How to Navigate Klaviyo Pricing Changes as a Small Business

If you created a Klaviyo account after April 2024 you’re already under the new pricing structure. However, for those with legacy accounts before April 2024, the previous pricing model was still being honored—until now.

We’ve been researching and navigating these changes for clients since April 2024 and have put together this guide to help other small businesses:

• Understand the new pricing model and how to estimate your new costs
• Implement list-cleaning strategies to control your active profile count and manage expenses
• Identify when to explore alternative platforms and AI tools

Understanding Klaviyo’s New Pricing Model

Klaviyo is shifting to an active profile-based billing system. For small businesses, this means:

• Your plan must match or exceed your number of active profiles – No more exceeding plan limits while staying on a smaller plan.
• Auto-upgrades and auto-downgrades – Your plan will adjust dynamically based on your active profile count.
• A 25% “Appreciation Discount” cap – Klaviyo has temporarily capped price increases at 25% of your current pricing/plan, but there is no official timeline for how long this discount will remain in place.

Directly from Klaviyo:

“Klaviyo will calculate your Appreciation Discount on your first billing date after February 18th, based on your active profile count on that day. The Appreciation Discount continues indefinitely and, until further notice, it will recur as long as your account stays on an applicable plan. Please note that the dollar value of the discount will shrink by the amount of any downgrades until it reaches $0. The discount amount does not change if your plan grows.”

How to Check Your Current Active Profile Count

To determine how these changes will impact you:

1. Log into Klaviyo
2. Go to Account → Billing → Plan Overview
3. Look for your Active Profiles count

Tip: Active profiles include anyone who is not suppressed in your Klaviyo account, whether you are actively emailing them or not. Read more about active profile definitions here.

How to Estimate The Impact of Klaviyo’s Pricing Changes

Klaviyo’s Pricing Page allows you to estimate your new costs:

1. Visit Klaviyo’s Pricing Calculator
2. Enter your current active profile count
3. Enter your estimated SMS Credits

This number tells you what you will eventually pay Klaivyo for an account after they have removed the appreciation discount.

However, with the 25% Appreciation Discount in place, you will have a capped price starting on your first billing cycle after February 18th. You (or account owners and administrators) should have received an email with the calculations and breakdown.

Let’s say you have an account with 1,350,000 active profiles.

However, your plan only allows 90,000 profiles (i.e. profiles you are actively emailing in campaigns).

• Current plan: 90,000 profiles – $1,265.00/month
• Estimate based on active profiles (1,350,000): $9,230.00/month (620% Increase)
• With the 25% Cap: $1,265 x .25 = $1,581.25/month

Instead of a drastic $20,000+ annual increase, the 25% Appreciation Discount temporarily limits the cost increase.

Image: Breakdown of price changes (Source Klaviyo)

This means businesses have two options:

1. Suppress inactive profiles (sometimes drastically) to keep costs down.
2. Accept the 25% price increase and utilize the increased send capacity for as long as you can.

However, before you jump into suppressing thousands or even hundreds of thousands of profiles from your Klaviyo account, consider this:

• Lost Revenue Opportunities: Suppressed profiles won’t receive emails, either from campaigns or flows, effectively eliminating potential re-engagement.
• Invested Resources: You’ve already spent time and money to acquire these emails. While it’s true that we shouldn’t be swayed by “sunk cost fallacy”, removing most of your email list will undoubtedly have an impact on your business and marketing plans.

The 25% Appreciation Discount offers a great leeway in accommodating a significant number of active profiles and emails. It’s an excellent opportunity to run re-engagement or win-back email flows, helping you reconnect with inactive subscribers on your list.

Cost-saving Strategies

The maximum cost might seem overwhelming if you’ve been using Klaviyo for a while. While the 25% Appreciation Discount offers some relief, it’s important to consider long-term strategies to offset expenses and maximize your email ROI.

Here are key cost-saving strategies worth exploring:

1. List cleaning to remove inactive profiles.
2. Migrating to alternate ESPs with different pricing structures.
3. Performing partial migrations to balance costs across multiple platforms.
4. Using AI-driven list management to optimize engagement and reduce unnecessary expenses.

List Cleaning

Since billing is based on active profiles, removing inactive ones will lower your costs.

Klaviyo has a guide on creating a “never engaged” segment. Take a look and use it to identify potential profiles that could be removed.

However, this will probably not reduce your active profiles enough to have a substantial impact on your costs. Across our clients, we’ve seen this range from 10-25% of active profiles.

To take this a step further, you can analyze your engagement segments to determine if there are additional profiles worth suppressing:

• 3-Month Engaged – Engaged list, likely receiving your campaigns
• 6-Month Engaged – Moderately engaged list, likely being used for larger campaigns and announcements (like BFCM)
• 12-Month Engaged – Lower engagement, but some reactivation potential
• 24+ Month Engaged – Likely inactive, safe to remove or suppress

Analyze your list to better understand engagement over time and also take the time to look closely at any re-engagement, re-activation, or win-back flows currently running in your Klaviyo account. There may be a natural point where additional suppression of profiles makes sense.

