Free Copilot Chat, included with Microsoft 365 business plans, gives every user a web-grounded AI chat that analyses files they upload and, in Outlook, answers questions about their inbox and calendar. The paid licence, $21 a user a month for Copilot Business, adds reasoning across your emails, meetings, chats and files together, plus Copilot inside Word, Excel, PowerPoint and Teams.
The distinction Microsoft draws is web-based chat versus work-based chat. Free Copilot Chat knows the internet and whatever you hand it. The licence lets Copilot go and find things in your organisation's data (every email, file and meeting you already have permission to see) and combine them. For some roles that's the whole point; for others, free chat does 80% of the job.
The names don't help. Microsoft renamed the Microsoft 365 Copilot app "Microsoft Copilot" in August 2026, and its pages now call the paid add-on Microsoft Copilot, while the small-business product is still sold as Microsoft 365 Copilot Business in places. It's the same thing. Consumer Copilot Pro, which some owners still ask about, is retired.
Both tiers keep the enterprise data protection that comes with a work account, and both respect existing Microsoft 365 permissions. Neither shows anyone content they couldn't already open.
What every Microsoft 365 business user gets without paying extra
Copilot Chat is included with eligible plans, including Business Basic ($7 a user a month on annual billing), Business Standard ($14) and Business Premium ($22). Users reach it from the Microsoft Copilot app, the chat page in their browser, Outlook, Teams and the Edge side pane. Microsoft lists what it does:
- Research and summarise from the web, with the same model picker as the paid version: Auto, Quick response for routine questions, and Think deeper for harder ones.
- Write and rewrite content, from emails to policies.
- Analyse files you upload, such as a PDF contract or a spreadsheet export.
- Create images.
- Work with your inbox and calendar in Outlook. Without a licence you can ask about your emails, calendar, meetings and other limited data, and take actions such as flagging messages, setting an automatic reply or scheduling a meeting.
- Use agents, in a limited way, with usage metered rather than included.
Two limits matter in practice. Free chat runs on standard access, so Microsoft says quality and speed can vary with service capacity. And outside Outlook it doesn't search your organisation's files; it works on what you paste, upload or reference. Whether a basic Copilot pane appears inside Word, Excel, PowerPoint and OneNote for unlicensed users depends on your licensing and tenant settings, and Microsoft labels it in the app: "Microsoft 365 Copilot (Basic)" means you have standard access there, and "Copilot Chat (Basic)" means you don't.
What the paid licence adds, feature by feature
| Capability | Free Copilot Chat | Paid licence |
|---|---|---|
| Web-grounded chat, file upload, images | Yes | Yes, with priority access |
| Enterprise data protection | Yes | Yes |
| Questions about your inbox and calendar in Outlook | Yes, within supported Outlook scenarios | Yes, plus chats and documents |
| Reasoning across emails, meetings, chats, files and sites together | Limited | Yes |
| Copilot in Word, Excel, PowerPoint and OneNote | Depends on plan and settings | Full experience |
| Copilot in Teams meetings, including recaps | No (recaps need Teams Premium or the licence) | Yes, with a Teams licence |
| Microsoft's Researcher and Analyst agents | No | Included |
| Agent use in Copilot Chat | Metered | Included |
| Scheduled prompts | No | Yes, up to 10 |
The row that justifies most licences is the fourth. Microsoft's own example is a licensed user asking Copilot to synthesise information across emails, meetings, chats and documents into one answer. The free tier can't do that because it can't see those sources together; it can only work with the ones you bring to it one at a time.
The same requests, free and paid
Here are three tests from an office manager's week, as illustrations of where the line falls.
Test 1: a web research question
What should a small language school include in a refund policy
for term fees? Give me a checklist and flag anything I should
check with an adviser.Free and paid gave essentially the same answer: a ten-point checklist covering cancellation windows, partial refunds after a term starts, and transfers between courses, with a note to check consumer-law obligations with an adviser. For web-grounded questions like this, the licence adds nothing but priority.
Test 2: an inbox question in Outlook
Summarise emails from the last week about the Saturday exam
course and list anything still waiting for my reply.Free Copilot Chat in Outlook handled it. The illustrative answer grouped nine emails into three threads (room booking, a parent's query about exam dates, an invoice from the examining body) and listed two awaiting a reply. What it couldn't do was check the exam timetable in a Word document on SharePoint when the parent's question depended on it; it suggested opening the document and asking again.
