How to Calculate an Amazon PPC Bid from Your Target ACOS

To calculate an Amazon PPC bid, multiply the revenue a click brings in by your target ACOS, and then keep each change inside fixed limits. A bid is the most you will pay for one click on your ad. I set it from what a click is worth to the business, which is the method I use on the client accounts I manage.

The target ACOS bid formula

The bid depends on two numbers for each keyword or campaign. Revenue per click is your ad sales divided by your clicks, and your target ACOS is the share of ad sales you are willing to spend on ads.

Multiply revenue per click by target ACOS to get the bid, so if a click brings in $2.40 of sales and your target is 30%, the most you should pay for it is $0.72.

You can also write the formula with conversion rate and average order value. Revenue per click is those two numbers multiplied together, so both versions give the same bid:

Input	Example
Conversion rate (orders divided by clicks)	8%
Average order value (ad sales divided by orders)	$30.00
Revenue per click (8% times $30.00)	$2.40
Bid at a 30% target ACOS ($2.40 times 30%)	$0.72

Set your target ACOS from your margin

The formula follows whatever target you give it, so the target has to be right. Your break-even ACOS equals your profit margin before ad spend, because if you keep 35% of each sale before ads, spending 35% of sales on ads leaves nothing. Any target above your break-even sets bids that lose money on every sale, so set the target below it and leave room for profit.

Check the bid against break-even cost per click

The break-even cost per click is the most a keyword or campaign can pay for a click and still hit your target ACOS at its own conversion rate, so when the campaign pays more than that, the bid or the budget needs to change.

When the bid would have to fall by more than half to reach break-even, I treat it as a conversion problem. A cut that deep means the bid is the wrong lever, and the listing, price or targeting needs attention first. You can check each campaign's break-even cost per click across the whole account by following the audit guide.

What a click can cost: placements and dynamic bids

A placement multiplier adds a percentage to your bid for one placement, such as the top of the search results. On a campaign that uses fixed bids or dynamic bids down only, a $0.80 bid with a 50% top-of-search multiplier can cost up to $1.20 there, because $0.80 times 1.50 is $1.20.

Amazon lets you choose one of three bidding strategies for each Sponsored Products campaign: fixed bids, dynamic bids down only, or dynamic bids up and down. Under dynamic bids up and down, Amazon raises your bid for clicks that are more likely to convert and lowers it for clicks that are less likely to. The change can reach 100% for all placements, so a $1.00 bid can become up to $2.00 (Amazon Ads guide to dynamic bidding). If your campaigns use this setting, a click can cost more than the bid you typed in.

Amazon also advises bidding highest on exact match, lower on phrase match and lowest on broad match (Amazon Ads guide to targeting).

How far a bid can move in one run

Large jumps make it hard to tell which change worked, so I keep every change inside fixed limits, and the Bulk Bid Optimizer applies them on every run:

• A keyword that sells close to your target is left alone.
• On the Balanced strategy, each run moves a bid by 15% at most in either direction, apart from the test raise below. You also set the lowest and highest bid allowed, which the skill calls Min CPC and Max CPC.
• A keyword that runs above your target, or spends with no orders, is never raised once it has 3 clicks or more.
• A live campaign with 3 clicks or fewer in the last 30 days gets a 20% raise on every bid, up to your ceiling, so it gets a real test.
• A keyword with even one order is never paused automatically, and nothing is paused until there are enough orders to judge.
• Keywords with your brand name can have their bids lowered, and the 20% test raise is the only way they go up.
• A whole campaign is never paused, and the searches to negate are listed for you to act on.

Every change goes to a dashboard for your approval before anything is uploaded, and the run also builds a reverse file that puts the old bids back if you need to undo it.

Amazon PPC bidding strategy by product stage

The skill runs under one of five strategies that you pick first, and they are separate from Amazon's fixed and dynamic bid settings.

• Profit-First is for established products where you want profit before growth.
• Balanced is the default for steady growth, and it reads 30 days of data.
• Launch is for products in their first eight weeks, and it reads 7 days of data and lets ACOS run about one and a half times your target while it gathers data and visibility.
• Ranking Push is for climbing or holding the top of the search results on chosen keywords for a limited time.
• ACOS-Targeted, CPC-Managed is for scaling sales by feeding budget to the winners while bringing cost per click down.

The campaign structure guide explains how to choose campaign types by goal and stage.

Recalculate every week, after cleaning your search terms

I run the bid calculation every week, after harvesting new keywords and negating the searches that waste spend, so that the bid changes land on clean traffic. For the negating step, the negative keywords guide sets out when to add a negative keyword.

What the formula cannot see

The formula does not know what competitors bid on a keyword or your share of the top of the search results, so look closely at any large cut on a brand keyword or a keyword you want to rank for before you upload it. Keep a copy of the old bids every time so that you can put them back if a change goes wrong.

Putting the bid formula to work

Start with your margin, because it sets the target ACOS that every bid depends on. Then calculate each bid from revenue per click and check it against the placement and bidding settings on its campaign. Clean the search terms each week before you move the bids in capped steps, and keep the old bids from every run so that any change can be undone.

Frequently asked questions

How much should I bid per click on Amazon?

Bid your revenue per click times your target ACOS, so $2.40 of sales per click at a 30% target gives $0.72. Check first that the target sits below your break-even ACOS.

What should my default bid be?

Once the keywords in an ad group have clicks that earned sales, use the same formula of revenue per click times target ACOS. I use the Launch strategy for a product in its first eight weeks, and it reads 7 days of data and lets ACOS run about one and a half times the target.

Should I use Amazon's suggested bid?

The suggested bid does not know your margin or what a click on your listing brings in, so it cannot tell you whether a click pays for itself. I set bids from revenue per click and target ACOS.

Why is my cost per click higher than my bid?

A placement multiplier adds a percentage to your bid for one placement, and Amazon's dynamic bids up and down can raise a bid by up to 100%. A $1.00 bid can become up to $2.00 under that setting. Check both settings on the campaign.

How often should I change Amazon PPC bids?

I recalculate bids every week, after cleaning the search terms. On the Balanced strategy each run moves a bid by 15% at most in either direction. The exception is the 20% test raise for a live campaign with 3 clicks or fewer in the last 30 days.

What bid should I use for a new product?

The formula needs clicks that have already earned sales, and a new product has few of those. For the first eight weeks I use the Launch strategy, which bids a little bolder to gather data and visibility and waits longer before pausing a keyword.