Microsoft Shifts Copilot to Consumption-Based Pricing: The Per-Seat Model Dies

The traditional per-seat software licensing model is breaking under the weight of AI inference costs. GitHub Copilot moved first, announcing on April 27, 2026 that all plans would transition to usage-based billing on June 1, 2026. Microsoft is following suit with pay-as-you-go billing for Microsoft 365 Copilot, signalling that the economics of per-user AI licensing simply don't work at scale.

This shift is not a minor pricing adjustment. It's a fundamental reckoning with the reality that AI models are expensive to run. When users can generate hundreds of tokens in a single session, and some sessions run for hours, the cost per user becomes unpredictable and unsustainable under fixed per-seat pricing.

GitHub Copilot's announcement, made by Chief Product Officer Mario Rodriguez, was direct about the problem: "Copilot is not the same product it was a year ago. It has evolved from an in-editor assistant into an agentic platform capable of running long, multi-step coding sessions, using the latest models, and iterating across entire repositories. Agentic usage is becoming the default, and it brings significantly higher compute and inference demands."

The new model replaces Premium Request Units (PRUs) with GitHub AI Credits, calculated based on token consumption. The key details:

For individuals:

•Copilot Pro: $10/month, including $10 in monthly AI Credits

•Copilot Pro+: $39/month, including $39 in monthly AI Credits

For businesses and enterprises:

•Copilot Business: $19/user/month, including $19 in monthly AI Credits

•Copilot Enterprise: $39/user/month, including $39 in monthly AI Credits

Critically, GitHub introduced pooled included usage for organisations. Instead of each user's unused credits being isolated, credits can be pooled across the entire business. This eliminates stranded capacity and gives organisations flexibility in how they allocate usage.

The transition happens on June 1, 2026. Users on monthly plans will automatically migrate. Users on annual plans will remain on their existing plan until expiration, then transition to the new model.