Copilot Chat (Free) vs Microsoft 365 Copilot: What You Get Without a Licence
Bottom line: Copilot Chat comes at no extra cost with an eligible work Microsoft 365 plan. It's mostly web-grounded, plus whatever files you upload. The one big exception is Outlook, where the free version can search your inbox and calendar. The paid licence, Microsoft 365 Copilot (now called Microsoft Copilot), adds Copilot that works across your organisation's data, priority access, advanced agents and reliable Copilot inside Word, Excel and PowerPoint.
Before you pay for anything, find out what you already have. It's one screen, and I'll show you where.
First, check what you already have
Sign in to microsoft365.com and scroll to the bottom of the home page. Under your name you'll see one of these labels:
1Copilot Chat (Basic)
You have the free chat. No Copilot inside Word, Excel, PowerPoint or OneNote.
2M365 Copilot (Basic)
No paid licence, but you have standard access to Copilot inside the apps. Standard access depends on service capacity and can be restricted at busy times.
3M365 Copilot (Premium)
You have the paid add-on, with priority access.
Why the 2 Basic labels? On 15 April 2026 Microsoft removed the free Copilot Chat from Word, Excel, PowerPoint and OneNote for unlicensed users in large organisations. Smaller ones kept it. The line reported online is more than 2,000 users, but that number isn't in Microsoft's public docs, so treat it as unconfirmed.
Label says Premium and you still can't find Copilot? That's a setup problem, and I cover it in Copilot not showing in Outlook or Word.
What Copilot Chat gives you for free
Copilot Chat is included for people who sign in with a work or school (Entra) account and have a qualifying plan. That covers Microsoft 365 E3, E5 and E7, F1 and F3, Business Basic, Standard and Premium, Office 365 E1, E3 and E5, and several Teams plans.
You open it in the Copilot app (web, desktop, mobile), at copilot.cloud.microsoft, in Edge, and inside Outlook and Teams. What you get, per Microsoft's own comparison table:
1Chat grounded in the web
Plus whatever you give it: uploaded files, supported app context, or agents.
2Enterprise data protection
Same as the paid version, as long as you sign in with your work account.
3File uploads, analysis and image generation
Upload a PDF or a spreadsheet and ask about it. That's how you use Copilot on a file for free.
4Simple agents at no cost
Agents grounded in instructions and public websites are free. Agents that read shared company data, like SharePoint, are billed per use and off by default for Chat users.
The catch: it's "standard access". Microsoft says it's subject to service capacity. On a busy day, free access can be restricted for a while. Paid users get priority access.
Outlook is the big exception
Every user with an eligible work subscription gets Copilot Chat in Outlook, and here the free version isn't limited to the web. Without a licence you can ask about your inbox, calendar, meetings and other limited data, and take action right in Outlook. The free chat even stayed in Outlook in the big companies that lost it in Word and Excel.
These are Microsoft's own examples for unlicensed users:
Summarize my emails from the last week related to [project or customer name].
Flag all unread emails from my manager.
Schedule a meeting with my manager.
What the paid licence adds in Outlook: chats and enterprise data (your files, your organisation), plus paid-only features such as Schedule with Copilot. More ready-made prompts in Copilot prompts for Outlook.
What Microsoft 365 Copilot adds
From here on, "paid" means the add-on licence. The rows where the 2 versions differ, straight from Microsoft's comparison:
1Reasoning across your Microsoft 365 data
Free: limited. Paid: yes, through Microsoft Graph, Work IQ and semantic indexing across your mail, chats and files. This is the big one. Free Copilot doesn't read your SharePoint.
2Advanced agents
Free: limited. Paid: yes, including Researcher and Analyst, and Microsoft says no extra step is needed to use agents with the licence.
3Priority access
Free: no. Paid: yes, to Copilot and to advanced reasoning models.
4Copilot in Teams meetings
Asking Copilot during and after a meeting needs the paid licence.
At the time of writing (September 2026) the enterprise add-on lists at $30 per user/month paid yearly in the US, £23.10 in the UK and €26.00 in Germany and Ireland, excluding VAT. It needs a qualifying Microsoft 365 plan underneath. For up to 300 users there's Copilot Business, at $21 list in the US with a first-year promo. Prices move, so check Microsoft's pricing page before you budget. Full breakdown by country in Copilot licence cost in the UK and EU.
How to use Copilot in Excel for free
This is the most searched version of the question, so here's the straight answer.
If your label says M365 Copilot (Basic), you already have standard access to Copilot in Excel. Open a workbook and press F6. If it says Copilot Chat (Basic), you don't have it inside Excel, but you can still upload the file to Copilot Chat on the web and ask about it. At home, Copilot in Excel needs Microsoft 365 Personal or Family with an AI credits plan, or Microsoft 365 Premium.
Button still missing? That's a different problem, and I cover it in Copilot not showing in Excel.
So which one do your people need?
My take. If the work is writing, rewriting, summarising documents people upload, and asking about their own inbox, the free Copilot Chat covers a lot of it. It's already in your tenant.
If people need Copilot to find things across mail, Teams and SharePoint, use Researcher and Analyst, or work inside Excel and PowerPoint in a large company, that's the paid licence.
And one thing no licence fixes: people who never open it. Free or paid, the tool only pays off once people know what to ask it.
Questions about Copilot free vs paid
Is Copilot Chat free?
Yes, at no extra cost for users who sign in with a work or school account and have a qualifying Microsoft 365 plan, such as Business Basic, Standard or Premium, or E3 and E5. It runs on standard access, which depends on service capacity.
What is the difference between Copilot Chat and Microsoft 365 Copilot?
Copilot Chat is mostly grounded in the web and in files you upload. Microsoft 365 Copilot, the paid add-on, reasons across your organisation's data through Graph and Work IQ, and adds advanced agents, priority access and Copilot in Teams meetings.
Can free Copilot Chat read my company files?
Not on its own. Outside Outlook it works with the web plus what you upload. In Outlook, the free version can ask about your inbox, calendar, meetings and limited related content.
What do Copilot Basic and Premium mean?
They are labels, not products. M365 Copilot (Premium) means you have the paid add-on with priority access. M365 Copilot (Basic) means standard access in the apps without it. Copilot Chat (Basic) means no Copilot in Word, Excel, PowerPoint or OneNote.
Can I use Copilot in Excel for free?
If your label is M365 Copilot (Basic), yes, with standard access. Unlicensed users in large organisations lost it on 15 April 2026. They can still upload a workbook to Copilot Chat on the web.
Free or paid, it only pays off when people use it.
I run live online Copilot workshops for groups of up to 20 people, from 1.5 to 4 hours. They work for teams on Copilot Chat and for teams on the full licence.