Microsoft delays Copilot usage-based billing again

Microsoft now expects to enact UBB early next year

Microsoft has again pushed back the effective date of its plan to turn on usage-based billing by default for new Microsoft 365 Copilot Business subscriptions purchased through Cloud Solution Provider partners.

Microsoft now expects to enact the policy sometime between January and March 2027, its third fiscal quarter, the technology giant revealed.

The change comes as Microsoft solution providers navigate internally and with customers when artificial intelligence use is covered by a licence, when it triggers consumption and how those costs affect the use of AI tools such as Copilot.

“We heard your feedback and are adjusting the effective dates to give you extra time to prepare for these upcoming changes and support your customers,” according to the Microsoft statement on the change.

Chris Miller, chief revenue officer of Microsoft solution provider ATB Technologies told Computing’s sister site CRN in a recent interview that working with Microsoft’s Azure cloud has helped ATB develop an understanding of cloud economics.

Miller said he can imagine licence-based AI offers disappearing one day and the market moving entirely to token-based pricing. ATB has been differentiating from other Microsoft partners through helping clients understand their AI consumption bills, stay within budget and determine which Microsoft AI capabilities are covered by licences and which trigger consumption charges.

“There is the ability to do it in a way so that it's not like you're going to end up with a $5,000 bill at the end of the month,” he said. “We're monitoring our own ways to help make sure the costs are staying in line.”

ATB recommends to clients targeted rollouts of Copilot licences to select users before exploring products such as the Microsoft Fabric software-as-a-service data analytics platform and determining whether consumption-based capabilities make sense for particular users. In some cases, consumption is a better model than licencing.

“We can start helping them start to see a better way of doing it where it is consumption because 80% of your users [could be] wasting your licence,” he said.

Microsoft promises partners 30-Day Copilot UBB testing head start

This marks Microsoft’s second delay of its usage-based billing (UBB) by default policy, with the vendor previously delaying the policy’s 2nd November effective date to 1st December.

Microsoft is also delaying the availability of Partner Centre sandbox environments for testing the new policy, without revealing a new availability date. The vendor is promising readiness guidance and at least 30 days of sandbox testing before default UBB becomes generally available (GA).

Timelines for sandbox availability and UBB apply to Australia, Belgium, Brazil, France, Germany, India, Italy, Korea, the Netherlands, Poland, Spain, UK and other markets.

Solution providers will still have a default spending limit of 4,000 Copilot Credits per user per month across eligible services for users in a customer’s organization. Partners can set the applicable spending limit to zero to stop UBB spending.

Copilot Cowork, Work IQ APIs and GitHub Copilot Harness are among the Microsoft offerings that require usage-based billing for customers to use them.

UBB by default will apply to new purchases of Microsoft 365 Copilot Business licences in CSP, including standalone offers and bundles.

Microsoft executives have been publicly saying that the future of AI pricing is a basic allotment of compute under a licence with metered consumption charges for more advanced uses of AI.

During Microsoft’s latest quarterly earnings call, CEO Satya Nadella touted the vendor’s growing consumption-based AI business, revealing that the number of Copilot customers actively consuming credits through usage-based billing grew more than 75% over the quarter.

Credit consumption from agentic features on Microsoft’s GitHub business, which already uses usage-based billing, has more than doubled. Consumption plus seat subscriptions increase Microsoft’s total addressable market and average revenue per user, Nadella said on the call.

“As agents take on higher-value work, consumption opens up business-funded demand, with spending tied directly to the value these agents deliver,” Nadella said.

This article first appeared on Computing’s sister title CRN.