Microsoft 365 Copilot: fixed licence or pay-as-you-go?

Microsoft has expanded how organisations can access Microsoft 365 Copilot by introducing a consumption-based licensing option to complement the existing fixed licence model.

At SoftwareOne, we don't favour one licensing model over another. We help you understand all the options and work out which might be best for you in achieving your business process transformation and productivity goals. Whether you're focusing on process automation, content creation or data analysis, we understand your business objectives should always drive the licensing decision.

With that in mind, this guide will help you work through:

• What each licensing model includes and the cost implications
• How to choose based on your organisation's size
• Special considerations for industries like healthcare and finance
• How to combine both approaches for the best results
• Practical next steps you can take today

Understanding the options

Microsoft 365 Copilot (full licence) — @$30 per user per month

This option fully integrates AI assistance throughout your Microsoft 365 environment. Your team members get Copilot embedded within the applications they use every day not just as a separate chat tool but directly within Word, Excel, PowerPoint, Outlook and Teams. From a business process perspective, this integration means your teams can use AI to help:

• Streamline content creation: Marketing teams can draft materials that align with brand guidelines, repurpose existing content, and generate variations for different channels.
• Enhance data analysis: Finance and operations can quickly analyse trends, create reports, and extract insights from complex datasets.
• Improve client communications: Customer-facing teams can personalise outreach, summarise previous interactions, and ensure consistent messaging.

For individual productivity, the benefits multiply the more Copilot is used across daily tasks. Staff spend less time drafting emails, creating presentations, summarising documents, and organising information which can potentially free them up to focus on higher- value work.

The fixed per-user fee structure means practically unlimited usage with predictable costs. This typically suits roles where AI becomes an everyday productivity tool rather than an occasional resource.

Microsoft 365 Copilot Chat with pay-as-you-go (PAYG) agents

This model offers a different approach to AI adoption. Users access the core Copilot Chat experience, with the ability to create custom agents for specific business needs. These agents are then billed based on actual usage, giving you flexible cost control “on the meter”.

By designing purpose-built agents for particular workflows, you can then address targeted business processes such as:

• Knowledge management: Create agents that make internal policies, procedures and resources easily accessible
• Specialised expertise: Build agents with domain-specific knowledge for areas like technical support, regulatory compliance, or product specifications
• Process guidance: Develop agents that walk employees through complex workflows, approvals, or decision trees

The consumption-based approach lets you focus your investment where it delivers the clearest value. This can work particularly well for:

• Departments with specialised needs that aren't addressed by standard Office integrations
• Processes that require specific contextual knowledge beyond what's in your Microsoft 365 content
• Teams with occasional rather than constant AI needs

You will need strong governance in place with PAYG because the costs you pay will be determined by the complexity of the agent(s) you build, its tasks, and the number of messages sent. This can rack up significantly unless its monitored and managed consistently.

When to choose each option

Finding the right licensing approach should start with a discussion about your organisation's specific needs and usage patterns:

Choosing the full licence can be good when:

• Your users work extensively with Microsoft 365 apps daily
• You need AI integrated directly within Word, Excel, PowerPoint and Outlook
• You want predictable, fixed monthly costs rather than variable billing
• Users will be heavy Copilot users who engage with it many times daily
• You want to simplify administration without tracking usage

Choose the PAYG model might make sense if:

• You want to experiment with Copilot before wider deployment
• Usage will be occasional or limited to specific tasks
• You prefer to pay only for what you actually use
• You need to control costs tightly while still providing AI capabilities
• You're focusing on specific use cases rather than general productivity

Cost considerations play a significant role in this decision. The full licence creates budget predictability but requires enough usage to justify the cost. The consumption model introduces more financial flexibility, but with costs that can scale beyond initial expectations unless they’re monitored an controlled. Several factors affect these costs:

• Query complexity: More sophisticated requests require more processing
• Organisational data access: Searches through your internal content cost more than general questions
• Autonomous actions: When agents perform actions on your behalf, additional processing is required
• Usage frequency: Regular users generate more interactions than occasional ones

For light users who might only interact with Copilot a few times weekly, the PAYG model can be substantially more cost-effective so long as good governance is put in place to make sure that any agents are actually needed for the job in hand. Regular users who incorporate AI throughout their daily workflows will typically find better value in the fixed licence once they cross a certain usage threshold.

Strategies by organisation size

Of course, what’s right for you may also depend on the size of your organisation. Here’s an at-glance guide showing factors which you might want to consider, and a range of licensing strategies you could adopt as a result.

Your industry vertical may also have specific requirements that should influence your Copilot licensing approach. To inform your thinking, here are some considerations we’ve noticed across a range of client engagements at SoftwareOne.

The Hybrid Approach

As you can see from these tables, many organisations are likely to embrace the best of both worlds by combining licensing models to create their ideal balance between AI innovation and optimised cost control.

A sound start for that strategy is clear categorisation, grouping your users based on their likely Copilot usage patterns. Typically, this will give you three user groups:

• Power users: People who'll integrate AI throughout their daily workflow
• Regular users: Staff who need AI for specific, recurring tasks
• Occasional users: Those who'll only use AI sporadically

For power users, the full licence often makes sense. For occasional users, the PAYG model could be more cost-effective. Regular users require closer evaluation—perhaps start them on consumption and then monitor usage on a case-by-case basis, ready to transition to another group as their usage grows.

This approach—combined with good governance—prevents both overspending on underutilised licences and excessive consumption costs for heavy users.

Equally important is ongoing measurement. Take full advantage of Microsoft's admin tools to track key metrics including average messages per user, departmental costs, usage patterns (time of day, types of queries), and—most crucially—business outcomes linked to Copilot usage.

8 Steps You Can Start Taking Now

Based on our experience helping organisations implement Copilot, here are our top recommendations to help you put these principles into practice:

1. Start with a controlled pilot using the PAYG model to establish usage patterns before making significant licence purchases.
2. Licence your clear power users from the start. That’s likely to include roles like content creators, analysts, and executives who'll use Copilot extensively.
3. Set usage policies and guidelines to help teams understand when and how to use Copilot, preventing unnecessarily costly interactions.
4. Create custom agents strategically: each interaction with an agent incurs costs in the PAYG model, so focus on your proven high-value use cases.
5. Establish a regular review cycle (quarterly is ideal) to assess whether your licensing mix still matches actual usage patterns.
6. Consider message packs for departments with predictable but moderate usage. These provide slight discounts over pure consumption pricing.
7. Document successful use cases and calculate ROI to build the business case for expanding licences where they deliver clear value.
8. Train users thoroughly: proper prompt engineering and effective use of Copilot can reduce message counts and improve outcomes.