Welcome to iMore! Increasing your iCloud storage is not going to give you more free space on your device. iCloud is meant as a backup of what is on your device not an online storage solution. There are a few things you can do that might help though:
1. Go to Settings > iCloud > Photos. Make sure iCloud Photo Library is ON and make sure that "optimize iPhone storage" is checked.
2. Utilize a cloud storage service like Dropbox or OneDrive. I use both and both have automatic photo upload capabilities.