Assigning Licenses and Billing Policies

What it is

Two admin tasks decide who can use Copilot and who pays. Assigning licenses gives named users the Microsoft 365 Copilot add-on. Billing policies are the pay as you go alternative: a policy ties a set of users to an Azure subscription, and usage of a Copilot service is charged there.

How it works

Assigning Copilot licenses

Users first need an eligible Microsoft 365 license, and the Copilot add-on is assigned on top of it. Licenses can be bought in the Microsoft 365 admin center marketplace, through a partner or from the Microsoft account team.

To assign:

1. In the Microsoft 365 admin center, go to Billing > Licenses.
2. Select the Microsoft 365 Copilot product.
3. Assign it to users or groups, or reassign it from another user.
4. Check the result under Users > Active users, which lists each user's licenses.

You can also assign it from a user's Licenses and apps tab, or use the Copilot setup guide in the admin center.

Roles that can manage licenses include Global Administrator, License Administrator and User Administrator.

Pay as you go billing policies

A billing policy is a unique billing identifier. It combines an Azure subscription and a set of users. Two steps set it up:

1. Add a billing policy. Choose the Azure subscription and the users it covers, and optionally add a budget.
2. Connect the policy to a Copilot service, such as Copilot Chat agents or SharePoint agents.

Creating the policy alone does not finish the setup. Until it is connected to a service, nothing is billed and nothing is enabled.

The place to start is Microsoft 365 admin center > Copilot > Settings > User access > Copilot pay-as-you-go billing, which opens the Billing & usage page. There, the Pay-as-you-go services tab lets you pick a service and configure its policy.

Managing policies

Policies can allocate cost to departments, so each team's usage lands on its own Azure subscription. Connections happen one at a time.

Monitoring cost

Use the Cost Management page in the Microsoft 365 admin center for each pay as you go service. The Azure portal gives a deeper cost breakdown and analysis through Microsoft Cost Management.

The Global Administrator, Billing Administrator and AI Administrator roles can view and manage pay as you go. Global Reader gets read only access. By default pay as you go is disabled, and a Global Administrator or subscription owner can enable it.

A worked example

The marketing team wants to try Copilot Chat agents but has no licenses. The admin opens Copilot pay-as-you-go billing, adds a billing policy named Marketing that uses the marketing Azure subscription, sets a budget with an email warning at a chosen percentage, and connects the policy to the service. A month later the admin checks the Cost Management page. Usage is lower than expected, so marketing stays on pay as you go. Sales, with heavy daily use, receives monthly licenses instead.

How the exam asks about this

• "Where do you assign a Microsoft 365 Copilot license to a group?" Microsoft 365 admin center > Billing > Licenses.
• "A billing policy exists but users cannot use the service." The policy has not been connected to a Copilot service.
• "Warn the team when spending reaches a threshold." Add a budget with notifications to the billing policy.