Microsoft 365 Copilot and its agents are paid for in three different ways, and each one bills to a different place: per-user seats on the Microsoft 365 invoice, prepaid Copilot Credits allocated to Power Platform environments, and pay-as-you-go charges on an Azure subscription. This guide explains the three cost shapes, the controls Microsoft provides for each, and a chargeback model built on them, checked against Microsoft's documentation in September 2026.
Once you have decided to extend Microsoft 365 Copilot, there are three ways to do it, and they are not interchangeable. Copilot connectors change what Copilot knows, declarative agents change how it behaves, and custom engine agents replace its engine. This guide compares the three on licensing, governance and who carries the risk, with every claim checked against Microsoft's documentation in September 2026.
Copilot Studio and Microsoft Foundry are not competitors — they sit at different levels of abstraction, and three changes in 2026 have quietly retired most of the advice written about choosing between them. A decision framework built on who owns the runtime, where the data already lives, and who operates the agent on day ninety, with the cost shapes, governance asymmetries and interop paths verified against Microsoft's own documentation.