diff --git a/app/main/views/service_settings.py b/app/main/views/service_settings.py
index 1af8ed6dd..7b42732c3 100644
--- a/app/main/views/service_settings.py
+++ b/app/main/views/service_settings.py
@@ -1,5 +1,6 @@
 from flask import (
     abort,
+    current_app,
     flash,
     redirect,
     render_template,
@@ -695,10 +696,15 @@ def set_organisation_type(service_id):
     form = OrganisationTypeForm(organisation_type=current_service.get('organisation_type'))
 
     if form.validate_on_submit():
+        free_sms_fragment_limit = current_app.config['DEFAULT_FREE_SMS_FRAGMENT_LIMITS'].get(
+            form.organisation_type.data)
+
         service_api_client.update_service(
             service_id,
             organisation_type=form.organisation_type.data,
         )
+        billing_api_client.create_or_update_free_sms_fragment_limit(service_id, free_sms_fragment_limit)
+
         return redirect(url_for('.service_settings', service_id=service_id))
 
     return render_template(
diff --git a/tests/app/main/views/test_service_settings.py b/tests/app/main/views/test_service_settings.py
index 8b5b11211..a360f06f7 100644
--- a/tests/app/main/views/test_service_settings.py
+++ b/tests/app/main/views/test_service_settings.py
@@ -1560,6 +1560,7 @@ def test_should_set_organisation_type(
     logged_in_platform_admin_client,
     mock_update_service,
     organisation_type,
+    mock_create_or_update_free_sms_fragment_limit
 ):
     response = logged_in_platform_admin_client.post(
         url_for(