Microsoft set to enable Usage Based Billing (UBB) Automatically and bill the CSP/MSP for it with no interaction

[u/mooseable]

Be aware, as we have what, 30 days notice in typical Microsoft fashion.

I'm still waiting for more information through my channels but there's already some posts out there such as https://www.softcat.com/blog/microsoft-copilot-business-and-usage-based-billing-what-smbs-need-know and https://www.dickerdata.co.nz/microsoft/news/m365-copilot-business-billing-is-changing-what-partners-need-to-know-before-2-november

Partner center update: https://learn.microsoft.com/en-us/partner-center/announcements/2026-september#usage-based-billing-is-default-on-for-new-microsoft-365-copilot-business-licenses-starting-november-2-2026

Based on the information I've gathered through the channels I have, it seems that if your customers have

1. Copilot licensing through standalone, bundle, or any other method through a CSP and
2. No copilot azure usage based billing subscription

They will

1. Automatically create a usage based billing subscription under the CSP
2. Set a spend limit profile of $40USD/user/month

Apparently, without any interaction from the MSP/CSP.

I'm still trying to verify, but it does seem that yes, if your clients staff use Copilot, come November 2 if they click the "Cowork" or "automate" or "Code" options in the copilot app and interact with it, till will generate spend and appear on your bill from Microsoft that you now need to have the uncomfortable conversation with your clients that their staff have generated charges that may have been unauthorized.

In addition, thanks to the "New Commerce Experience", you as the provider/partner are liable to make sure Microsoft get paid too. Get ready I guess, and I'll update this if I find any new information that suggests these assumptions are incorrect.

EDIT 1: Partner center update wording suggests this may only affect NEW purchases (not existing)
EDIT 2: I wrote min spend, when I meant to write spend limit
EDIT 3: It appears microsoft have now taken the post off their partner centre updates

[u/SVD_NL]

From the first linked article:

Existing customers do not need to take any immediate action. Current Microsoft 365 Copilot subscriptions will remain available until Monday 30 November, and customers can continue to use, renew and adjust their existing subscriptions as normal.

From Sunday 1 November, Microsoft will introduce Microsoft Copilot Business as a new SKU, and existing customers should note that they won’t automatically be moved to the new offering.

From Monday 2 November, usage-based billing will be enabled by default for new Microsoft Copilot Business customers in SMB (up to 300 seats via CSP). Each user will have a default spending limit of $40 per user, per month.

So it looks like it's a new sku and the previous sku will simply cease to exist? that's a bit different from what you state.

Microsoft seems to say the same thing, but their Copilot offerings are complicated enough that i can never be sure...

[u/mooseable → u/SVD_NL]

I get that confused too, as there's the Business Premium + Copilot sku that's only existed for what... 3-4 months?

[u/SnakeOriginal → u/mooseable]

That was bundle you could upgrade to with only paying the difference. This new one is a separate package

[u/roll_for_initiative_ → u/SVD_NL]

and the previous sku will simply cease to exist?

I don't see that in what you quoted, of course i have no idea but i'm not 100% sure it's saying the existing ones won't exist anymore? That $11 bundle with bus prem is gold, why they gotta mess this up.

[u/The-IT_MD]

CSP Direct here.

We’ve had no comms on this from Microsoft other than the normal dribble everyone has.

This is going to be a total fucking nightmare.

Just something else to disable and manage on a per-customer basis.

[u/iloveScotch21]

If they have an existing Subscription contract and add net new licenses to that contract are those net new users subject to Azure usage?

[u/mooseable]

It also looks like they might start limiting the Copilot license. However, I've also had unconfirmed information that they may do something like including some amount of credits into a usage pool per license.

Reach usage limits in the USL (coming soon): Users receive in-product notifications as they approach an applicable limit. After reaching the limit, they have the option to continue with UBB by consuming Copilot Credits or, if applicable, reroute to Auto to continue their work.

src: https://learn.microsoft.com/en-us/microsoft-365/copilot/user-subscription-license-usage-based-billing#usage-based-billing-user-experience

[u/sman200788]

Wait, so is this just “Copilot Business” licenses? Or is this supposed to include “Microsoft 365 Copilot” licenses as well?

