GitHub Copilot by token: what's changing for dev teams

Copilot's flat-rate model is over: what has changed

Until a few months ago, GitHub Copilot offered a flat-rate monthly subscription. Developers paid a predictable fee and used the tool without any major usage limits. However, Microsoft has decided to switch things up in a big way.

The new model introduces the token-based billing . Basically, every request sent to the AI model eats up a token quota. As a result, the more the team uses Copilot — for autocomplete, function generation, code review — the higher the bill climbs.

According to reports by TechCrunch , the community's reaction was immediate. Phrases like “What a joke” are circulating in technical forums. Therefore, the dissatisfaction is not marginal: it affects teams of all sizes, from freelancers to structured software houses.

Why the developer community is on high alert

The issue is not just financial. It is structural. A consumption-based model introduces budget unpredictability . For a team of five developers using Copilot every day, estimating the monthly cost becomes a complex exercise.

Plus, token-based billing really hurts heavy-duty use cases. For instance, if you use Copilot to crank out automated tests or inline docs, you'll burn through tokens like crazy. On the flip side, if you only use it for the occasional autocomplete, you might even save a few bucks compared to the old flat rate.

So, the new model creates a clear split. On one side, light users who pay less. On the other, power users and structured teams who see costs go up. In particular, tech SMBs — often with limited IT budgets — almost always fall into the second category.

According to Gartner , the adoption of AI tools for software development grew by 40% in 2025. Therefore, a pricing change on such a widespread tool has systemic impacts, not just individual ones.

The real-world impact on Italian tech SMEs

Italian SMBs operating in the tech sector or with internal development teams are facing a pretty tough decision. In fact, many of them have integrated Copilot into their workflows over the last two years. Walking away from it isn't simple.

However, the risk of runaway costs is real. A team of ten developers using Copilot for eight hours a day could rack up a monthly bill that is hard to justify in an SMB budget. Therefore, looking into alternatives has become super urgent.

Among the cost factors to consider are:

• Tokens consumed for auto-completion : the most used feature, but also the one that generates the most traffic to the models.
• Tokens for chat and extended generation : chat sessions with the AI consume significant quotas.
• Tokens for review and refactoring : advanced features with high consumption per request.
• Integration costs with different IDEs : some configurations amplify the number of API calls.

Besides this, you need to consider the hidden cost of billing management . Monitoring token consumption requires attention and extra tools. For an SMB without a dedicated DevOps, this represents a real operational burden.

The alternatives that are gaining ground

Frustration with Copilot is speeding up the switch to alternative tools. Some are open source, others are commercial with more predictable pricing. Right now, the market has some solid choices.

Cursor is one of the most cited AI-native editors as an alternative. It offers flat-rate plans and a comparable development experience. Similarly, Codeium and Tabnine keep freemium models with predictably priced tiers.

For teams that prefer self-hosted solutions, Continue.dev with local models (like Ollama) is a zero-cost option per token, but it needs some hardware setup. So, the choice depends on the team's tech skills and how much operational risk they can handle.

According to Harvard Business Review , companies that diversify their AI stack reduce their dependence on single vendors and improve the resilience of their tech budgets. Therefore, this isn't just an emotional reaction to the pricing change: it's a smart strategy.

What Microsoft didn't clearly communicate

There is one element that strongly emerges from the online debate: the lack of upfront transparency . The shift to token-based billing was not accompanied by clear communication regarding expected costs for the most common usage profiles.

In fact, many developers found out about the change by reading release notes or community posts, rather than through a direct notification. Despite this, Microsoft published technical documentation on the new system. However, technical documentation does not replace transparent sales communication with existing customers.

This aspect is relevant for Italian SMEs that purchase Copilot through Microsoft 365 or Azure licenses. In some cases, the pricing change applies to already active contracts. Therefore, it is advisable to check the specific conditions of your contract with your Microsoft reseller.

What to do in the coming weeks: a hands-on guide

Faced with this scenario, we at SHM Studio we suggest a structured three-phase approach. First of all, it is necessary to measure current consumption . Without real data on Copilot usage in your team, any financial estimate is just a guess.

Next, you can proceed with a future cost simulation based on the new pricing model. GitHub provides token consumption estimation tools. It is useful to apply them to your team's historical data to get a realistic projection.

Finally, it's worth running a benchmarking with at least two alternatives. This doesn't necessarily mean ditching Copilot: in some cases, the new model might still make sense. However, having a tested alternative reduces dependence and boosts bargaining power.

For SMEs looking to dive deeper into adding AI tools to their digital workflows, our team is ready for a one-on-one chat. Check out our expertise on AI services or contact us directly from the contact page .

Outlook: towards a more competitive AI coding tool market

GitHub Copilot's shift in direction could have an unexpected effect: boosting competition. In fact, when the market leader introduces a model that's seen as less favorable, competitors benefit directly.

In the short term, growth in the adoption of alternative tools is expected. In the medium term, Microsoft is likely to revise some pricing aspects in response to community feedback. Similarly, other providers — such as Anthropic with Claude for coding or Google with Gemini Code Assist — could speed up their competitive offers.

For Italian tech SMEs, this is a good time to re-evaluate their development stack. Not as an emotional reaction, but as a strategic exercise. The choice of AI tools impacts team productivity, code quality, and cost sustainability over time.

Anyone managing or supervising development teams can also find useful insights in our analyses on digital transformation and AI , or dive deeper into how AI integrates with the strategies of Digital marketing and web development for Italian SMEs.