Table of Contents
Introduction
AI is now a strategic priority for organizations aiming to stay competitive. Microsoft Copilot brings enterprise-grade AI directly into workplace tools, improving productivity, collaboration, and customer experience.
Microsoft continues to expand Copilot capabilities with new AI model enhancements and orchestration features. Organizations should refer to Microsoft’s latest product documentation for current model availability and capabilities. Combined with Microsoft Graph, Copilot delivers assistance that is both relevant and reliable across Microsoft 365 and Dynamics 365 applications.
What makes Copilot uniquely defensible is Work IQ, the intelligence layer that grounds Copilot in your organization’s own emails, files, meetings, calendars, and CRM records through Microsoft Graph. Unlike standalone AI tools that generate generic outputs, Copilot produces responses that are immediately relevant to your specific business context. For organizations already running on Microsoft 365, this is a structural productivity advantage, not an experiment.
This guide explains what Microsoft Copilot is, its price, where it fits into the Microsoft ecosystem, and how AlphaBOLD can help you leverage it effectively.
The Evolution of Copilot: Wave 1 → Wave 2 → Wave 3
Microsoft has structured its Copilot rollout in waves, each representing a significant expansion in capability and ambition. Understanding the arc helps organizations see where Wave 3 fits and why March 2026 is a genuine inflection point.
| Wave | Timeline | key Capabilities |
|---|---|---|
|
Wave 1Â |
Nov 2023 |
Initial Copilot in Word, Excel, PowerPoint, Outlook, Teams |
|
Wave 2 |
2024 |
Copilot Studio, expanded ecosystem integration, collaboration tools |
|
Wave 3 |
Mar 2026 (GA) |
Agentic AI, Copilot Cowork, Work IQ, multi-model (Claude + OpenAI), in-app creation, chat-first workflows |
Wave 3, announced on March 9, 2026, marks the shift from Copilot as an assistant that answers questions to Copilot as an agent that executes work. This is not an incremental update, it fundamentally changes the value proposition of a Copilot license.
Wave 3 Deep Dive: Agentic AI, Copilot Cowork & Work IQ
Wave 3 of Microsoft 365 Copilot was announced on March 9, 2026, at Microsoft’s Frontier Transformation digital event. It introduces a set of capabilities that collectively move Copilot from single-shot prompt-response interactions into sustained, multi-step work execution across Microsoft 365 applications.
Copilot Cowork:
Copilot Cowork is the headline feature of Wave 3. Built in partnership with Anthropic, leveraging the same technology that powers Claude Cowork, it enables Copilot to handle long-running, multi-step tasks that unfold over minutes or hours, not just seconds.
Practical examples include: preparing for a client meeting by gathering relevant emails, files, and Teams messages, then producing a briefing document and deck; cleaning up your Outlook calendar by identifying conflicts, suggesting reschedules, and implementing changes after your approval; or conducting research across internal and external sources and consolidating the output into a structured report.
Cowork entered research preview with a limited set of customers in March 2026 and will expand through the Frontier program. It is available as part of Microsoft’s Wave 3 Copilot rollout. Organizations should verify current feature entitlements and licensing requirements through Microsoft’s official licensing documentation.
Note: Billing for Copilot Cowork usage itself began at general availability in June 2026; see the Copilot Suite pricing for the consumption model. Confirm current credit rates with Microsoft before budgeting.
Work IQ:
Work IQ is the intelligence layer that makes Wave 3 possible. It connects signals from Microsoft 365, documents, meetings, emails, chats, and calendar data to give Copilot a real understanding of how your organization works, who collaborates with whom, and what context matters for a given task.
Work IQ Memory is also being introduced: it allows Copilot to retain a user’s style, preferences, and work patterns across conversations, making responses more personalized over time. Additionally, Work IQ will soon connect to Dataverse operational data through Copilot in Dynamics 365 and Power Apps, bridging productivity and business application data.
Multi-Model Intelligence:
Wave 3 makes Microsoft 365 Copilot model-diverse by design. Users in the Frontier program can now select Claude models from Anthropic directly within Copilot Chat, alongside the latest OpenAI models. Copilot automatically applies the most effective model for each task, with no vendor lock-in, no manual configuration required.
Note for EU and UK administrators: Anthropic models require explicit opt-in by IT Admins in these regions due to data residency requirements. In other regions, they are available by default.
In-App Copilot: Word, Excel, PowerPoint, Outlook:
Wave 3 embeds Copilot natively inside the document canvas, not just as a side panel. In Word and Excel, this is now generally available. In PowerPoint and Outlook, the rollout is beginning in March 2026 and will be completed over the following months.