Test 3: a question spanning emails, a meeting and files
Prepare me for Thursday's meeting with the director about
enrolment numbers: what was agreed at the last meeting, what the
latest enrolment spreadsheet shows against target, and which
parent complaints came in since.Only the licensed account could answer. The illustrative reply pulled the action points from the last meeting's recap, the totals from the enrolment workbook on SharePoint (212 against a target of 240), and two complaint emails, with links to each source. The free account explained it couldn't access those files or the meeting and offered to help if they were pasted in. That's the licence in one example: saving the 20 minutes of gathering, not writing better sentences.
A language school decides who needs a licence
This school has 14 staff on Business Standard: a director, an office manager, two administrators and ten teachers, several part-time. Licensing everyone with Copilot Business would cost 14 x $21 = $294 a month on annual commitment, or $3,528 a year. Before spending that, the director ran a 30-day test with free Copilot Chat for everyone and asked each person to note any task where they'd wanted Copilot to find something itself.
The notes told a clear story. Teachers used free chat for lesson materials, worksheet ideas and rewriting feedback, and never hit the limit: their work starts from a blank page or a document they already have open. The administrators mostly drafted emails and replies, which free chat in Outlook covered. The director and the office manager hit the wall repeatedly: meeting preparation, summarising a month of email with a partner organisation, pulling numbers from workbooks they hadn't opened in weeks.
| Option | Monthly cost (annual commitment) | Yearly cost |
|---|---|---|
| Free Copilot Chat for all 14 | $0 | $0 |
| Copilot Business for director and office manager | $42 | $504 |
| Same two seats at the $18 promotional price (first year, if bought by 31 Dec 2026) | $36 | $432 in year one |
| Copilot Business for everyone | $294 | $3,528 |
The school bought two seats. At $42 a month, each licence has to save about 25 minutes a month of a manager's time to break even at a notional $50 an hour, which meeting preparation alone did in the first week. Because Copilot Business is sold on an annual commitment, two seats that get used beat fourteen that mostly don't.
Roles that usually outgrow the free tier, and roles that don't
The school's pattern repeats in most small businesses, because it follows the shape of each job rather than the sector. As a starting point for your own trial:
| Role | Typical Copilot jobs | Free enough? |
|---|---|---|
| Owner or director | Meeting preparation, summaries across months of email, numbers from several workbooks | Often not: the classic paid seat |
| Office or practice manager | Complaints with history, rota and supplier threads, reports drawn from shared files | Often not |
| Reception or front desk | Drafting replies, summarising one thread, tidying notes | Usually yes |
| Practitioners (teachers, vets, physiotherapists) | Letters, handouts, rewriting notes they already have open | Usually yes |
| Bookkeeper | Analysing exports, explaining variances | Depends: upload works; working inside Excel files needs the full in-app experience |
| Marketing | Web research, social posts, newsletters | Usually yes |
A veterinary practice shows why job shape beats job title. Its vets write discharge notes and owner letters from what's in front of them, which free chat handles once the notes are pasted in. The practice manager spends Monday mornings reconciling the weekend's emails, the rota spreadsheet and the notes from Friday's partners' meeting into one plan for the week. That's the task the licence exists for, and it's the one seat the practice bought. If a vet starts running clinical meetings in Teams and wants recaps, that changes the answer for them too.
Getting more out of free Copilot Chat
Most of the gap between the tiers is about finding information, not writing it. Close as much of it as you can by bringing the information to free chat yourself:
- Upload the source. Free chat analyses uploaded files, so attach the price list, policy or export rather than asking it to recall one.
- Ask inbox questions in Outlook, where free chat can see your emails, calendar and meetings, rather than in the browser, where it can't.
- Choose Think deeper for multi-step questions such as comparing two supplier quotes line by line.
- Share good prompts. A short, shared list of prompts that work for your team saves everyone rediscovering them; building a shared prompt library shows how to keep one.
A dental practice receptionist tried the first technique with five new-patient enquiries and the practice's price list, uploaded as a PDF:
Using only the attached price list, draft short, friendly replies
to these five enquiries. Quote prices exactly as listed. If an
enquiry asks about something not on the list, say a team member
will confirm. [five enquiries pasted below]The illustrative result was five usable drafts, each quoting the right "from" price for a check-up, hygiene visit or whitening. One needed fixing: to an enquiry asking "can I come in this week?", the draft replied "we'd be happy to see you this week", a promise about availability the price list couldn't support. Adding "never promise appointment times or availability" to the prompt fixed it on the next run. Total time for five replies: about four minutes, against roughly fifteen by hand, with no licence involved.
