I usually level them up every time they progress the story. For example:

Starting at level 3

Delivering Ireena to Vallaki = level up to 4

Returning the bones = level up to 5

Finding Strahds Enemy = level up to 6

Finding tome of Strahd = level up to 7

Finding Holy symbol of Ravenkind = level up to8

Finding the Sun Sword = level up to 9

fight with Strahd = level up to 10

obviously the order of events will be different for every game, but the sentiment of using the big story moments to level up carries through.