>_ The Manifest

A developer pinged me on Teams last week with a question I get almost every week: “I want to start building declarative agents, but I don’t have a Copilot license. Do I really need to spend $30 a month before I can write a single line of JSON?” The answer made her day: no, you don’t. But you do need a tenant, and the path to getting one changed in 2024. Let’s walk through exactly what you need, what you don’t, and how to get up and running this afternoon.

What You Actually Need to Build Declarative Agents

Before we set anything up, let’s clear the air on what’s actually required. To build, test, and ship declarative agents for Microsoft 365 Copilot, you need three things:

  1. A Microsoft 365 tenant with Microsoft Entra ID (so you have an admin and at least one developer account)
  2. Custom app upload enabled in that tenant (so the Agents Toolkit can sideload your agent)
  3. Access to Microsoft 365 Copilot Chat (which is included for free with any Entra account)

That’s the floor. No paid Copilot license required. Declarative agents run inside Microsoft 365 Copilot Chat, and Copilot Chat is free for anyone with a work or school account. You can prototype, iterate, demo to your team, and even ship to production users entirely on the free tier.

The paid Microsoft 365 Copilot license becomes relevant only when you want to test your agent inside the full Microsoft 365 Copilot experience: pinned in the side panel of Word, Excel, PowerPoint, and Outlook with access to Microsoft Graph grounding across the user’s mailbox, files, and calendar. For most agent development, you do not need it on day one.

💡 Tip

If you only remember one thing from this post, remember this: Copilot Chat is free, and declarative agents run there. Start building now, worry about Copilot licenses when you actually need Graph grounding for testing.

Option 1: The Microsoft 365 Developer Program

The official path for developers is the Microsoft 365 Developer Program. It gives you a 90-day renewable sandbox tenant with 25 user licenses, pre-populated sample data (Adele, Alex, Megan, the whole crew), and an E5 SKU under the hood.

In 2024, Microsoft tightened eligibility. Today, to get a new Microsoft 365 E5 developer sandbox you need one of:

  • An active Visual Studio Enterprise or Professional subscription (the sandbox is a benefit of those subscriptions)
  • A verified Microsoft Partner account
  • An active Microsoft 365 E3, E5, or A3/A5 subscription in your day-job tenant

If you already have one of those, sign up at developer.microsoft.com/microsoft-365/dev-program, pick the Instant sandbox, and you’ll have a tenant in about ten minutes. The portal walks you through choosing a domain (yourname.onmicrosoft.com), an admin account, and the sample users.

Once provisioned, your tenant comes pre-licensed. Every sample user already has Microsoft 365 E5 assigned, which means SharePoint, OneDrive, Teams, Exchange, and Microsoft Entra ID P2 are all there. You don’t need to assign anything manually.

Option 2: Buy the Minimum: Business Basic + Microsoft 365 Copilot

If you don’t qualify for the Developer Program, stop hunting for a workaround. The cleanest path is to buy the minimum license stack yourself: one seat of Microsoft 365 Business Basic plus one Microsoft 365 Copilot add-on assigned to that same user. That’s it. No trial countdown, no expiration window, no scrambling to migrate before day 30.

Microsoft 365 Business Basic is the cheapest qualifying base SKU for the Copilot add-on (around $6 per user per month). It gets you a real production tenant, Microsoft Entra ID, Exchange Online, OneDrive, SharePoint, Teams, and the ability to enable custom app upload. The Microsoft 365 Copilot add-on (around $30 per user per month) layers Copilot Chat with full Microsoft Graph grounding on top.

Buy both at microsoft.com/microsoft-365/copilot and assign them to the user who will be your primary developer and test account. Total: roughly $36 per month for a permanent, production-grade development tenant with the full Copilot experience. That’s less than a JetBrains license and it never expires.

This is the path I recommend for anyone serious about building on the platform. You get a real tenant that mirrors what your customers run, you can test agents with real Graph grounding from day one, and you stop fighting eligibility forms and 30-day clocks.

