You will never have to pay extra for an item update. Updates will be free for the life-time of the product. You can download the latest version of your theme under “Downloads” when logged into ThemeForest: http://themeforest.net/downloads/
*Before updating any item or website, make sure to save a backup!
You can then de-activate and delete your old theme. Then upload your new theme again via the WordPress Dashboard.
OR you can over-write the files over via FTP if you have FTP access. You will not lose any settings or content by doing this.
You can turn on automatic updates for WordPress themes by using the Envato WordPress Toolkit plugin. Although there are a few extra steps, this route is the way to go.
You will start by requesitng your Envato API key. All you have to do is login to Themeforest and visit your user profile page. Click on Settings. You Should see an API Keys tab below. Just click the button to generate your API key.
Envato will create a random 32 character API key for you to use. You can create multiple keys if you need to (some users prefer to do this if they are installing each theme purchase on a different domain).
Setting up the plugin is super easy since you already have your Envato API key. Simply click on the Envato Toolkit menu item in your dashboard and enter in your Envato username and API key. Then Save your settings.
Once saved, the toolkit should recognize your API key and display all of your Themeforest purchases. If the plugin doesn’t recognize your API key it’s possible your key is still too new. Try clearing your cache or refreshing your browser, and if that doesn’t work then wait a little and try again.
All you have to do to update a theme is click on the Update Automatically link for that theme in your toolkit. The plugin will prompt you to confirm your update. This is to remind you that if you’ve edited your stylesheet or other core files without using a child theme you will lose your changes. Don’t worry about the styling options you’ve set in the WordPress Theme Customizer or in the Theme Options Panel – those options will not be effected by updating your theme.
Link to Envato WordPress Toolkit plugin: https://github.com/envato/envato-wordpress-toolkit