The formula behind the bid
One click brings, on average, your order value times your conversion rate in sales. ACOS is what the click cost over what it brought. Turn that around and you get the most a click can cost at any ACOS you choose.
Highest cost per click
Order value × conversion rate × target ACOS$24.99 × 12% × 30% = $0.89Put your break-even ACOS in as the target and the result is the ceiling: above it, every click loses money on average.
Where to find each number
- Order value. Ad sales divided by ad orders for the keyword or campaign, over at least 30 days.
- Conversion rate. Ad orders divided by clicks. A keyword with fewer than about 20 clicks has not shown you its rate yet; use the campaign's.
- Target ACOS. Break-even for the ceiling, lower for profit. What is a good ACOS?
- Today's CPC. Spend divided by clicks. Amazon's second-price auction means you usually pay less than your bid, so compare CPC, not the bid itself.
From the ceiling to the bid you set
The result is a cost per click, and Amazon charges a little over the next bid down, so your bid can sit slightly above it. Move in steps of 10 to 20%, then read the result after the 7-day attribution window closes. A large cut can lose placement and change the conversion rate the number was built on.
Questions
- How much should I bid on Amazon PPC?
- No more than order value × conversion rate × your target ACOS per click. For a $25 product converting at 10% with a 30% target, that is $0.75.
- Should I use Amazon's suggested bid?
- As a read on competition, yes. As a bid, only if it sits under your ceiling: Amazon's suggestion knows the auction, not your margin.
- Why is my CPC lower than my bid?
- Amazon's auction charges the winner just over the next highest bid, so you often pay less than you bid.
Keep going
Free toolsBreak-even ACOS calculatorYour break-even ACOS from price and costs, and the bid that reaches it.GuidesAn Amazon PPC strategyTargets by product stage, a campaign layout, and the weekly loop.GuidesAmazon PPC match typesWhat each match type matches, the auto groups, and how to switch a keyword.Free toolsACOS calculatorACOS and ROAS from spend and ad sales, TACOS when you add total sales.