I am not sure this is worth contacting ESO support or not? So I hope I can get my question answered here? Before I contact them.
So I didn't get the level 7 Bag Upgrade Reward. So I was wondering if you buy one before you get the "free" one. Does it over right it?
“I’m The Best There Is At What I Do. But What I Do Isn't Very Nice…” - Wolverine/Logan/James Howlett
Just to confirm with what was said above, the free upgrade will only be awarded if you haven't purchased any bag upgrades yet. Basically, it will only ever save you the price of the first upgrade which is about 400 gold if I remember correctly.