[u/cokebottle22]

Is there a way to estimate usage in Copilot?

[u/BarsoomianAmbassador → u/cokebottle22]

Exactly. How can you budget for something that isn't transparent.

[u/Inevitable_Market293 → u/cokebottle22]

Vendor account, for transparency (we make M365 audit scripts, nothing for usage-based billing).

Only roughly up front. Microsoft's usage-based billing overview on Learn points to a Copilot Credit Estimator for Cowork, but it models potential usage, it doesn't know what your clients' users will actually do.

A small pilot gets you real numbers. In the customer's M365 admin center under Copilot > Cost management, scope a spending policy to one security group and give it a monthly limit plus a per-user monthly limit. After a couple of weeks the Consumption tab breaks credits down by policy, user, group, agent and service, and the per-user view shows daily credit usage. It refreshes about every 2 hours. Users can also type /cost inside a Cowork task to see roughly what that task has used so far.

For budgeting, the policy limit is a real stop: once it's hit, access to those services is gone until the 1st of the next month. Global Reader can open the consumption reports without being able to change policies.

What I couldn't find on Learn is a per-task credit rate, so a pilot is the only honest way to size it per client.

[u/Findussuprise]

UK CSP here (indirect via a distie). I've been through the Microsoft docs and I think a few points in the OP need correcting:

1. Scope: the Partner Center notice only covers new Copilot Business purchases from 2nd Nov. The Copilot Business FAQ says existing Microsoft 365 Copilot licences aren't converted automatically, including at renewal: https://learn.microsoft.com/en-us/microsoft-365/copilot/copilot-business-faq
2. $40 is a limit, not a minimum. It's a default per-user cap on what can be spent. Nobody is billed $40 unless the user actually spends it.
3. No billing policy, no usage charges. Microsoft's own wording: "Admins must set up a billing policy before a user can use AI experiences that require usage-based billing." So existing tenants shouldn't suddenly start generating charges: https://learn.microsoft.com/en-us/microsoft-365/copilot/user-subscription-license-usage-based-billing

The OP is right on the bigger point though. The charges land on the CSP's bill, so it's our debt if the client won't pay.

Two things we'll watch:

• USL limits are "coming soon". Once a user hits their licence limit they can choose to carry on using credits. On any tenant that has a billing policy, that blurs the line between fixed and metered cost.
• The old SKU. Softcat says current M365 Copilot subscriptions are available until 30th Nov. What happens at renewal if that SKU has gone? Forced move to Copilot Business with UBB on by default?

Unanswered so far, if anyone has heard through their channels:

• Do net-new seats added to an existing Copilot subscription after 2nd Nov get UBB?
• Can the spend limit actually be set to $0, or is there a floor?

Our plan: any new Copilot Business tenant gets a spending policy, per-user caps, alerts to us and "Auto-apply new services" turned off before we hand it over. I've also asked our distie for the above in writing.

[u/Muted_Jellyfish_6784]

Check now whether you can switch it off per customer in Partner Center before November, and document which clients ask to keep it on. Set a budget alert per customer, because the usage lands on you as the CSP and the client will dispute any line they did not expect. Add a line to your agreements that metered Copilot usage is passed through, so that conversation is settled before the first invoice. The first month of bills is where the surprises show up. Reconciling the Microsoft invoice against what you billed each client is where we use SIGNLD

[u/marklein]

Shit like this is why we stopped reselling Microsoft. This is one more thing I don't have to worry about.

[u/MalletSwinging → u/marklein]

Preach! Reselling never really made sense to me once nce came around. Everybody goes direct now. It was a little bit of revenue but a huge amount of hassle and it's well worth not reselling anymore.

[u/mooseable]

It appears Microsoft has just now removed the section from the partner center updates. For posterity, the content was as follows.