- Word: Copilot creates, edits, and refines content directly in the document with full awareness of existing content through Work IQ.
- Excel: Copilot inserts real Excel formulas, structures data correctly, and makes every change transparent, auditable, and reversible.
- PowerPoint: Chat-first creation lets users build presentations directly in Copilot Chat, without switching apps.
- Outlook: Copilot manages RSVPs based on custom instructions, drafts emails in-canvas, and schedules meetings from within chat.
Agent 365: The Control Plane for AI Agents:
Agent 365 is a new governance and management platform for AI agents across an enterprise. It provides a centralized agent registry, access controls via Entra ID, visibility into agent activity, and security oversight using the same tools already used for human employees: Admin Center, Defender, Entra, and Purview.
Agent 365 reaches general availability on May 1, 2026. It is priced at $15 per user per month as a standalone add-on and is included as part of the new M365 E7 Frontier Suite.
AlphaBOLD can help your organization prepare for Wave 3
From governance readiness for Agent 365 to Frontier program enrolment and agentic workflow design.
Request a ConsultationWhat's New in 2026 Updates?
Microsoft 365 Copilot Business for SMBs:
Microsoft launched Microsoft 365 Copilot Business in December 2025, a new offering specifically designed for small and medium-sized businesses with fewer than 300 users. This represents a significant price reduction from the standard $30/month enterprise pricing.
- Current price: Current pricing starts as $18 per user/month (annual commitment), with pricing and billing options varying by market and subscription term.
- Eligibility: Organizations with 1 – 300 users
- Requirement: Microsoft 365 Business Basic, Standard, or Premium subscription
- Features: Same capabilities as enterprise Copilot, AI in Office apps, agents, and Notebooks
- Feature availability and Wave 3 entitlements may vary by license and release schedule. Refer to Microsoft licensing documentation for current availability.
Note: Microsoft pricing and promotions may change. Refer to Microsoft’s official pricing page for current offers and availability.
Microsoft Security Copilot Licensing Updates
Microsoft continues to expand Security Copilot capabilities and licensing options across its security portfolio. Licensing, including capacity, consumption models, and feature entitlements, may vary depending on your Microsoft agreement, subscription type, and product packaging.
Organizations evaluating Security Copilot should review Microsoft’s current licensing documentation to confirm:
- Eligibility requirements and supported licensing plans
- Included Security Copilot entitlements, if applicable
- Consumption-based pricing and capacity allocation models
- Available security agents and supported Microsoft security products
- Current rollout status and regional availability
Because Microsoft may update Security Copilot licensing and pricing over time, organizations should verify the latest information directly through Microsoft before making purchasing or budgeting decisions.
Copilot Chat Expansion:
Microsoft has expanded Copilot Chat availability to all Microsoft 365 users at no additional cost:
- Available now: Secure AI chat grounded in web results
- Rolling out (Sept – Oct 2025): Copilot Chat in Word, Excel, PowerPoint, Outlook, OneNote
- Live March 2026: Inbox and calendar context awareness
- General Available March 2026: Chat-first document creation (Word, Excel, PowerPoint from chat)
- Early 2026: Agent Mode in Copilot Chat and Office apps
2026 Microsoft 365 Price Increases
On December 4, 2025, Microsoft announced pricing updates for Microsoft 365 suite subscriptions. These price changes reflect the addition of expanded AI, security, and management capabilities to the suites.
| Plan | Current Price | July 2026 Price | Change |
|---|---|---|---|
|
Business Basic |
$6/user/month |
$7/user/month |
+$1 (17%) |
|
Business Standard |
$12.50/user/month |
$14/user/month |
+$1.50 (12%) |
|
Business Premium |
$22/user/month |
$22/user/month |
No change |
|
Office 365 E1 |
$10/user/month |
$12/user/month |
+$2 (20%) |
|
Office 365 E3 |
$23/user/month |
$26/user/month |
+$3 (13%) |
|
Microsoft 365 E3 |
$36/user/month |
$39/user/month |
+$3 (8%) |
|
Microsoft 365 E5 |
$57/user/month |
$60/user/month |
+$3 (5%) |
|
Microsoft 365 E7 [NEW] |
N/A (new tier) |
$99/user/month |
GA May 1, 2026 |
Key Justifications for Price Increases:
Microsoft introduced additional security and AI capabilities across enterprise licensing plans
- Microsoft Defender for Office P1 added to O365 E3 and M365 E3
- Intune Suite capabilities added to M365 E3 and E5
- URL checks added to E1, Business Basic, and Business Standard
- 1,100+ new features released in the past year
- Volume discounts were eliminated in November 2025, list prices now apply more consistently
Renewal Window:
Customers renewing before July 1, 2026, can lock in current pricing until their next renewal.
