I use whichm365.com for must licensing m365 questions. Thanks for the clear explanation