Table of Contents
- Introduction
- What Is Copilot Cowork?
- Copilot Cowork vs. Regular Microsoft 365 Copilot
- Prerequisites
- Step 1: Create Your Pilot Group
- Step 2: Enable Usage-Based Billing
- Step 3: Create a Spending Policy
- Step 4: Make Cowork Available to Users
- Step 5: Users Install Cowork
- Step 6: Start Using Cowork
- Configuration Settings Reference
- Tips for Success
- Frequently Asked Questions
- Final Thoughts
Introduction
Microsoft Copilot Cowork is a powerful AI assistant that can handle complex, multi-step tasks for you — like drafting emails, creating reports, scheduling meetings, and organizing files. Unlike regular Copilot that helps you work, Cowork does the work for you.
However, Cowork uses a pay-per-use model, meaning you pay only for what you use. Before turning it on, you need to set up proper cost controls. This guide walks you through the entire setup process step by step.
Important: Cowork uses a pay-per-use model. Before turning it on, you need to set up cost controls to avoid unexpected charges.
What Is Copilot Cowork?
Copilot Cowork is a digital assistant that can handle complex, multi-step tasks for you — like drafting emails, creating reports, scheduling meetings, and organizing files.
Unlike regular Copilot that helps you work, Cowork does the work for you.
Key features:
- Works across Microsoft 365 apps — Word, Excel, Outlook, Teams, and SharePoint
- Executes multi-step tasks autonomously
- Requires user approval before taking actions like sending emails or scheduling meetings
- Pay-per-use model with Copilot Credits
Copilot Cowork is an AI agent that works across Microsoft 365 apps — Word, Excel, Outlook, Teams, and SharePoint — to complete complex tasks automatically.
Copilot Cowork vs. Regular Microsoft 365 Copilot
| Feature | Regular Copilot | Copilot Cowork |
|---|---|---|
| Pricing | Included in the per-user license | Pay-per-task (per credit) |
| What it does | Assists in individual apps | Executes multi-step tasks autonomously |
| Run time | Seconds | Minutes to hours |
| Requires approval? | No | Yes (for emails, posts, scheduling) |
| Default state | Always on | Off (must be enabled by admin) |
Use regular Copilot for simple chat responses. Use Cowork for complex, multi-step tasks that justify the cost.
Prerequisites
Before you begin setting up Copilot Cowork, ensure you have:
- Microsoft 365 Copilot license assigned to users
- Admin permissions — AI Admin, Security Admin, or Office Apps Admin
Users need a Microsoft 365 Copilot license to access Cowork. Cowork is an add-on experience on top of the Copilot subscription.
Step 1: Create Your Pilot Group
Why a pilot group? Starting with a small group allows you to test Cowork, monitor usage, and control costs before rolling out to everyone.
How to create a pilot group:
- Go to Microsoft 365 admin center
- In the left menu, go to Teams & groups > Active teams & groups
- Click Add a group
- Choose the group type you need:
- Microsoft 365 Group — For collaboration + access (includes shared mailbox, calendar, SharePoint)
- Security group — For access control only
- Mail-enabled security group — For access control + email
- Fill in the details:
- Name — Enter a group name (e.g., "Copilot Cowork Pilot")
- Description — Add a description
- Owner — Add at least one owner
- Members — Add the users who should be in the pilot
- Click Create
Types of Groups in Microsoft 365
| Group Type | What It Does | Best For |
|---|---|---|
| Microsoft 365 Group | Comes with shared mailbox, calendar, SharePoint site, and Teams | Collaboration and file sharing |
| Security Group | Used for permissions and access control only | Controlling access to apps and policies |
| Mail-enabled Security Group | Security group that can also receive emails | Access control + email communication |
Step 2: Enable Usage-Based Billing
Before users can access Cowork, you need to enable usage-based billing.
How to enable usage-based billing:
- Go to Microsoft 365 admin center
- Navigate to Copilot > Cost Management > Get Started
- Choose your billing method:
- Pay-as-you-go — Pay per credit, no commitment ($0.01 per credit)
- Prepaid Credits (P3) — Purchase annual credits at a discount
When you buy credits in advance for the year (P3 Plan), you receive a discounted rate. Prepaid credits are used first. When they run out, billing automatically switches to pay-as-you-go with no service interruption.
Step 3: Create a Spending Policy
A spending policy defines who can use Cowork and how much they can spend.
What is a spending policy?
- Which users or groups can use Cowork
- How many credits they can spend per month
- Which billing method applies
Important rule: If a user is covered by more than one policy, the policy with the higher limit applies.