Customers renewing after July 1 will transition to new pricing at their next renewal.
If your EA falls between May 1 and July 1, 2026, you are in a critical window, and both E7 and the price increases are live simultaneously.
Audit Your Current Microsoft 365 Licences
AlphaBOLD can audit your current Microsoft 365 licenses, model the financial impact of July 2026 price changes, and help you renew at existing rates before the deadline.
Request a ConsultationMicrosoft 365 E7: The Frontier Suite
On March 9, 2026, Microsoft announced Microsoft 365 E7, The Frontier Suite, the first new enterprise licensing tier since E5 launched in 2015. It reaches general availability on May 1, 2026.
What Is Included in E7?
- Microsoft 365 E5: Full security, compliance, device management, Office apps, Teams, Power BI Pro
- Microsoft 365 Copilot: Wave 3 AI capabilities and related features, subject to Microsoft’s licensing and entitlement documentation
- Agent 365: Enterprise control plane for AI agent governance, monitoring, and security
- Microsoft Entra Suite: Verified ID, Permissions Management, Internet Access, Private Access, ID Governance, on top of the Entra ID P2 already in E5
- Advanced Defender, Intune, and Purview capabilities beyond the E5 baseline
E7 Pricing at a Glance:
- • List price: $99 per user/month (with or without Teams)
- • Introductory discount (10+ seats): 10% off annual term
- • Introductory discount (100+ seats): 15% off annual term
- • Generally available: May 1, 2026
- • Copilot adoption: 90% of Fortune 500 now use M365 Copilot; paid seats grew 160% YoY
E7 is designed for what Microsoft calls the ‘frontier firm’, organizations moving beyond AI experimentation into an environment where AI agents operate autonomously alongside humans at scale.
E7 vs E5 + Add-Ons: Which Makes Financial Sense?
E7 is not automatically the right choice for every E5 customer. The financial case depends on your current license mix, whether you need the Entra Suite, and the maturity of your Copilot and agent deployments. The table below shows the key scenarios:
| Current Position | Monthly Cost (post - July 2026) | E7 Verdict |
|---|---|---|
|
E5 ($60) + Copilot ($30) |
$90/user/month |
Add Agent 365 ($15 standalone) = $105. E7 at $99 saves $6/user + adds Entra Suite. |
|
E5 ($60) + Copilot ($30) + Agent 365 ($15) |
$105/user/month |
E7 saves $6/user/month. Strong case if Entra Suite needed. |
|
E3 ($39) only |
$39/user/month |
E7 adds $60/user. Requires full readiness assessment before committing. |
|
E5 ($60) only — no Copilot yet |
$60/user/month |
Consider M365 Copilot add-on first ($90 total) before E7 commitment. |
When E7 Makes Clear Sense:
- Your organization is already running E5 + Copilot and needs Agent 365 to govern an expanding agent estate
- You need the Entra Suite capabilities (Verified ID, Permissions Management, Internet/Private Access) that go beyond the Entra ID P2 already in E5
- You want to consolidate multiple Microsoft invoices into a single SKU and simplify license management for large user populations.
When E7 May Not Be Right Yet:
- Your Copilot adoption is still low; Microsoft’s own CEO cited 15 million paid seats (3% of the commercial base) in January 2026. E7 adds premium pricing for capabilities that may not yet have traction in your organization
- You are on E3: the jump to E7 is $60/user/month. A phased approach (E3 → Copilot add-on → E5 → E7) yields better adoption outcomes than purchasing before organizational readiness
- Agent 365 is newly GA and unfinished in some respects — agents created before Entra ID agent registration was available cannot be retroactively managed within Agent 365 without being recreated
Independent analysis (Gartner, LicenseQ) puts the genuine E7 discount versus à -la-carte purchasing at approximately 13–15%, not the headline figure Microsoft sometimes cites. For some organizations, particularly those with selective role-based Copilot deployments, the per-seat E7 price across all users may not be justified.
