3.1 Copilot Licensing and Billing

Microsoft AB-900 Study Guide Exam

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1 Microsoft 365 Core Features

AB-900 Exam Map and Audience M365 Licensing and Admin Centers Exchange, SharePoint, and Teams Objects Identity and Authentication with Entra Zero Trust and Security Basics Microsoft Graph and Permissions Model

2 Data Protection and Governance

Purview Information Protection DLP Policies and Sensitive Info Types Insider Risk and Communication Compliance DSPM for AI and Copilot Exposure Retention Labels and Records Governance Traps for Copilot Data

3 Copilot and Agent Administration

3.1 Copilot Licensing and Billing 3.2 Usage Monitoring and Analytics 3.3 Prompt Governance and Controls 3.4 Agent Creation and Lifecycle 3.5 Agent Permissions and Grounding 3.6 Admin Exam Scenarios and Review

Free exam prep Microsoft Copilot and Agent Administration Fundamentals (AB-900) Practice Questions 200 questions Study Guide 18 topics Cheat Sheet 69 facts Flashcards 50 cards

3.1 Copilot Licensing and Billing

Key Takeaways Explain This Topic AI

Microsoft 365 Copilot requires both a qualifying base license (E3/E5, Business Standard/Premium, or Office 365 E3/E5) and the Copilot add-on assigned per user in the Microsoft 365 admin center.

The monthly per-user license is a fixed subscription; pay-as-you-go bills consumption in Copilot Credits and requires linking the tenant to an Azure subscription.

The Copilot Administrator Entra role manages Copilot settings with least privilege — use it instead of Global Administrator for day-to-day Copilot administration.

Researcher and Analyst are Microsoft-built reasoning agents included with a Copilot license; pay-as-you-go does not apply to them.

Copilot licenses are assigned under Active users > Licenses and apps; new licenses are purchased under Billing > Purchase services. Last updated: July 2026

Quick Answer: Microsoft 365 Copilot is a per-user add-on on top of a qualifying base license. Assign it in the Microsoft 365 admin center under Active users > Licenses and apps . For variable usage, pay-as-you-go meters consumption in Copilot Credits through a linked Azure subscription instead of fixed monthly seats. Why Licensing Matters on AB-900 Domain 3 — Basic Administrative Tasks for Copilot and Agents — is worth 25–30% of the AB-900 score. Licensing and billing questions test whether you know where admins act, what each model costs, and which prerequisites must exist before users see Copilot. Microsoft writes distractors that swap billing models, confuse purchase with assignment, or point you to the wrong admin center. Built-in Copilot vs Custom Agents (Licensing Lens) Microsoft 365 Copilot is the built-in productivity assistant embedded in Word, Excel, PowerPoint, Outlook, Teams, and other M365 apps. It grounds on the tenant semantic index and the signed-in user's Microsoft Graph permissions. Custom agents are organization-built assistants authored in Microsoft Copilot Studio with scoped topics, knowledge sources, and actions. They carry separate governance, approval, and sometimes distinct licensing considerations. AB-900 expects you to distinguish the two before choosing a billing model. Prerequisite Base Licenses Before any Copilot add-on works, each user needs a qualifying base license :

Qualifying Base License Copilot Add-on Required Microsoft 365 E3 or E5 Yes — Copilot add-on Microsoft 365 Business Standard or Premium Yes — Copilot add-on Office 365 E3 or E5 Yes — Copilot add-on Assigning only the Copilot SKU without a base license leaves the user unable to access integrated app experiences. During rollout, admins verify both licenses appear on each pilot user's account. Monthly Per-User License Model The monthly per-user license is a fixed subscription : one Copilot seat per licensed user, billed predictably regardless of how heavily that person uses Copilot in a given month. This model fits organizations with steady, organization-wide adoption where finance wants predictable OpEx and HR wants every knowledge worker enabled. Assignment path: Microsoft 365 admin center → Active users → select user → Licenses and apps → enable Microsoft 365 Copilot . Group-based licensing through Entra security groups scales assignment for departments. Purchase path: Billing → Purchase services acquires new Copilot seats; assignment is a separate step under Active users. Pay-as-You-Go Billing Model Pay-as-you-go suits pilots, seasonal teams, or fluctuating usage where committing to hundreds of monthly seats is premature. Instead of a fixed per-user fee, consumption is metered in Copilot Credits and billed based on actual usage.

