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Jeroen Hidding
Jeroen entered Microsoft Licensing in 2008 at a Global LSP. Jeroen is specialized in optimizing complex Microsoft licensing requirements from a commercial perspective.
Microsoft Copilot Licensing... Microsoft Copilot Licensing: Strategy, Costs and Pitfalls to Avoid
Jeroen Hidding
Microsoft Copilot has been called the “AI revolution for the workplace.” It’s being pushed heavily in renewals, upsells, and licensing conversations, and executives are told they can’t compete without it.
But what is the reality?
After advising multiple organizations on Copilot licensing, we’ve seen patterns repeat themselves: heavy investment, limited adoption and confusion around prerequisites.
Here are six things enterprises need to know before signing the check.
1. Copilot comes in multiple SKUs. Know the differences
Microsoft has positioned Copilot across multiple product lines:
- Copilot Pro: A premium upgrade that gives faster access to advanced models, more image generation boosts, and integration with Microsoft 365 web apps.
- Copilot Studio: A low-code platform for building custom AI agents that automate workflows and connect to business data.
- Copilot in Windows: Built into Windows 11, it helps users manage settings, summarize content, and get contextual assistance across the OS.
- GitHub Copilot: An AI coding assistant that suggests code, explains syntax, and helps developers write software faster in IDEs like VS Code and Visual Studio.
- Microsoft 365 Copilot: Available for M365 E3/E5 users (extra cost on top of the base license).
- Sales Copilot: For Dynamics 365 Sales users.
- Service Copilot: For Dynamics 365 Service.
- Security Copilot: Separate SKU, still evolving, with limited availability.
Each SKU has different prerequisites. You can’t just buy Copilot. You need the right foundation licensing in place.
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2. You need to license the base before adding Copilot
One of the most common mistakes we see: organizations budget for Copilot, only to realize their users aren’t even on the right Base Licenses.
- M365 Copilot requires M365 E3 or E5 + Teams.
- Sales/Service Copilot requires the relevant Dynamics 365 license.
- Without upgrading base entitlements, you can’t enable Copilot at all.
This is often where budgets balloon, because Copilot isn’t a standalone SKU, it’s an add-on.
3. Beware of adoption mistakes
Last year, some organizations spent €150,000–200,000 just for early access. They didn’t buy Copilot: they paid to be Microsoft’s guinea pigs. Fast forward 12 months and usage is almost non-existent.
What happened?
- Sold directly to C-levels as you can’t compete without AI.
- Blind purchases with no pilot programs.
- A large organization in the Netherlands paid for licenses but couldn’t use them as Copilot didn’t support Dutch language at the time.
The result? Months of paying for software that didn’t work. Meeting recap became the primary (and sometimes only) feature being used.
This pattern is common: panic-buying based on hype, not business need.
4. Budgeting and ROI. Don’t assume the hype matches reality
Copilot is expensive. At €30 per user/month for M365 Copilot the ROI is not automatic.
Ask yourself:
- How many users really need Copilot?
- What business processes will it improve?
- Are there workflows already automated without Copilot?
- Will these Copilots actually solve the problems I have in my organization?
We’ve seen organizations spend hundreds of thousands of euros upfront, only to discover usage rates in the single digits. First, ask yourself whether the solutions you envision for your organization are truly feasible with Copilot.
Lesson: Budget based on a use-case analysis, not Microsoft’s marketing slides.
5. The marketing playbook never changes
Microsoft is brilliant at creating urgency around new products:
- Generating must-have narratives (You can’t compete without AI).
- Pushing directly to executives, bypassing IT.
- Encouraging fear of being left behind.
- Organizations panic-buy.
- Reality check comes later: unused licenses, no ROI.
This is exactly how Copilot has played out so far. The technology is good, but adoption is not automatic and value takes work. The efficiency increase might be there, but it takes a lot of work to get there. Take this into account in your decision making.
6. Be critical! Business need vs. marketing pressure
AI will reshape work, but buying Copilot does not equal transformation. Before your next renewal conversation, ask:
- Are we buying Copilot because we need it, or because Microsoft is pushing it?
- Do we have the right licenses, processes, and training in place to use it?
- Should we pilot it with a small group first, instead of rolling out to everyone?
Final thoughts
Microsoft Copilot is here to stay, and over time, it will mature. But right now, enterprises face sky-high costs, confusing licensing requirements, and low adoption rates.
Don’t let hype dictate your budget. Instead:
- Understand the SKUs
- Check base licensing requirements
- Pilot before scaling
- Budget realistically
At LicenseQ, we help enterprises separate real needs from marketing pressure when it comes to Microsoft licensing. If you’re considering Copilot, let’s talk about how to structure your licensing strategy for cost efficiency and real ROI.
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