Microsoft Copilot Suite: Complete Pricing Reference
| Product | Use Cases | Pricing Structure | Notes |
|---|---|---|---|
|
M365 Copilot Business [NEW] |
SMBs (<300 users) |
Starting at $18/user/month |
Microsoft pricing varies by commitment term and market |
|
Microsoft 365 Copilot |
Enterprise E3/E5 |
$30/user/month (standard Copilot add-on SKU) |
Additional Copilot packaging options may be available |
|
Copilot Pro (Consumer) |
Individuals, M365 Personal/Family |
$20/user/month |
Requires M365 sub |
|
Copilot Chat |
All M365 users |
Included |
No additional cost |
|
Copilot Studio |
Custom agents, chatbots |
$200/tenant/month |
25K Copilot credits |
|
Security Copilot (E5) |
M365 E5 customers |
Included |
400 SCU/1K licenses |
|
Security Copilot (Standalone) |
Security professionals |
$4/SCU/hour |
$6/hour overage |
|
Dynamics 365 Copilot |
Sales, Service, Marketing |
No separate per-user fee |
Bundled into the corresponding Dynamics 365 application license |
|
Agent 365 [NEW] |
Enterprise agent governance |
$15/user/month |
Included in M365 E7 |
|
Microsoft 365 E7 [NEW] |
Frontier enterprises |
$99/user/month |
E5+Copilot+Agent365+Entra Suite |
|
GitHub Copilot [NEW] |
Dev / engineering teams |
$19/user/month (Business) |
Enterprise tier at $39/user/month |
Note: All numbers above are verified against the current Microsoft and GitHub pricing pages as of June 2026.
Further Reading: Dynamics 365 Licensing Guide 2025 & 2026 Updates
Core Technologies Powering Microsoft Copilot
Microsoft Copilot runs on two foundational technologies: Large Language Models (LLMs) and Microsoft Graph. Together, they allow Copilot to deliver responses that are both context-aware and business-relevant.
- Large Language Models (Multi-model): Wave 3 makes Copilot model-diverse. It dynamically selects between OpenAI models (GPT-4o and successors) and Anthropic’s Claude based on the task at hand — reasoning, speed, context window, and safety profile all factor into model selection.
- Microsoft Graph: This connects Copilot to organizational data including emails, files, calendars, chats, and CRM records. Graph ensures Copilot understands relationships, projects, and workflows, so its recommendations are relevant to your business context.
- Work IQ: The new intelligence layer introduced in Wave 3. Work IQ goes beyond raw Graph data to build an understanding of how a specific user works, who they collaborate with, and what context matters for their role. It also underpins Copilot Cowork’s ability to execute multi-step tasks with relevant context.
Microsoft Security Copilot: Benefits and Pricing
Microsoft Security Copilot is an AI assistant designed for security professionals. It integrates with Microsoft Defender, Sentinel, Entra, Intune, and Purview to analyze incidents, recommend actions, and generate investigation reports.
Pricing Model:
- Microsoft offers Security Copilot through multiple licensing and consumption models.
- Organizations should review current Microsoft Security Copilot pricing documentation to confirm included capacity, consumption rates, and licensing eligibility.
- Pricing and entitlements may vary by agreement type and product packaging.
Where Else Can You Use Microsoft Copilot?
Microsoft Copilot extends across the Microsoft ecosystem:
- Viva Sales: Drafts email responses, summarizes CRM activity, and provides customer insights
- Power Platform: Creates apps, automates workflows, and builds chatbots with natural language prompts
- Dynamics 365: Now accessible directly within D365 Sales, Customer Service, and Power Apps, with Work IQ grounding extending into Dataverse operational data
- Power BI: Natural language queries to generate data visualizations and insights.
- Microsoft Teams: Copilot summarises meetings, drafts follow-up actions, and manages calendar with custom RSVP instructions. Full agentic scheduling live in March 2026
- Azure and GitHub: Copilot for Azure assists with infrastructure management and cost optimisation. GitHub Copilot accelerates development with AI-assisted code completion, review, and documentation
- Copilot Chat (all M365 users): Now includes Word, Excel, and PowerPoint agents accessible directly from chat — allowing document creation, scheduling, and task execution without leaving the conversation interface
Further Reading: Copilot for Power BI: Take Productivity to the Next Level
Optimize Your Microsoft Copilot Investment
AlphaBOLD simplifies the Microsoft Copilot Licensing process through structured assessments, license optimization, and customization. Our approach includes license optimization, Copilot readiness assessments, role-specific enablement, and ongoing strategy.
Request a ConsultationHow to Evaluate Copilot ROI Before You Buy
At $18-$30 per user per month for the Copilot license alone, depending on SMB promotional pricing or the enterprise tier, and before any July 2026 base plan increases, organizations need a clear business case to justify the investment. In 2026, Wave 3’s agentic capabilities changed the ROI calculation. Copilot now delivers value beyond drafting emails by executing workflows, creating greater productivity gains.
Key ROI Factors to Quantify:
- Meeting preparation: Copilot Cowork can now autonomously prepare for client meetings — gathering files, drafting briefing documents, and creating presentation decks. What previously took 2–4 hours per meeting can be delegated to Copilot, freeing highly paid professional time for higher-value work.