The Minimum License Matrix

Here is the practical breakdown of what each license unlocks for declarative agent development:

CapabilityLicense RequiredCost
Build and sideload a declarative agentAny M365 tenant + Entra accountFree
Test the agent in Copilot ChatEntra accountFree
Use web search, code interpreter, image generation in your agentEntra accountFree
Ground the agent on SharePoint, OneDrive, email, Teams chatsMicrosoft 365 Copilot licensePaid (~$30/user/mo)
Pin the agent in Word, Excel, PowerPoint, Outlook side panelsMicrosoft 365 Copilot licensePaid (~$30/user/mo)
Publish the agent to your organizationMicrosoft 365 admin roleFree (license itself)
Use API plugins with Microsoft Entra authAny M365 tenantFree

The pattern is clear: the platform itself is free to develop on. You only pay when your agent needs to reach into a user’s actual Microsoft 365 data inside the full Copilot experience.

Enabling Custom App Upload

Whether you go with the Developer Program tenant or your own purchased tenant, there is one tenant setting you must flip before sideloading anything: custom app upload. It is on by default in Developer Program tenants and off by default everywhere else.

In the Microsoft 365 Admin Center:

  1. Go to Settings then Integrated apps then Manage how users get apps
  2. Open the App setup policies in Teams
  3. Edit the Global (Org-wide default) policy
  4. Set Upload custom apps to On
  5. Save

Without this, when the Agents Toolkit tries to deploy your agent, you’ll get a generic “app upload failed” error that sends you on a wild goose chase. Flip the setting first, save yourself the afternoon.

⚠️ Warning

The custom app upload policy can take up to 24 hours to propagate. In practice it’s usually 15 to 30 minutes, but if your first sideload fails immediately after enabling it, give it a coffee break before debugging deeper.

Wiring Your Tenant into the Agents Toolkit

Once you have the tenant and the policy, point the Agents Toolkit at it. From VS Code, sign in with your developer admin account in the Agents Toolkit sidebar under Microsoft 365 Account. From the CLI, do the same with one command:

atk auth login m365

A browser opens, you sign in with your tenant admin, and the Agents Toolkit caches a token. From here on, every atk provision and atk deploy runs against that tenant.

To confirm everything is wired correctly, scaffold a starter agent and hit deploy. If you’ve never done this before, walk through Scaffolding Your First Declarative Agent for the five-minute version.

What Happens When You Need a Copilot License

Eventually you will want to test your agent against real Microsoft Graph data: a user’s actual mailbox, their actual SharePoint sites, their actual Teams chats. That’s when you need a Microsoft 365 Copilot add-on license assigned to at least one test user in your tenant.

Microsoft 365 Copilot is sold as an add-on to a qualifying base SKU (Microsoft 365 E3, E5, Business Standard, or Business Premium). As of 2024, there is no minimum seat requirement: you can buy a single Copilot license for a single test user. In a Developer Program tenant, the E5 base is already there, so adding one Copilot license is a one-click purchase in the Admin Center.

📝 Note

A common mistake: assigning a Copilot license to your admin account and then wondering why grounding doesn’t return interesting results. Assign it to a sample user that has actual mailbox content, calendar events, and SharePoint files. Adele Vance is the classic choice in Developer Program tenants.

The Value You Just Unlocked

By following this setup once, you save yourself weeks of confusion later. Specifically:

  • Zero-cost development: A free Developer Program tenant or Business Standard trial gives you everything you need to build declarative agents without ever opening a credit card.
  • Free testing surface: Copilot Chat runs your agents on the free tier, so prototyping, demos, and internal feedback loops cost nothing.
  • Right-sized licensing later: You can add a single Copilot license to one test user when you actually need Graph grounding, instead of buying seats blindly.
  • Clean tenant separation: Your dev tenant stays separate from your production tenant, so experiments never threaten real users or real data.
  • Working sideload pipeline: With custom app upload flipped on day one, every future atk provision and atk deploy just works, no troubleshooting required.

The barrier to building for Microsoft 365 Copilot is much lower than most people assume. The only real cost is the time you spend learning the platform, and the best way to learn it is to start building today.

Resources

Have questions or want to share what you're building? Connect with me on LinkedIn or check out more on The Manifest.