Microsoft shifts to usage-based billing with new AI office agent

WASHINGTON: Microsoft has introduced a new artificial intelligence office assistant and, with it, a major change to how it charges for software, moving away from a solely fixed-fee model toward usage-based billing for certain AI tasks.

The company launched Copilot Cowork on Tuesday, describing it as an AI agent capable of handling workplace assignments on a user’s behalf, including drafting documents, creating spreadsheets and sending emails. The tool still requires a paid Microsoft 365 Copilot subscription, but each task carried out by the agent will now be billed separately according to the computing resources it uses.

Copilot Cowork is Microsoft’s entry into what the company described as agentic AI, a category of tools designed to go beyond chatbot responses and independently complete assignments for users. The system can be given a task and continue working on it on its own, in some cases for several hours. The company said one customer used the tool to review nearly 4,000 documents within a few hours, while it can also prepare for complex meetings by bringing together information from emails, internal files and calendars.

Why Microsoft changed its pricing

Microsoft linked the new billing structure to the high cost of running advanced AI systems, which require far more computing power than conventional search engines or chatbots. The company said usage can differ sharply from one user to another, making a single flat charge less suitable for this kind of service.

Charles Lamanna, Microsoft’s executive vice president for Copilot and agents, explained the shift in comments to AFP.

"The new plan will be “like you’re filling up your gas tank at the pump," Lamanna said. He added "there’s not one overarching user license that makes sense,"

given that users consume different amounts of computing power.

He also described the move as a significant change for Microsoft’s long-established software business.

"This is a big evolution for us … which has been a user subscription-based business for so long, for really like two decades,"

Lamanna said, calling the approach "the only way to make the model work."

Safeguards and model options

To reduce the risk of unexpectedly high charges, Microsoft said the feature is switched off by default. Companies will also be able to set spending limits for individual employees, teams or departments.

The company said customers will have a choice over which AI model powers the tool, allowing them to opt for more capable and more expensive models or lower-cost alternatives. At general availability, Copilot Cowork runs on Anthropic models including Opus 4.8 and Sonnet 4.6. Customers on the Frontier tier can use GPT 5.5, which is described as state-of-the-art. Microsoft also said a significantly cheaper model called Cowork 1 will be introduced soon for everyday tasks.

Part of a wider industry shift

Microsoft is not the only technology company adopting this approach. Its coding subsidiary GitHub moved to usage-based billing in early June, a change that triggered criticism from some developers after some bills rose sharply. Anthropic also said in early June that its newest advanced models would soon be billed by usage instead of being bundled into subscription plans, including premium tiers.

The move marks a notable departure for Microsoft, whose office software business has for around two decades largely relied on predictable subscription pricing. The latest change reflects the growing cost and complexity of delivering AI tools that perform actions rather than simply answering prompts.