Costs, licences and add-ons: a manager's guide
Microsoft licensing is difficult because several charging models can sit on top of one another: an underlying Microsoft 365 plan, a per-user add-on, a premium automation licence, and usage-based credits. This page gives managers enough commercial context to ask the right questions before approving an experiment.
Last reviewed 2026-09-05
Commercial snapshot
| Capability | Current UK list-price guide | What managers should notice |
|---|---|---|
| Copilot Chat | Included for eligible Microsoft 365 / Entra users | No separate Chat licence, but some Agent use can be metered. |
| Microsoft 365 Copilot | £23.10 user/month paid yearly; Microsoft also shows £24.26 paid monthly on an annual commitment | A qualifying Microsoft 365 plan is still required. At £23.10, the list-price annual commitment is about £277.20 per user. |
| Power Automate Premium | £11.50 user/month, paid yearly | About £138 per user/year list price. Premium connectors and AI capacity are separate considerations. |
| Power Automate Process | £115.30 bot/month, paid yearly | A process/bot licence rather than an ordinary user licence; useful for shared business processes. |
| Copilot Studio prepaid capacity | £153.80 for 25,000 Copilot Credits/month, paid yearly | Roughly £1,845.60/year for one prepaid pack. Pay-as-you-go is also available with an Azure subscription. |
| Agent 365 standalone | £11.50 user/month, paid yearly | About £138 per licensed user/year. It is licensed per person using/managing/sponsoring agents, not per Agent. |
| Microsoft 365 E3 / E5 / E7 | £33.50 / £51.60 / £81.60 user/month, paid yearly | The numbering is not a ladder with every number. Current public enterprise comparison shows E3, E5 and E7. E7 includes E5, Microsoft 365 Copilot, Agent 365 and Entra Suite. |
| Cowork | No separate Cowork user price shown | Requires the relevant Microsoft 365 Copilot access plus Copilot Credit usage/billing and admin enablement. Cost is therefore fixed licence + variable consumption. |
The figures are useful for scale and procurement conversations, but always confirm the current quote before purchase.
Four different ways Microsoft can charge you
| Model | How to recognise it | Typical examples |
|---|---|---|
| Included | No extra line-item licence for the capability | Copilot Chat for eligible users; standard Microsoft 365 connectors already included in a plan. |
| Per user / annual commitment | A monthly-looking figure attached to a user but contracted annually | Microsoft 365 Copilot, Power Automate Premium, Agent 365, E3/E5/E7. |
| Per process / bot | The automation or hosted process is licensed rather than each ordinary user | Power Automate Process and Hosted Process. |
| Consumption / capacity | Cost changes with usage, model or action | Cowork, Copilot Studio, Agents for Chat-only users, AI Builder after seeded capacity is exhausted/removed. |
Where bundles change the answer
A manager may see several add-ons separately and assume they should all be bought independently. That is not always the cheapest or simplest route. Microsoft 365 E7 currently bundles Microsoft 365 E5, Microsoft 365 Copilot, Agent 365 and Microsoft Entra Suite. For a small number of users, standalone add-ons may still make more sense; for users who already need the wider E7 security/identity stack, buying the components separately can be the wrong comparison. Ask procurement or your reseller to compare the whole user profile, not one feature at a time.
Before approving another licence
Start with the work rather than the product name.
Go deeper
Sources
- Microsoft 365 Copilot enterprise pricing — checked 2026-09-05
- Microsoft 365 E7 — checked 2026-09-05
- Microsoft 365 enterprise plans and pricing — checked 2026-09-05
- Power Automate pricing — checked 2026-09-05
- Microsoft Copilot Studio UK pricing — checked 2026-09-05
- Microsoft Agent 365 UK pricing — checked 2026-09-05