How to properly setup Microsoft Copilot Cowork

Why I write this

Microsoft does have official documentation for setting up Copilot Cowork, but it doesn’t give you enough details. There are no step-by-step pictures, no FAQ, and after following it, you often end up wondering, “Why isn’t this working? Did I do something wrong?”

Whenever I share the official guide with clients, about 8 out of 10 tell me they still don’t understand it and ask for a “quick call”—which wastes time for everyone. That’s why I wrote this guide: a clearer, step-by-step walkthrough that actually shows you how to get it running without the confusion.

Prerequisite

I’ll assume you already know what Copilot Cowork is. The real question is: How do you actually set it up for your organization? Let’s get straight to it. You will need

Microsoft 365 Copilot **OR** Microsoft 365 Copilot Business subscription
- This is per-user subscription (If you want 10 users to use Cowork, then you will need 10 subscription)
- You can buy this directly in Microsoft 365 Admin Center or contact Microsoft Partner company that selling license to your organization
Azure subscription
- Since Cowork usage is pay-as-you-go billing, it will billed you through Azure, so you will need Azure subscription
- Can be just one Azure subscription, no need multiple subscription

What is Azure subscription and where to find it

Think of an Azure subscription as Microsoft’s way of billing you pay-as-you-go. Getting a subscription is completely free—there are no upfront costs to set it up.

Any usage fees your organization builds up during the month simply get billed to that subscription, and you pay for what you used at the end of each month.

There are two easy way to get Azure subscription

Directly from Microsoft
- Go to this link https://go.microsoft.com/fwlink/?linkid=2234155
- Login with your company Microsoft account
- This way will require you to attach credit card, Use your company’s card, not your personal card.
- Signing up is completely free. Your card will only be charged at the end of the month for what you actually use.
Your Microsoft Partner
- If your company buys Microsoft licenses (like Microsoft 365 or Office) through a Microsoft Partner, they can usually set up an Azure subscription for you. Just reach out to them—they will be more than happy to help.
- This means your bills go through the partner, not Microsoft. Payment terms, credit limits, and pricing will be based on your agreement with them.

Whichever method you choose, once your subscription is active, go to https://portal.azure.com/#servicemenu/Microsoft_Azure_Resources/ResourceManager/subscriptions. You should see a screen that looks something like this:

Assign Copilot license

Now for the main part: turning on Cowork for your company. Every step from this point forward happens in the Microsoft 365 admin center.

First, make sure you assign a Microsoft 365 Copilot license to every user who needs to use Cowork (if you haven’t done this already).

Go to https://admin.cloud.microsoft/?#/users
Select user that you want to assign the license then “Manage product licenses”

Checked the either Microsoft 365 Copilot **OR** Microsoft 365 Copilot Business
Then click “Save changes”

Repeat this for every user you want them to use Cowork

Understand Copilot Credits

eep in mind that Cowork usage is set up using credits, not direct dollar amounts. At the time of writing, 1 Copilot Credit = $0.01 USD (or 100 credits per $1.00).

Because of this, every spending limit number in the next section is configured in Copilot Credits, not US Dollars.

Connect Cowork to Azure subscription

Now the most confused part, I will try explain every detail.

This is important part, it where you can config

Who can access Cowork
Limit Cowork usage
Who get notified when about to hit usage limit

Once you complete these steps, you will have one billing policy. You can always add more later. The simplest way to understand a billing policy is to think of it as a spending limit for a specific group of people.

Here’s how it works in real life:

Company-wide budget: If your company has a single $1,000 monthly budget shared across everyone using Cowork
- You only need one billing policy.
Department budgets: If different teams have their own spending limits—for example, Finance gets $500, Sales gets $200, and Management gets $800
- You will create three separate billing policies.

Let go step-by-step

From Microsoft 365 Admin Center, click on Copilot > Cost management

You wil see something like this, just click on “Get started”

This modal with showed up, I will explain every section in the next bullet

Billing method
- Select “Use a pay-as-you-go subscription”
- Then select your Azure subscription, it will appear only if you already have one

Set the monthly spending limit for this policy
- This limit applies to the whole group.
- For example, if you set the limit to 10,000 credits, everyone assigned to this policy shares that same 10,000-credit pool.
- If you don’t want a cap at the policy level, simply select “Don’t limit monthly spending.”

Select the monthly spending limit for users
- This step is optional and applies to each person separately.
- For example, if you set this limit to 1,000 credits, every user assigned to this policy gets their own dedicated 1,000-credit cap per month.

You can configure both limits together, pick just one, or set none at all. Whichever cap gets hit first will immediately cut off usage.

Do not leave this unlimited. Set at least one limit. If you leave spending wide open, a few heavy users can easily rack up a surprise bill that will blow through your entire IT budget overnight.

Define alerts
- This is optional.
- You can choose who will get notified when usage of this billing policy reach specified threshold (Can be percentage or exact credit count)

There are additional configuration, I recommend you to check it

Some of them are the same. I will focus only new config we never done

Policy name
- Can be anyname you want

User and group access
- Choose which user to be assigned to this policy
- If you choose “All users” means every user in your organization will assigned to this policy
- If you choose “Specific groups” you will need to choose group of user who will assigned to this policy
  - What is group? How to define group? Read “Config user group” below
- At the time I writing this post, we can’t select “Specific users” option so I will skip it.

Agents and services
- At the time I writing this post, Only “Copilot Cowork” and “Work IQ API” is available, I highly recommend to checked them both.

Once you’ve done all the configuration, simply click “Activate”

Congratulations 🎉 You now configured Copilot Cowork and it will ready for your users soon!

If you need to add more policy e.g. Each department have different budget, you can click “Add spending policy” and repeat steps in this section

Use

Now the fun part, after you’ve done the configuration job, Your user will now access to Cowork.

Go to https://m365.cloud.microsoft/cowork
If you see something like this, your Cowork is ready to go

Seeing something like this? Don’t worry, allow up to 1-3 hours for the configuration to reflect. Relax and wait, keep check back later.

Example scenarios

Scenario 1: Both Limits Set (e.g., 50,000 credit Team Pool, 10,000 credit User Cap)

Whichever limit is reached first cuts off access.
If Alice uses 10,000 credits, only Alice is blocked. Bob can keep working.
If five teammates each use 10,000 credits, the shared 50,000 credit pool is completely drained. Now Bob is blocked too, even if he only used 1,000 credits himself.

Scenario 2: Team Limit Only (e.g., 50,000 credit Team Pool, No user cap)

Everyone pulls from the same pool on a first-come, first-served basis.
If Alice runs heavy tasks and uses all 50,000 credits in the first week, Bob and everyone else are locked out for the rest of the month.

Scenario 3: User Limit Only (e.g., No Team Pool, 10,000 credits per person)

Each person has their own dedicated credit allowance.
If Alice hits her 10,000 credit limit, only she is blocked. She cannot affect Bob’s balance.
The risk: With no team-level cap, if you have 20 users who all max out their 10,000 credits, your organization will consume 200,000 credits that month.

Scenario 4: Neither Limit Set (Wide Open)

Zero safety net. Both Alice and Bob can consume unlimited credits with no automatic shutoff, leading to completely uncontrolled monthly usage.