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Before you extend Microsoft 365 Copilot with custom capabilities—such as integrating external data sources or building intelligent agents—it's important to understand the associated licensing and consumption costs.
Your Microsoft 365 Copilot license type determines access to extensibility features and whether additional usage charges apply. This article outlines the available Copilot licensing options, and breaks down cost considerations for each extensibility path, including Microsoft 365 Copilot connectors (formerly Microsoft Graph connectors), agents, and Microsoft 365 Copilot APIs..
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 is ideal for frequent users of Copilot and agents and those who want AI assistance integrated throughout their workflow.
Your license type determines access to Copilot capabilities and whether metered consumption charges apply when using extensibility options like Copilot connectors or agents.
For more details about consumption costs, see Billing rates and management. 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 additional 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). Metered charges apply for shared tenant data (SharePoint, Copilot connectors), tracked via Copilot Studio meters. |
| No Copilot license or Microsoft 365 subscription | N/A | Not supported | May be unable to access Copilot; extensibility features not guaranteed without a qualifying license. |
Copilot connectors
Copilot connectors allow you to enrich Copilot with external data to enhance the contextual relevance of Copilot responses.
Index quota and licensing
All eligible Microsoft 365 enterprise customers receive 50 million items of index quota at no extra cost. This quota is used for ingesting content via Copilot connectors. By default, each connection is capped at 5 million items. If you need a higher per-connection or overall quota, contact your Microsoft account manager or submit this form. For details, see Index quota for Copilot connectors.
Eligible licenses
The following licenses qualify for the 50 million item quota:
- Microsoft 365 Business Basic / Standard / Premium
- Microsoft 365 A3 / A5 / E3 / E5 / F1 / F3
- Office 365 A3 / A5 / E1 / E3 / E5 / F3
Note: Connectors in preview status don't count against your quota. When the connector reaches general availability, it starts counting toward the quota.
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 will automatically be able to 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 the M365 Copilot Chat add-on license with an eligible Microsoft 365 license.
If a user doesn't have a Copilot license and metered usage 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 do not incur extra costs.
- Agents that access shared tenant data (such as SharePoint or Copilot connectors) generate metered consumption charges via Copilot Studio.
Hosting Cost
Declarative agents are hosted by Microsoft 365 Copilot and do not incur additional hosting costs.
Custom engine agents
Usage Cost
Users do not 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 do not incur additional charges.
- Users without a Microsoft 365 Copilot license might incur metered consumption charges if the agent interacts with shared tenant data (SharePoint or Copilot connectors), based on Copilot Studio meters.
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 might be metered or subject to Power Platform capacity limits.
- Azure AI Services – For AI-powered processing and natural language understanding. See Azure AI services 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 will vary 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 with 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 additional charges. For users without licenses: - No charges for instruction-based or public site-grounded agents. - Metered charges for shared tenant data usage (e.g., SharePoint, Copilot connectors). |
Varies based on license:
|
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.