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Use this article while you plan your plugin or another Microsoft 365 Copilot extensibility solution. Record the cost categories that can affect the design now, and confirm the final licenses, meters, and service prices after you choose the capabilities and development tools.
Identify cost categories
Account for:
- User and administrator licenses for the target Microsoft experiences.
- Usage-based consumption for agents, Copilot connectors, APIs, models, or other metered services.
- Development tools, test environments, and developer subscriptions.
- Hosting for APIs, applications, databases, remote MCP servers, and other external services.
- Identity, secrets, certificates, networking, storage, monitoring, and audit services.
- Marketplace, certification, publishing, and customer-onboarding requirements.
- Support, incident response, evaluation, servicing, deprecation, and retirement.
A plugin can bring together components that use different licensing and billing models. Record costs for the plugin experience and for each independently operated component or service.
Licensing options for Microsoft 365 Copilot
Microsoft 365 Copilot is available with two different license options:
- Microsoft 365 Copilot Chat is included in your Microsoft 365 subscription at no additional charge. It provides access to web-based Copilot Chat and optional pay-as-you-go access to work-based chat. This option is ideal for occasional users of Copilot and agents.
- Microsoft 365 Copilot add-on license is available with an eligible Microsoft 365 subscription. It includes both web-based and work-based Copilot Chat and unlocks embedded Copilot features in Word, Excel, Outlook, and Teams. This option is ideal for frequent users of Copilot and agents and users who want AI assistance integrated throughout their workflow.
Your license type determines access to Copilot capabilities and whether usage-based billing charges apply when using extensibility options like Copilot connectors or agents.
For more information about consumption costs, see Copilot Studio licensing and Copilot Credits billing rates. For more information about licensing, see License options for Microsoft 365 Copilot and Decide which Copilot is right for you.
| License type | Cost | Best for | Extensibility consumption costs |
|---|---|---|---|
| Microsoft 365 Copilot | Add-on license required | Frequent users | No extra charges for accessing or using extensibility features (Copilot connectors, agents, plugins). |
| Microsoft 365 Copilot Chat | Included for eligible Microsoft 365 users | Occasional users | No charges for lightweight extensibility (instruction-based agents or public site grounding). Usage-based billing charges apply for shared tenant data (SharePoint, Copilot connectors), metered in Copilot Credits via Copilot Studio. |
| No Copilot license or Microsoft 365 subscription | N/A | Not supported | Can't access Copilot; extensibility features require a qualifying license. |
Access and usage
Users with a valid Microsoft 365 Copilot, Microsoft 365, or Office 365 license can access data from Copilot connectors in Copilot Chat, Copilot Search, and Microsoft Search.
If you build a connector and your admin configures it in the admin center, licensed users in your organization can automatically retrieve its data through Copilot Chat.
Agents in Copilot
Agents are AI assistants that automate tasks and answer queries across the Microsoft 365 ecosystem, including Copilot Chat, Microsoft Teams, and other Microsoft 365 apps. This section covers the costs of declarative agents and custom engine agents.
Declarative agents
Usage Cost
To use a declarative agent, users must have a Microsoft 365 Copilot add-on license, or access to Microsoft 365 Copilot Chat through an eligible Microsoft 365 license.
If a user doesn't have a Copilot license and usage-based billing is enabled in the tenant, using declarative agents might result in consumption charges or limited functionality, depending on how the agent is built.
- Agents that rely on instructions or public website grounding don't incur extra costs.
- Agents that access shared tenant data (such as SharePoint or Copilot connectors) generate usage-based billing charges (metered in Copilot Credits) via Copilot Studio.
Hosting Cost
Declarative agents are hosted by Microsoft 365 Copilot and don't incur additional hosting costs.
Custom engine agents
Usage Cost
Users don't need a Copilot license to access custom engine agents in Microsoft 365 Copilot Chat. However, usage costs vary based on the user's license:
- Users with a Microsoft 365 Copilot license don't incur additional charges.
- Users without a Microsoft 365 Copilot license might incur usage-based billing charges if the agent interacts with shared tenant data (SharePoint or Copilot connectors), metered in Copilot Credits via Copilot Studio.
Hosting Cost
Custom engine agents are hosted outside of Microsoft 365 Copilot using your own orchestrator and/or models. Hosting these agents might incur additional hosting costs, such as:
- Copilot Studio – For users with a Microsoft 365 Copilot add-on license, agents built in Copilot Studio for Teams, SharePoint, and Copilot Chat are included at no extra charge. Users without a Microsoft 365 Copilot license might need to purchase a Copilot Studio license or Power Platform plan, and usage-based billing (Copilot Credits) or Power Platform capacity limits might apply.
- Azure AI Foundry – For AI-powered processing, model hosting, and natural language understanding. See Azure AI Foundry pricing.
- Azure App Service – For hosting services and APIs that support your agent. See App Service pricing.
- Azure Bot Service – For publishing agents across multiple channels. See Azure AI Bot Service pricing.