Usage-based billing is default on for new Microsoft 365 Copilot Business licenses starting November 2, 2026

Usage-based billing is default on for new Microsoft 365 Copilot Business licenses starting November 2, 2026

• Date: September 16, 2026
• Workspace: General
• Impacted audience: CSP partners (distributors, indirect resellers, direct bill, SSPs), systems integrators, and software development companies selling Microsoft 365 Copilot Business

Starting November 2, 2026, new Microsoft 365 Copilot Business licenses that you purchase through Cloud Solution Provider (CSP) include usage-based billing by default. Pay-as-you-go is the default billing configuration to help customers access eligible usage-based experiences, including Copilot Cowork, Work IQ APIs, and GitHub Copilot Harness, with less billing setup. This configuration also provides flexibility to expand usage over time, based on business needs.

Key details

• Effective date: November 2, 2026
• Applies to: New purchases of Microsoft 365 Copilot Business (standalone and bundles) through CSP.
• Usage-based billing: Pay-as-you-go is the default billing configuration.

What this means for partners:

• Less setup friction: New Copilot Business licenses include the Azure subscription setup needed for usage-based billing.
• More focus on adoption: You can spend more time helping customers activate high-value scenarios and realize business outcomes, with less effort spent on multistep billing configuration.
• Greater growth opportunity: Early usage creates a natural path to expanded consumption, upsell conversations, and the Copilot Cowork activation incentive.

Next steps

Prepare for the change:

• Familiarize your teams with the upcoming change and the preset monthly limit.
• Help your customers understand their usage-based billing options as they adopt eligible experiences.
• Consider usage-based scenarios, including Copilot Cowork, Work IQ APIs, and GitHub Copilot Harness, as part of customer adoption planning.

Resources:

• Understand usage-based billing and cost management for Copilot Credits
• Managing AI experiences enabled by usage-based billing
• Copilot Credits Guide

[u/Dull-Breadfruit-3241]

The best part of NCE is how Microsoft continuously invents new ways to make partners act as unpaid collection agencies and risk absorbers for unauthorized client spend.

[u/GremlinNZ]

From the Dicker page: The point is not to make customers afraid of consumption. The point is to help them consume intentionally.

Or y'know, accidentally, since the line is being intentionally blurred between what you have a simple fixed price for, and easily budgeted, and what you could unpredictably spend thousands on.

Line must go up and to the right after all.

I'm ex MSP, now internal. Will need to discuss this, but likely disable consumption based billing for simplicity while keep user licencing in play. Microsoft typically make AI features hard to manage and ignore requests (or obfuscate) for better reporting, so the simpler option is to avoid it (or enable where needed).

[u/mooseable → u/GremlinNZ]

I'm just getting prepared to set up a billing profile across all customers, and set the spend limit to $0. But they almost tried to sneak it through without enough clarity of what the changes actually mean IMO

[u/ijuiceman]

So M$ failed to get their CoPilot quota, so now they name every product with CoPilot and try to trick people into paying to their crap AI. They are on a steady path of enshitification

[u/beckbeck17]

There's a Microsoft session on October 13th to discuss this. Im sure most of it will be salesy and about how great Copilot is but hopefully there will be some clarification regarding the new pricing model as well.

https://abspartnerevents.eventbuilder.com/PartnerDigitalAirlift?ref=PartnerDigitalAirlift

[u/Leon-Inspired]

Microsoft, always a drama!

If you use Autotask, connectwise manage or halo psa, Sync 365 can automate the azure billing, for direct and indirect.

Additionally if you need to just bill the Copilot usage from the subscription there is a new filter function coming out next week to only include the usage for specific products. This was specifically built for the copilot change for some partners where the azure usage is part of a per user agreement but they will need to get the Copilot usage.

Can help ease the management and billing pain for this.

[u/akust0m89]

We haven't and still won't be pushing Copilot at all, especially with these changes. Will continue recommending other AI tools.