Navigating Klaviyo’s Pricing Changes: How to Optimize Costs Without Sacrificing Performance
- Dispatch Strategy Team
- Mar 19
- 4 min read
Klaviyo recently introduced an auto-downgrade feature, adding more flexibility to its pricing model. While this update provides brands with a new way to manage their plan costs, it also introduces important limitations—especially when combined with Klaviyo’s existing auto-upgrade and flexible sending options.
If your brand is scaling its email and SMS marketing, choosing the right billing strategy can mean the difference between maximizing efficiency and overpaying for unused capacity.
At The Dispatch Agency, we’ve spent time analyzing Klaviyo’s new pricing model to determine the best way to keep costs low while ensuring consistent messaging for our clients. Here’s a breakdown of what’s changed and how we’re helping brands stay flexible without unnecessary spending.
Understanding Klaviyo’s New Pricing Model
Historically, Klaviyo only offered auto-upgrade, which automatically moves accounts to a higher pricing tier when they exceed their email or SMS send limits.
Now, they’ve introduced auto-downgrade, which reduces your plan based on the number of active profiles in your account.
Sounds great, right? Not so fast. There’s a catch.
You cannot enable both auto-upgrade and auto-downgrade at the same time.
Since auto-upgrade is based on sending volume and auto-downgrade is based on active profiles, these two settings can’t work together—forcing brands to choose between them.
Here’s what happens when you hit your plan’s limits:
Flexible Sending (Flex Plans)
Allows you to send beyond your plan’s limit by purchasing additional sends.
You’re charged based on your base plan’s unit pricing.
Downside: Even if you exceed your limit by a little, you’ll be billed for the entire next tier’s sends—whether you use them or not.
Auto-Upgrade
Moves you to the next pricing tier automatically.
More economical than flexible sending if your sending volume is consistently high.
Downside: You stay at the higher tier until you manually downgrade.
Stop Sending Until the Next Billing Cycle
Your emails and SMS campaigns pause until the next billing period.
Downside: This is not an option for most businesses, especially during high-sales periods.
Why Flex Plans Can Be an Expensive Trap
At first glance, flexible sending might seem like the best option—it allows you to send beyond your limits without committing to a higher-tier plan.
The problem? You could be overpaying for sends you don’t use.
Example: How Flex Plans Lead to Unnecessary Costs
Let’s say your plan includes 10,000 email sends per month, but you need 10,500 sends.
✅ With auto-upgrade, your plan moves to the next tier, 15,000 sends, and you’re charged accordingly.
❌ With flex sending, you’re charged for the entire 15,000-send tier, even if you only use 10,500 sends.
Over time, these small overages add up, and brands often end up paying more for capacity they never use.
Our Recommended Approach: Auto-Upgrade + Manual Downgrades
At Dispatch, we’ve tested different approaches and found that the most cost-effective way to manage Klaviyo’s pricing structure is a combination of auto-upgrade and manual downgrades.
Why This Strategy Works
✔ Auto-Upgrade Ensures You Never Stop Sending
If a campaign drives unexpected engagement, your plan scales up automatically to handle the extra volume.
This means no disruptions—your emails and SMS campaigns continue uninterrupted.
✔ Manual Downgrades Prevent Overpaying
We review your profile usage each month to determine if you can drop back down to a lower-tier plan.
By handling downgrades manually, we ensure clients never pay for unnecessary capacity.
Example:
Your brand is on a 10,000-send plan, but a seasonal campaign spikes your sending needs to 15,000 sends in a single month.
Auto-upgrade kicks in, moving you to a 15,000-send plan.
The next month, your volume returns to normal, and we manually downgrade you back to 10,000 sends—avoiding unnecessary costs.
Why Not Use Auto-Downgrade?
While auto-downgrade is an interesting feature, it only adjusts based on active profiles, not sending volume. This means:
❌ If your sending volume drops but your active profiles remain high, you stay at a higher-tier plan.
❌ If your profile count fluctuates but your sends remain consistent, your plan might downgrade when you still need higher sends.
Because of this limitation, we’ve found that manually managing downgrades is more cost-effective than relying on auto-downgrade.
How Dispatch Helps Clients Optimize Klaviyo Costs
At The Dispatch Agency, we take on the heavy lifting to ensure our clients only pay for what they actually need while maintaining seamless email & SMS marketing performance.
Here’s How We Do It:
🔹 Custom Klaviyo Plan Monitoring – We actively track your sending trends to determine when to upgrade or downgrade your plan.
🔹 Auto-Upgrade Setup – Ensures you never miss an opportunity to engage customers when sending spikes.
🔹 Monthly Profile Suppression Reviews – We help clean inactive profiles to keep your costs lower.
🔹 Manual Downgrade Management – We analyze your usage each month and adjust your plan accordingly to prevent unnecessary charges.
The result? You maintain a high-performing email & SMS program without overspending on unused capacity.
The Bottom Line: Don’t Let Pricing Confusion Cost You Money
Klaviyo’s pricing changes give brands more flexibility, but choosing the wrong settings can lead to overpaying for unnecessary capacity.
If you’re still navigating these updates and want to ensure your Klaviyo plan is fully optimized, we can help.
Let’s Chat—Optimize Your Klaviyo Setup Today
Ready to take control of your Klaviyo costs without compromising performance?
Book a strategy call with our team, and we’ll help you:
✅ Ensure you’re on the right plan.
✅ Set up auto-upgrades for seamless sending.
✅ Implement manual downgrades to avoid overpaying.
✅ Optimize retention strategies with smarter email & SMS automation.
Stop overpaying. Start optimizing. Let’s make Klaviyo work smarter for your brand.
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