Guide

Microsoft Copilot agents: Copilot Studio and Agent Builder

Harrowtech.ai · last checked 13 October 2026

Microsoft has more than one way to build an AI agent inside the Copilot family, and the names overlap. This page explains the two main tools for Copilot agents, Copilot Studio and Agent Builder, what you can build with each, and how Microsoft's documentation says they are licensed.

Harrowtech.ai is independent of Microsoft. If you need the basic definition of an agent first, read AI agents vs workflows vs agentic AI.

Copilot Studio

Microsoft's overview calls it “a graphical, low-code studio for building and managing AI-powered agents and workflows.” You build, connect to your organisation's data and systems, and publish to the channels where people already work. It is a web app at copilotstudio.microsoft.com. Microsoft's page was dated 25 September 2026. It lists three things you can build.

Agents. Microsoft defines an agent as “an AI assistant that handles conversations and completes tasks.” It follows your instructions, draws on knowledge sources you connect, and uses tools to act. Agents can work with staff and customers in several languages across Microsoft Teams, Microsoft Copilot, websites, mobile apps and other channels. You can create one by describing it in plain language and test it before publishing.
Workflows. An automation built with a drag-and-drop designer, where each step can combine agents, tools and logic. Microsoft says workflows include built-in testing and human-in-the-loop controls.
Agent flows. Described as the established flow format, with an authoring experience similar to Power Automate. They can run on their own, or be attached to an agent as a tool. They can run prompts, call agents and include human review steps.

Everything runs on what Microsoft calls a harness, the engine behind the scenes. There are three: a GitHub Copilot harness for “reasoning-heavy, multi-step work”, a standard harness for rule-based agents and structured, repeatable conversations, and a Copilot chat harness for extending Microsoft Copilot Chat with your organisation's knowledge. The harness you pick affects what the agent can do and how it is billed. Microsoft marks building from a natural-language goal, and its app-creation experience, as preview.

For running agents, Microsoft lists analytics, evaluations with test sets, and administration to inventory and secure agents with role-based access and cost management.

Agent Builder in Microsoft 365 Copilot

Agent Builder is the lighter route. Microsoft says it builds declarative agents for Microsoft 365 and “suits quick and straightforward projects.” Its examples are a coaching agent tailored to organisational standards, and a team onboarding agent that answers questions about a new team. You can point the agent at SharePoint content and Copilot connectors, and test it before sharing. Adding skills to an Agent Builder agent is in preview and only for organisations in the Microsoft Frontier Program.

You reach it from microsoft365.com/chat, office.com/chat or the Teams desktop and web client, not from mobile. The documented limits are worth reading before you plan around it:

It does not support actions that connect to external services. For low-code actions, connectors or workflows, Microsoft says to copy the agent to Copilot Studio.
You cannot use agents built in Agent Builder in Teams group or one-to-one chats.
Customer Managed Keys are not supported.
Automatic sharing of SharePoint files and folders works only when sharing with specific security groups, not everyone in the organisation.
Administrators can switch Agent Builder off for their organisation.

Microsoft's page was dated 30 September 2026.

Licensing, as Microsoft states it

The common currency is the Copilot Credit. Microsoft says that from 1 September 2025 it replaced “messages” for agents, with no change to the quantity per prepaid pack or to the pay-as-you-go rate. The documented ways to pay for Copilot Studio are:

Pay-as-you-go. Billed through an Azure subscription. At the end of each month you pay only for the credits your agents used, and you can unlink at any time.
A prepaid Copilot Credits pack from the Microsoft 365 admin centre, the standalone subscription. A free Copilot Studio user licence is assigned to makers, but Microsoft says you need a tenant prepaid pack before you can get it.
A one-year prepurchase plan in the Azure portal.
A Microsoft 365 Copilot licence, which lets you use Copilot Studio to extend Microsoft Copilot with agents.
A trial. Microsoft says you can create and test agents but cannot publish them. When the trial expires it can be extended by 30 days, and Microsoft says the agent “continues to work for up to 90 days after your trial expires”. A work or school account is needed, as personal email addresses can be rejected.

Two details affect running costs. Capacity is enforced monthly and unused credits do not carry over; going over can lead to service denial. And with a Microsoft 365 Copilot licence, using agents in Copilot Chat, Teams or SharePoint for classic answers, generative answers or Microsoft Graph tenant grounding does not count against the Copilot Studio pack or meter.

For agents in Microsoft 365 Copilot, a separate page sets out access by licence. Copilot Chat is available to all Microsoft 365 users. Agents grounded in SharePoint data or Copilot connectors need either pay-as-you-go billing enabled in the tenant or a Microsoft 365 Copilot licence. Agents grounded on public web data or only on instructions do not. The page also lists Microsoft 365 Copilot Business as a standalone SKU introduced for small and medium businesses.

Those pages give no pound or dollar prices, and send you to Microsoft's licensing guide and a usage estimator. Microsoft gives no prices on these pages.

Agent Builder, Copilot Studio or a custom build?

For a UK small business, Microsoft’s own statements point to when each of its tools fits. They do not say when a tool outside Microsoft fits better, so that part is a set of questions.

Agent Builder fits when your team already works in Microsoft 365 and you want an agent that answers from your own content, such as SharePoint files or Copilot connectors. Microsoft says it “suits quick and straightforward projects”. It cannot take actions in other systems: “Agent Builder doesn’t support authoring actions that integrate external services.”
Copilot Studio fits when the agent has to do things as well as answer: use connectors, run workflows, or talk to staff and customers on Teams, a website or other channels. Microsoft says that because it is low-code “you can build capable solutions without an extensive technical background”, and it can “Connect to other data sources through prebuilt or custom connectors”. Usage is paid in Copilot Credits, and unused purchased credits do not carry over to the next month.
Even without Copilot licences, Microsoft says a Microsoft 365 subscription “such as Microsoft 365 Business Basic” lets you build and test agents for Microsoft 365 Copilot Chat “with limited capabilities”. Grounding an agent in your organisation’s data needs pay-as-you-go billing or a Microsoft 365 Copilot licence.

Questions to settle before you choose:

Does the job live inside Microsoft 365, or in other systems such as your accounts package, CRM or website?
Does the agent only need to answer questions, or must it take actions in those systems?
Who builds it and keeps it working when something changes?
What will a month of use cost? Microsoft points to its licensing guide and its agent usage estimator for the numbers.

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What this guide does not cover

It does not cover Microsoft prices, which are on Microsoft's licensing guide and change. It does not cover custom engine agents, the Microsoft 365 Agents Toolkit or the new plugin tooling beyond naming them, and it does not cover the GitHub Copilot features that carry a similar name. For those, see AI agents on GitHub.

Sources, all read 13 October 2026 on Microsoft Learn

Overview of Microsoft Copilot Studio (dated 25 September 2026)
Standard harness licensing (dated 3 August 2026)
Get access to Copilot Studio, standard harness (dated 3 August 2026)
Agent Builder overview (dated 30 September 2026)
Set up your development environment for a Microsoft 365 Copilot plugin (dated 30 September 2026)