Note
Your total cost varies based on the AI models, orchestration complexity, and cloud services you use to deploy and maintain your agent.
Cost comparison: declarative agent vs custom engine agent
| Feature | Declarative agents | Custom engine agents |
|---|---|---|
| License requirements | Requires Microsoft 365 Copilot add-on license, or Copilot Chat access through an eligible Microsoft 365 license. | No additional license required. |
| Hosting | Hosted by Microsoft 365 Copilot (no additional hosting costs). | Hosted externally (incurs hosting costs, such as Azure AI Foundry). |
| Usage cost | For users with Microsoft 365 Copilot add-on licenses, no extra charges. For users without licenses: - No charges for agents with instructions only or grounded only in public data. - Usage-based billing charges (Copilot Credits) for shared tenant data usage (for example, SharePoint, Copilot connectors). |
Varies based on license. Users with a Copilot license don't incur additional charges. Users without a Copilot license might incur usage-based billing charges (Copilot Credits) when shared data is used. |
Work IQ API
The Work IQ API provides an AI-native interface to Microsoft 365 work intelligence. By using this API, you can build applications that query emails, meetings, files, and organizational knowledge by using natural language grounded in Microsoft 365 data.
You pay for use of the Work IQ API through a consumption-based model that uses Copilot Credits.
For more information, see the Work IQ General Availability announcement.
Manage shared Copilot credits
When you plan a solution's budget, account for other services that use the same prepaid capacity. Copilot Cowork, Copilot Studio agents, and Work IQ API can consume Copilot credits from a shared tenant pool. Capacity allocated to Power Platform environments reduces the prepaid capacity available to services managed in the Microsoft 365 admin center.
Spending policies control access and spending limits; they don't reserve or allocate credits for a workload, user, or group. A separate policy for Cowork doesn't guarantee that credits remain available for Cowork.
Use the following controls with your administrator to limit competing consumption. No single control covers all services managed across the Microsoft 365 and Power Platform admin centers.
| Control | What it does | Scope and limitations |
|---|---|---|
| Select supported services in spending policies | Include Cowork and exclude Work IQ API from a policy when its users shouldn't consume credits through Work IQ API. Turn off Auto-apply new services if future services require review. | Review all applicable policies, including the default policy. Excluding a service from one policy doesn't exclude it from other policies. Copilot Studio consumption is managed separately in the Power Platform admin center. See Manage spending policies. |
| Set policy and per-user limits | Limit monthly consumption for selected user groups and the services covered by their policies. | Limits don't reserve credits. If multiple policies cover a user for the same service, the policy with the highest per-user limit takes precedence. See How spending policies apply to users. |
| Restrict Copilot Studio authoring | Use the Copilot Author setting in the Power Platform admin center to limit authoring access to a security group. | Authoring restrictions don't stop consumption by existing agents. See Manage Copilot Studio access. |
| Review environment allocations and overage settings | Reduce unused environment allocations to leave more prepaid credits available in the shared tenant pool. | A lower allocation isn't a hard cap if the environment can draw from the tenant pool or use pay-as-you-go billing. See Manage capacity. |
| Set per-agent monthly limits | Configure notifications and a hard stop for individual Copilot Studio agents. | Enforcement isn't instantaneous, and an agent's limit doesn't stop the agent flows it calls. See Manage monthly consumption limits. |
Troubleshoot Work IQ quota exhaustion
A Work IQ chat request can fail with QuotaExhausted and the message "No AI credits are currently available for this user. Please request more credits from your admin." This error can happen even when the tenant has prepaid credits.
For prepaid capacity packs, the capacity available to services managed in the Microsoft 365 admin center is the total purchased capacity minus capacity preallocated to Power Platform environments. Consumption further reduces the remaining balance. A spending policy defines limits, not a reserved credit allocation.
Ask your billing administrator to check the available prepaid capacity and the applicable spending policy's service selection, policy limit, per-user limit, and billing method. To restore access, the administrator can:
- Release unused environment allocations. Review Copilot Studio capacity in the Power Platform admin center and reduce allocations that aren't needed. Released capacity becomes available in the shared tenant pool. See Manage Copilot Studio capacity.
- Add prepaid capacity. Purchase enough capacity for both environment allocations and expected shared-pool consumption.
- Enable pay-as-you-go billing. Configure an Azure subscription as a billing method so usage can continue when prepaid credits run out. Current billing settings support updating an existing spending policy's billing method without deleting and recreating the policy. Spending limits still apply. See Configure billing methods.
A Microsoft 365 Copilot license doesn't replenish the Work IQ API credit balance. Repeated retries won't resolve a depleted balance or an exhausted spending limit. For policy configuration, see Manage spending policies.
Microsoft 365 Copilot APIs
The Microsoft 365 Copilot APIs are available at no additional cost to users with a Microsoft 365 Copilot license. Support for users without a Microsoft 365 Copilot license is currently not available.