How to create a spending policy:
- Go to Copilot > Cost Management > Configuration
- Click + Add spending policy
- Fill in the policy details:
- Policy name — e.g., "Cowork Pilot Policy"
- User and group access — Select your pilot group
- Agents and services — Copilot Cowork, Work IQ API
- Billing method — Pay-as-you-go
- Monthly spending limit — Set your desired limit
- User and group limits — Set per-user limit
- Alerts — On or Off
- Email alerts to — Add email addresses if alerts are enabled
- Click Save to create the policy
Step 4: Make Cowork Available to Users
Cowork is disabled by default. You need to enable it.
How to enable Cowork:
- Go to Copilot > Settings in the admin center
- Under "AI experiences enabled by usage-based billing," turn the setting On
- Users covered by a spending policy can now access Cowork
Cowork is disabled by default. Users will not see Cowork until you enable this setting and they are covered by a spending policy.
Step 5: Users Install Cowork
Once enabled, users need to add Cowork to their Copilot experience.
How users install Cowork:
- Open Microsoft 365 Copilot (web, desktop, or Teams)
- In the left menu, select All agents
- Search for Cowork
- Click Add
Step 6: Start Using Cowork
Now that Cowork is set up, users can start using it.
How to use Cowork:
- Open Copilot and select Cowork from the top toggle
- Type the task you need completed
- Attach files if needed
- Cowork processes the task and asks for approval before taking actions
- Review and approve each action
Cowork asks for approval before sending emails, posting in Teams, or scheduling meetings. Users can choose "Always allow" for the current session.
Configuration Settings Reference
| Setting | Description |
|---|---|
| Policy name | Name of the spending policy |
| Status | Active or Inactive |
| User and group access | Groups or users covered by this policy |
| Agents and services | Which agents are covered |
| Billing method | Pay-as-you-go or Prepaid Credits |
| Monthly spending limit | Total credits allowed per month |
| User and group limits | Credits allowed per user per month |
| Alerts | On/Off – Notification when limits are reached |
| Email alerts to | Recipients for alert notifications |
Tips for Success
✅ Start with a Pilot
Roll out to a small group first. Track usage and costs before expanding.
✅ Set Conservative Limits
Start with lower limits and increase as needed.
✅ Use Alerts
Set email alerts at 80% and 100% of your budget to avoid surprises.
✅ Use the Right Tool
Use regular Copilot for simple tasks. Use Cowork for complex, multi-step tasks.
✅ Provide Clear Instructions
The more specific the request, the better Cowork performs.
✅ Monitor Usage
Regularly review credit consumption and adjust policies as needed.
Frequently Asked Questions
Q: Can users see Cowork if they don't have a spending policy?
A: Yes, but they will need to request access. Visibility can be controlled in Copilot settings.
Q: What happens when prepaid credits run out?
A: Billing automatically switches to pay-as-you-go with no service interruption.
Q: Does Cowork need approval for actions?
A: Yes, Cowork asks for approval before sending emails, posting in Teams, or scheduling meetings. Users can choose "Always allow" for the current session.
Q: What is the difference between a Microsoft 365 Group and a Security Group?
A: A Microsoft 365 Group includes a shared mailbox, calendar, and SharePoint site. A Security Group is for access control only. Either can be used for Copilot Cowork access.
Q: Where can I find the spending policy after creating it?
A: Go to Copilot > Cost Management > Configuration to view all policies.
Q: How much is one Copilot Credit?
A: Microsoft currently lists Pay-As-You-Go pricing at $0.01 per Copilot Credit.
Final Thoughts
Setting up Copilot Cowork involves these key steps:
- Create your pilot group — Choose the right group type for your needs
- Set up cost management — To control spending
- Create a spending policy — With your desired limits and settings
- Enable Cowork for users — In Copilot settings
- Users install Cowork — From the agent store
- Start using it — For complex, multi-step tasks
Key takeaways:
- Start small — Begin with a pilot group to control costs
- Monitor usage — Regularly review credit consumption
- Set alerts — Configure notifications at 80% and 100% of your budget
- Use the right tool — Regular Copilot for simple tasks, Cowork for complex ones
- Provide clear instructions — Specific requests yield better results
Cowork is a powerful tool that saves hours of manual work — with the right cost controls in place. Start small, monitor usage, and expand gradually.
If you need assistance setting up Microsoft Copilot Cowork or optimizing your Microsoft 365 environment, contact SystemLogicIT for expert guidance.