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Microsoft Copilot Licensing Changes: What You Need to Know (and the Big Gotcha)
Microsoft is once again shaking up its Copilot licensing model—effective October 10, 2025—and while the changes bring some new benefits, there’s also a costly catch IT sourcing leaders need to watch closely.
The headline: Microsoft is retiring several separate Copilot SKUs (like Copilot for Sales, Service, and Finance, which cost up to $600/year) and rolling those role-based AI features into the standard Microsoft 365 Copilot license ($360/year).
That’s great news for companies that haven’t yet invested in those role-specific licenses. But for those who did? There’s no refund for recent purchases of the retired SKUs. Transitions can only occur at renewal.
What’s Changing
1. Role-Based Features Now Included
- Retired SKUs: Copilot for Sales, Service, Finance
- These features are now bundled into Microsoft 365 Copilot at $360/year
- Important: No refunds for recently purchased role-based licenses; transitions only at renewal
2. Copilot Studio Enhancements
- Organizations can build custom Copilot agents
- Lite version: Embedded in Microsoft 365 Copilot for simple builds
- Full version: Available in Copilot Studio for advanced development
3. Consumption Model Changes
- “Messages” renamed to “Credits”
- Licensed M365 Copilot users: no usage charges
- Charges apply for non-licensed users, independent bots, and consumer-facing scenarios
The “Gotcha” That Procurement Needs to Manage
The lack of refunds for retired SKUs creates real cost exposure. Customers who purchased role-based Copilot licenses recently are left paying for functionality that will soon be standard in the cheaper $360 Copilot SKU.
Microsoft is also unlikely to renegotiate contracts mid-term—which means sourcing teams need to plan carefully for renewals and annual reconciliations.
Three Guidance Points for Procurement
- Use new SKUs for all net-new Copilot licenses. Don’t buy additional quantities under the soon-to-be-retired SKUs. Make sure any new Copilot licenses are purchased under the updated SKUs.
- Renegotiate pricing of the new SKUs. Use renewals as a leverage point to offset the sunk costs of older, more expensive licenses. Microsoft won’t hand you savings—you’ll need to negotiate them.
- Replace old SKUs at annual reconciliation if eligible. If your existing Copilot licenses are reduction-eligible, use your anniversary/true-up to swap them out for the new, lower-cost SKUs.
Bottom Line
Microsoft’s Copilot changes are a reminder that licensing shifts can create as much risk as opportunity. Enterprises that don’t carefully plan transitions may end up paying for redundant or overpriced licenses.
With no refunds available, procurement leaders need to be proactive—protecting their organizations by ensuring new purchases use the right SKUs, negotiating renewal pricing aggressively, and leveraging true-ups to realign cost and value.
Looking for more clarity around Microsoft’s recent licensing and pricing changes? Contact us – our Microsoft licensing experts can answer your questions.