Aspect Monthly Per-User Pay-as-You-Go Cost structure Fixed per licensed user Consumption-based (Copilot Credits) Azure subscription Not required for billing Required — tenant linked to Azure sub Best for Steady, org-wide rollout Variable or pilot deployments Admin configuration License assignment Billing policies in M365 admin center Prerequisite: Connect the Microsoft 365 tenant to an Azure subscription in the Microsoft 365 admin center so Microsoft can meter and invoice consumption. Without that link, pay-as-you-go cannot be enabled. Billing policy management: Admins create and adjust pay-as-you-go billing policies in the Microsoft 365 admin center , controlling cost exposure caps and which workloads consume credits. On the Exam: If a stem describes fluctuating month-to-month usage or a small pilot avoiding seat commitments , the answer is almost always pay-as-you-go . If it describes predictable enterprise-wide deployment , choose the monthly per-user license . Copilot Administrator Role Day-to-day Copilot configuration should not require Global Administrator . Microsoft provides the Copilot Administrator Entra role, scoped to manage Copilot settings, usage policies, and org-wide toggles such as web grounding — without tenant-wide superuser rights. This follows least-privilege access , a Zero Trust principle tested across AB-900. Microsoft-Built Agents and Licensing Researcher and Analyst are Microsoft-built reasoning agents included with a Microsoft 365 Copilot license. Pay-as-you-go does not apply to these agents — a common exam trap that reverses the billing relationship. Worked Scenario: Choosing a Billing Model A 500-person company launches Copilot to 50 sales reps for a 90-day pilot with uncertain continuation. Finance refuses 50 fixed monthly seats. The administrator should: Link an Azure subscription for metering. Enable pay-as-you-go billing policies in the M365 admin center. Assign base licenses plus enable Copilot access for the pilot group. Monitor consumption through billing reports before converting to per-user licenses if adoption stabilizes. Common Exam Traps

Trap Reality Purchase services assigns licenses Purchase acquires seats; Active users assigns them Pay-as-you-go needs no Azure link Azure subscription linkage is mandatory Copilot works without a base license Qualifying M365/O365 base license is required Global Admin is the only Copilot admin role Copilot Administrator is the least-privilege choice E5 vs E3 and Copilot Governance Readiness While Copilot licensing is separate from the base SKU, Microsoft 365 E5 includes advanced Purview capabilities — Insider Risk Management, Communication Compliance, and extended audit — that many organizations rely on when governing Copilot at scale. E3 provides foundational DLP and sensitivity labels but lacks several AI governance tools tested elsewhere on AB-900. When an exam stem ties licensing to comprehensive Copilot governance , E5's bundled compliance stack is often the implied prerequisite even though the Copilot add-on itself attaches to either tier.

Test Your Knowledge

What is the difference between the Microsoft 365 Copilot monthly per-user license and pay-as-you-go billing?

They are identical billing methods

Pay-as-you-go is only for SharePoint sites

The monthly license requires an Azure subscription but pay-as-you-go does not

The monthly license is a fixed per-user subscription, while pay-as-you-go charges based on consumption and requires linking to an Azure subscription Check Answer Need a hint? AI

Test Your Knowledge

A company wants fluctuating Copilot Chat usage during a pilot without committing to per-user subscriptions. Which billing model fits best?

Pay-as-you-go billing

A fixed annual per-user license for all employees

Assigning sensitivity labels instead

No Copilot usage at all Check Answer Need a hint? AI

Test Your Knowledge

Which prerequisite must be in place to enable Microsoft 365 Copilot pay-as-you-go billing?

A custom domain only

A linked Azure subscription to meter and bill consumption

A retention label applied to all sites

Disabling conditional access Check Answer Need a hint? AI

Test Your Knowledge

Where does an administrator assign Microsoft 365 Copilot licenses to individual users?

Exchange admin center > Mailboxes

Microsoft Purview portal > Information Protection

Microsoft 365 admin center > Active users > Licenses and apps

SharePoint admin center > Site permissions Check Answer Need a hint? AI

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