Part 5: Microsoft 365 Copilot Licensing & Pricing

In brief

Each user needs a supported base licence and a Microsoft 365 Copilot License

  • Base licences: Microsoft / Office 3665 365 E3, E5 or F3; Business Standard or Premium.
  • UK Pricing is £24.70 per month or £296.40 per year +VAT.
  • The commitment is 12 Months.
  • When buying directly from Microsoft, the year is billed up-front.


Microsoft 365 Copilot is an additional purchase as it is not included in any of Microsoft’s licence suites, including the “Hero SKU” Microsoft 365 E5. So, to take advantage of the new AI capabilities offered by Microsoft, you will need to budget for additional investment.

Also in this series:

Part 1: Microsoft 365 Copilot SharePoint Data Quality                                              Part 2: Microsoft 365 Copilot Document Management                                              Part 3: Microsoft 365 Copilot SharePoint Governance                                                Part 4: Microsoft 365 Copilot Technical Prerequisites                                                Part 5: Microsoft 365 Copilot Licensing & Pricing

Licensing Microsoft’s Copilot requires both a qualifying base license and the Microsoft 365 Copilot license.

The supported base licences are:

  • Office 365 / Microsoft 365 E3
  • Office 365 / Microsoft 365 E5
  • Microsoft 365 E3
  • Business Standard
  • Business Premium

Note: As of early 2024, the minimum purchase is only 1 seat. The minimum term remains as 12 months. Additional seats added during the term will be pro-rated for the remainder of the year.

“Microsoft 365” is not the same as “Office 365”. The Microsoft 365 suite adds the Windows 11 Operating system and the Enterprise & Mobility security features, the investment of this benefit sees an uplift of approximately 50% to the license fee.

The key Microsoft 365 Copilot relevant features you can expect from the add-on are:

  • Information protection
    • Azure Information Protection (P1 / P2)
    • Manual, default, and mandatory sensitivity labelling in Microsoft 365 apps
    • Manual retention labels
  • Operating System
    • Windows 11 Enterprise
  • AI Tools
    • Bing Chat Enterprise (protects your data from being ingested into their AI engine)

With Microsoft 365 Copilot relying on accurate data – we’ve highlighted the key features relevant to Microsoft 365 Copilot on why you might want to consider this add-on licence.

  • Microsoft Purview Data Lifecycle Management
    • Machine Learning-based retention
    • Rules-based automatic retention policies
    • Records Management
  • Microsoft Purview Information Barriers
    • Automatic sensitivity labelling in Microsoft 365 apps
    • Automatic sensitivity labels in Exchange, SharePoint, and OneDrive
    • Default sensitivity labels for SharePoint document libraries
    • Sensitivity labels based on Machine Learning/Trainable Classifiers/Exact Data Match

To purchase the Microsoft 365 E5 Compliance SKU for £9.90 per user per month, you either require:

  • Enterprise Mobility Security + Office 365 E3 (Not a supported base licence for Microsoft 365 Copilot)
  • Microsoft 365 E3 (Supported for Microsoft 365 Copilot)

Many organisations are compiling their business cases for the Microsoft 365 Copilot licence, and might be questioning – should we be going “all-in” on Productivity with Microsoft 365 – and if so, should we also budget from the step up from E3 to E5 as part of the that business case?

In the previous section we touched on the value of the Microsoft 365 E5 Compliance add-on, so the question now becomes, what additional you achieve the value from making the extra ~£9 investment?

The key features included are:

  • Compliance Features as per Microsoft 365 E5 Compliance Add-On
  • Insider risk management
  • Productivity
    • Power BI Pro
    • Teams Phone Standard
    • Viva Insights Premium
    • Viva Engage Communities, Conversations, and Storyline
  • Security
    • Microsoft Defender for Cloud Apps
    • Office 365 Cloud App Security

Sales Copilot is not part Microsoft 365 Copilot licence – it integrates with both Dynamics and Salesforce and is available as:

  • As a standalone licence
  • As part of Dynamics 365 Sales Enterprise
  • As part of Dynamics 365 Sales Premium

If you plan to integrate with data sources outside of Microsoft 365 via the Microsoft Search – you should consider your included search quota.

  • Only Microsoft 365 E5, and Office 365 E5, include 500 items per licenced user.
    An item is a webpage or a document.
  • So, if you have 250 employees on Microsoft 365 E5, then your included allocation is 250x500 = 125,000 items.
  • If you need additional Search Quota, then budget US$1,000 per million items per month.

This is no different to assigning any other service within Microsoft. Simply go to the Microsoft 365 admin centre (Billing > Licenses). From here, you can assign a license to individual users or multiple users.

Microsoft have put a high bar on the base license required for an organisation to buy the Microsoft 365 Copilot add-on. In our view an Office 365 E1 licence would technically be sufficient, but that doesn’t drive the revenue numbers that Microsoft hope to achieve through their AI play.

For organisations that are driven by data, start putting in your budgets the licences you need, but don’t forget that licensing is only part of the story, data readiness, platform governance and user adoption will all require investment too.


Q: How much is Microsoft 365 Copilot in the UK?

It is £24.70+VAT per user per month, or £296.40+ VAT per year and is transacted on a 12-month contract – billed annually, upfront.

Q: Can I add Microsoft 365 Copilot to an Office 365 E3 or Office 365 E5 license?

Yes, the requirement to have a Microsoft E3 / E5 license was dropped in early 2024. Office 365 E3 or Business Standard are now the minimum base licences.

Q: Does Microsoft 365 Copilot include Microsoft Copilot for Sales?

No, Copilot for Sales is licensed separately.


Rupert Squires

Client Director

2 mins read

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Microsoft 365 Copilot Licensing + Pricing

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Microsoft 365 Copilot is an additional purchase as it is not included in any of Microsoft’s licence suites, including the “Hero SKU” Microsoft 365 E5. So, to take advantage of the new AI capabilities offered by Microsoft, you will need to budget for additional investment.

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