- Email and calendar management: Wave 3 Copilot in Outlook manages RSVPs using custom instructions, handles scheduling from chat, and drafts send-ready emails with Work IQ context. This alone can recover 30–60 minutes per user per day for roles with high email volume.
- Document and content output: Copilot in Word and Excel (now generally available in-app) reduces first-draft time substantially for roles with high document output — consulting, legal, marketing, finance.
- Security incident response (E5): Security Copilot with the new agent suite can reduce mean time to investigate for security alerts — a measurable risk-reduction value, particularly for organisations approaching SOC maturity.
Enablement Costs to Factor In:
- Change management: Wave 3 requires users to develop new working patterns around agentic AI. Budget for structured onboarding, prompt engineering coaching, and champion network development.
- Data governance readiness: Copilot surfaces data from across Microsoft Graph. Before broad deployment, review SharePoint permissions, Teams access controls, and sensitivity label coverage.
- Agent governance: With Wave 3 and Agent 365, organisations deploying agents need policies for agent creation, access scope, monitoring, and decommissioning. This is new operational overhead that should be costed.
Microsoft Copilot Readiness Assessment
AlphaBOLD offers a structured Copilot Readiness Assessment covering your M365 environment health, data governance posture, and a realistic ROI model before you commit to licensing.
Request a Copilot ROI AssessmentCopilot Readiness: What to Prepare Before Deployment
1. Microsoft 365 Environment Health:
- Audit SharePoint site permissions: Copilot’s Work IQ will surface data broadly, overly permissive sharing can allow sensitive content to reach unintended users.
- Enable sensitivity labels. Microsoft Purview sensitivity labels ensure Copilot respects information boundaries and supports compliance requirements.
- Remove stale Teams, Groups, and SharePoint sites. Outdated content lowers Copilot response quality.
2. Agent Governance Readiness:
- Map your agent deployment roadmap: Agent 365 (GA May 1, 2026) manages agents created after Entra ID agent registration became available; agents created beforehand are not automatically governed.
- Define agent creation policies: Who in your organization can build agents? What access scopes are permitted? What is the review and approval process?
- Review third-party agent integrations. Agent 365 supports agents built with Microsoft tools, open-source frameworks, and partner cloud agents. Inventory all running agents.
3. Identity and Access Management:
- Enforce MFA across all accounts. Copilot’s access to organizational data makes identity security non-negotiable.
- Review and update Conditional Access policies for Copilot-enabled users.
4. User Enablement:
- Create a prompt library for Wave 3: Include samples for chat, meeting setup, editing, and Cowork delegation. Give users an initial set.
- Select pilot user groups with high ROI potential. Prioritize roles with heavy meeting load, document output, or complex research workflows for the fastest Cowork payback.
Conclusion:
2026 marks a major shift for Microsoft Copilot, with Wave 3 agentic capabilities, the E7 Frontier Suite, upcoming pricing changes, and limited-time SMB promotions.
Organizations should evaluate Copilot now rather than waiting until renewal deadlines. SMBs should review Copilot Business while promotional pricing is available, and all Microsoft 365 customers should assess renewal timing before July price increases. E5 customers should also verify that Security Copilot entitlements are enabled and being used.
Strategically, organizations should identify the roles and workflows that can most benefit from Wave 3 capabilities, assess whether E7 aligns with their security and AI roadmap, and establish governance for agent deployments. Before expanding Copilot licenses, ensure data permissions, security controls, training, and AI governance processes are in place.
FAQs
Microsoft 365 E7 is Microsoft’s highest-tier enterprise plan, combining E5, Copilot, Agent 365, and the Entra Suite in one license. It is best suited for organizations already using E5 and Copilot that need advanced AI agent governance and identity management.
Copilot Cowork is a Wave 3 feature that enables Copilot to complete multi-step tasks with minimal user input. It became generally available in June 2026 and is included with Microsoft 365 Copilot.
Agent 365 is Microsoft’s platform for managing and governing AI agents. It includes agent inventory, access controls, monitoring, and security oversight. It is most valuable for organizations deploying AI agents at scale.
The July 2026 increase affects Microsoft 365 base licenses, not Copilot itself. Organizations renewing before July 1 may be able to lock in current pricing until their next renewal.
Yes. Wave 3 added Anthropic Claude models to Copilot Chat alongside OpenAI models. Availability depends on region and tenant settings.
No. Microsoft states that Copilot does not use customer data to train its models. Data remains within your Microsoft 365 environment and follows your existing security and compliance policies.
Copilot value depends on user adoption, data quality, and business use cases. Organizations typically see better results when deployment is supported by training, governance, and a clear rollout plan.