For example, if you have a 12-month re-engagement flow that runs for 2 months, you might decide to suppress profiles that have been inactive for 14 months or 16 months if you build in an additional 2-month buffer.

Tip: When cleaning your list, it’s best practice to add a suppression step at the end of your automated flows. In the case of a 180-day re-engagement flow, for example, once a subscriber doesn’t open or click any email in this flow after 2 months they’ll be automatically suppressed. This is a strategy used by many email marketers to ensure that subscribers that haven’t re-engaged after multiple attempts are automatically suppressed, keeping your list clean and your costs under control.

Every business (especially seasonal ones) may have different timelines here, but the principle is the same: introducing self-cleaning automation in your account is a winning idea.

Considering Migration? Here’s What to Know

With the new pricing model, you might be wondering if it’s time to switch ESPs (email service providers). While exploring alternatives is smart, ESP migration is not a quick fix—it’s a process that requires 3-6 months of planning and execution.

If you’re thinking about moving away from Klaviyo, here’s what to look for:

• Pricing Model – Some platforms charge based on active profiles, while others use a pay-per-send model, which may be more cost-effective.
• Integrations – Ensure the ESP works seamlessly with your eCommerce platform, checkout system, or other marketing tools.
• Automation & Segmentation – Advanced segmentation and automation tools are essential for maintaining personalized marketing.
• Deliverability & Reputation – Some ESPs have better sender reputations, which can impact email deliverability.
  Customer Support & Community – A strong support team and knowledge base can make a big difference during and after migration.

Migrating to a new email platform is a time-consuming process, so it’s important to carefully consider whether Klaviyo is the right fit for your business. Klavioy is a leading platform for a reason, but it is also very expensive. It offers great value to businesses that can drive high customer lifetime value (CLV), meaning those with frequent opportunities for cross-selling, upselling, or repeat purchases. If you rely on these strategies then Klaviyo’s advanced features may be a worthwhile investment.

Top ESP Alternatives to Consider

Klaviyo is not the only solution. Here are some ESP options worth exploring:

Need help deciding whether to migrate? Check out our guide where we present a step-by-step breakdown of the migration process.

The Case for Partial Migrations

Instead of a full migration, you may consider partial migration—using two ESPs to manage costs.

For example, if you’re not sending that many emails like monthly newsletters, you might want to use an ESP that offers a lower cost per send. Alternatively, many other platforms (such as HubSpot or Podia) now offer built-in email capabilities. If you’re already using one of these tools, leveraging their email features could help reduce your reliance on Klaviyo and lower costs.

It’s worth considering your email program and seeing if there’s a natural place for emailing elsewhere while keeping key flows and automations on Klaviyo for certain parts of the customer journey.

Managing two ESPs may be complex and require additional effort, however, it may also reduce overall cost. Take the time to review your customer journey, software you’re already using, and email marketing strategy to see if it’s worth reworking the existing eco-system.

AI-Driven List Management Technology

eCommerce email marketing is big business. It’s no surprise that newer technologies have emerged in the last year (most saw these pricing changes coming), including those that automate profile suppression and reactivation, reducing costs while maintaining engagement.

How AI Suppression Works

• Keeps profiles active only when needed
• Suppresses profiles after a set time of inactivity
• Automatically reactivates profiles when they qualify for marketing flows

Here are some top tools to watch:

• Orita.ai – Currently the cost is prohibitive for most businesses, but it focuses on additional revenue-generating opportunities like cross-selling and up-selling.
• UpEngage – Seems affordable but currently waitlist only as it is still emergent and keeping up with high demand.

Closing Thoughts

Klaviyo’s new pricing structure is a significant shift for small businesses. While the 25% Appreciation Discount offers significant relief, costs will rise over time. To navigate these changes:

1. Check your active profile count in Klaviyo
2. Use Klaviyo’s Pricing Calculator to estimate the potential impact
3. Audit and clean your email lists
4. Automate suppression at the end of your flows
5. Consider evaluating alternative ESP options or partial migration
6. Leverage AI tools where possible

Now’s also a good time to revisit your email marketing strategy to see if you’re making the most of Klaviyo and how you can do more with email to offset these new costs. Remember, the 25% Appreciation Discount comes with significantly larger limits. Take advantage of them!

If you need further help navigating these changes and future-proofing your email marketing strategy, we can help. Reach out for personalized recommendations.

About Centric Squared

At Centric Squared, we specialize in email marketing, SMS marketing, and CRM strategy. If you’re unsure how these Klaviyo pricing changes will impact your business, we can help you clean your list, optimize your campaigns, and maximize ROI.

Book a call with our team today.