Pricing and bundles as of September 2026
- Copilot Business, for organisations up to 300 users: $21 a user a month on annual commitment ($25.20 if billed monthly), with a promotional $18 on annual billing for the first year, offered from 1 July to 31 December 2026.
- Bundles with the base plan, annual: Business Standard + Copilot $23.50, Business Premium + Copilot $32. Billed monthly: $28.20 and $38.40.
- Enterprise: $30 a user a month on top of an enterprise base licence.
One quirk is worth knowing: the Business Standard + Copilot bundle at $23.50 costs less than Business Standard ($14) plus the Copilot add-on ($21) bought separately. If most of your licensed people are on Standard anyway, price the bundle. Microsoft 365 Copilot pricing, Business vs Enterprise goes through the licensing options in more depth.
Traps when some staff are free and some are paid
- Assuming free chat has read the company files. A teacher asked free Copilot Chat "what's our policy on make-up lessons?" and got a confident generic answer from the web, not the school's policy. Outside Outlook, free chat doesn't search your SharePoint; paste or upload the policy, or ask a licensed colleague.
- Turning on a licence before tidying permissions. Paid Copilot finds anything the user can open, including an old HR folder that was accidentally shared with everyone. Clean up SharePoint permissions before turning on Copilot.
- Expecting meeting recaps. Teams intelligent recap needs Teams Premium or a Copilot licence. An unlicensed organiser won't get one, whoever else attends.
- Metered agents on free accounts. Unlicensed staff can use agents an admin sets up, but that usage is metered and billed. Check the billing set-up before rolling an agent out to everyone.
- Buying the consumer plan by mistake. Microsoft 365 Premium, at $19.99 a month, is the consumer replacement for Copilot Pro: Office apps, storage and Copilot for the subscription owner's personal account. It doesn't license staff or work accounts, so an owner who buys it to "get Copilot for the business" ends up with AI on a personal login and none of the work-account protections.
- Old instructions for retired features. Excel's =COPILOT() worksheet function was retired on 14 September 2026; cached results stay until the cell recalculates, at which point it shows #NAME?, and new formulas won't work. Use the Copilot pane in Excel instead.
A 30-day trial before buying any seats
- Week 1: Tell everyone Copilot Chat is available and share five example prompts for their role. Point Outlook users at the Copilot button.
- Weeks 1 to 4: Ask each person to jot down any task where Copilot said it couldn't access something they needed. Those notes are your licence shortlist.
- Week 4: Check the Copilot usage report in the Microsoft 365 admin centre, which shows active users over 7, 28, 90 and 180 days. People who never opened Copilot Chat won't use a paid seat either.
- Decision: License the few whose notes show repeated cross-source tasks (meeting preparation, summarising long email threads alongside files, pulling numbers from workbooks). Re-check at the next renewal with a measure of whether Copilot is paying for itself.
Two practical notes for the week you buy. After a licence is assigned, Microsoft says Copilot can take up to 24 hours to appear for that person, so don't judge it on day one. And if you start with Microsoft's one-month Copilot Business trial rather than buying, put the end date in the calendar: the trial converts to a paid subscription automatically, and Copilot Business is an annual commitment.
The school's notes after two weeks, shortened, show what a useful log looks like. Each line records the job and whether free chat could do it:
| Who | Task | Free chat managed? | What was missing |
|---|---|---|---|
| Teacher | Reading comprehension questions from a text | Yes | Nothing |
| Administrator | Reply to a parent about a missed lesson | Yes, in Outlook | Nothing |
| Office manager | Summarise a month of emails with the examining body plus the booking sheet | No | Couldn't open the sheet on SharePoint alongside the emails |
| Director | Brief for the landlord meeting from past emails and the lease notes | No | Lease notes in a Word file it couldn't reach |
| Teacher | Summary of a team meeting in Teams | No | Recaps need Teams Premium or a licence; teacher wrote notes instead |
Only the office manager's and director's gaps came up more than twice a week, which is what made two seats, not five, the right number.
For the wider verdict on whether the licence suits a business your size, see whether Microsoft 365 Copilot is worth it for a small business. For most teams under 20, the answer this trial produces is the school's: free Copilot Chat for everyone, and a paid seat for the one or two people whose day is spent joining up information from different places.
