WHAT'S HAPPENED? 🧲
From February 18th, Klaviyo will start enforcing pricing based on your "Active profiles" within legacy accounts.
There was previously a loophole whereby brands were paying purely based on emailed contacts but that's being closed now by this automatic enforcement.
The increase will be capped at 25% for existing customers until they downgrade their plans.
WHO WILL THIS IMPACT? 🧲
All customers using the platform but in particular, subscription brands will be hit hardest.
This is because a huge majority of subscription brands have 'Active profiles' living within Klaviyo, but often email their contacts with a reduced frequency due to fear of churn.
You could also make a compelling argument that anybody who has a slower purchase latency and needs to email their list less frequently will also be adversely impacted since their need to send emails each month is arguably less.
WHY ARE KLAVIYO DOING THIS? 🧲
Because they can.
The likelihood is that Klaviyo saw minimal churn to their last price increase last year and is further testing the market.
Klaviyo are obviously incredibly confident (and rightly so) about the value they're providing to their customers & wouldn't have enforced this without weighing up the risks to their business.
But it may also signal that they're struggling to penetrate new verticals they're trying to expand the product into and are looking for ways to maximize profits in the short-term.
HOW CAN YOU REDUCE YOUR BILL? 🧲
There are only 2 options available to reduce your costs.
1. Clean your list
> Create a segment of all profiles that have never purchased, been active on site, engaged with emails and been on your database for over 6 months and immediately suppress them
> Set up a Sunset flow to automatically suppress future people who meet this criteria
> Set new rules around manual suppressions (quarterly) before reactivating potential winback opportunities during peak shopping periods
2. Switch provider
This is a BIG move and not one I would recommend without doing your due diligence.
Saving a few thousand $ per year could come at a huge opportunity cost VS focusing on other initiatives within your business.
I'd first explore whether you're maximizing your value from Klaviyo's integrations and CRM.
MY PREDICTION 🧲
There will be a lot of social media noise about this but I believe the majority of merchants will reluctantly absorb the costs.
Klaviyo's got the market cornered and it's their right to increase pricing.
The question YOU need to ask yourself is:
"Am I using the features to their full advantage in a way that drives incremental growth VS what other platforms can provide with cheaper, pay-as-you-go models?"
Do a risk assessment for your business and try to quantify the impact of switching in terms of savings but critically, opportunity costs against other initiatives in the business.
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