Free and paid Copilot: follow-up questions
Is Copilot Chat really free with Microsoft 365?
Yes, for work accounts on eligible plans, including Business Basic, Standard and Premium. It's included at no extra cost and gives web-grounded chat, file analysis and image generation with enterprise data protection. It runs on standard access, so Microsoft says quality and speed can vary with service capacity; licensed users get priority access.
Can free Copilot Chat see our SharePoint files?
Not broadly. Outside Outlook, free Copilot Chat works from the web and from content you give it: pasted text, uploaded files, supported app context and agents. Searching and reasoning across all the SharePoint and OneDrive files you have access to is part of the paid licence, which uses what Microsoft calls Work IQ and semantic indexing.
Do we have to license everyone if we buy Copilot?
No. Copilot Business is bought per user, so you can license two people and leave everyone else on free Copilot Chat. Microsoft caps Copilot Business at 300 users and sells it on an annual commitment, so licence the people who've shown they'll use it rather than the whole staff list.
What happened to Copilot Pro?
Microsoft stopped selling Copilot Pro to new customers on 1 October 2025 and ended support for existing subscribers on 1 August 2026. Its consumer replacement is Microsoft 365 Premium at $19.99 a month. For a business, the relevant products are free Copilot Chat and the Copilot Business licence covered here.
Further reads
- Does Microsoft 365 Copilot Keep Your Business Data Private? — How Microsoft handles your data in both tiers.
- Copilot in Excel: What It Can and Can't Do With Your Numbers — What Copilot does with your spreadsheets once licensed.
- Copilot in Word: Draft Proposals From Your Own Files — Drafting proposals from your own files with the licence.
- Microsoft 365 Copilot Readiness Checklist for Small Businesses — What to fix before anyone gets a paid seat.
- ChatGPT or Copilot for a Microsoft 365 Business? — Whether ChatGPT would serve a Microsoft 365 team better.
- What Is Copilot Studio and Does a Small Business Need It? — Building your own agents, and whether you need to.
- How Much Does AI Cost a Small Business in 2026? — Itemised 2026 AI budgets for a sole trader, a six-person office and a 20-person firm, with the charges that grow after month three.
- Who in Your Team Actually Needs a Paid AI Licence? — A three-question test for deciding who gets a paid AI seat, a two-week usage log, and a florist's before-and-after seat bill with 2026 list prices.
- How Many AI Tools Does a Small Business Actually Need? — Why most small firms need two or three AI tools, how to spot paying twice for one job, and three businesses' stacks with monthly costs.
- Is AI Worth It for a Small Business? How to Work Out Your Answer — A three-number test for whether AI pays in your business, a break-even table, the costs the quick maths misses, and a two-week trial to settle it.
- How to Audit Your AI Subscriptions and Cut Wasted Spend — Find every AI charge, check real usage in each tool's admin reports, cut overlaps, and time changes to seat-reduction rules, with an architect-practice example.
- How to Run a 60-Minute AI Workshop for Your Team — A minute-by-minute plan for a one-hour AI session: preparation, live demos on real tasks, paired practice, data rules and the week after.
- Pros and Cons of Using AI in Your Business, With Real Costs — Every pro and con of business AI with a price attached, a first-year ledger for a small law firm, and the costs that never reach an invoice.
- How Much Does AI Cost a Small Architecture Practice per Month? — Priced line by line: assistants, model-aware rendering, meeting notes and automation, with monthly budgets for one, five and twelve-person practices.
- How Small Charities Can Use AI With Almost No Budget — A seven-stage plan for a charity with no AI budget: get verified, pick a free workspace, choose three jobs, set a data rule, and trial it for a month.
- Do You Need a Copilot+ PC or AI Laptop for Your Business? — What a Copilot+ PC adds, which AI works on any computer, and when it's worth choosing one as you replace old Windows 10 machines.
- AI Tools and AI Development: The Complete 2026 Guide — the AI hub, including every tutorial in the AI-for-business series.
Sources: Microsoft Learn 'Overview of Microsoft Copilot Chat' (updated 10 Sep 2026) and 'Microsoft Copilot licensing' (updated 25 Sep 2026); Microsoft Support 'Chat with Copilot in Outlook'; Microsoft 365 business plan comparison page (checked September 2026).