Amazon PPC Bidding Strategy: How Much Should You Bid?
Most sellers set bids by guessing, then adjusting weekly based on whether sales feel good. That works until it doesn't. The better approach is to derive your maximum bid from the economics of the product.
Start With Your Break-Even ACoS
Before you can bid, you need to know the ACoS at which advertising stops being profitable:
Break-Even ACoS = Profit Margin Before Ads ÷ Selling Price × 100
If your selling price is $30 and pre-ad profit is $9, your break-even ACoS is 30%. Spend more than 30% of revenue on ads and you are paying for the privilege of selling.
Setting Your Max Bid
A bid is what you pay per click, not per sale. Convert between them using conversion rate:
Max Bid = Selling Price × Break-Even ACoS × Conversion Rate
If your product sells for $30, break-even ACoS is 30%, and your keyword converts at 10%, then:
$30 × 0.30 × 0.10 = $0.90 max bid
Bid above this and you lose money on that keyword at that conversion rate.
The Three Campaign Types
- Auto campaigns — discovery. Run at a low bid to find converting search terms.
- Manual broad/phrase — expansion. Bid moderately on terms that partially match.
- Manual exact — harvesting. Bid aggressively on proven converters.
Bid Adjustment Cadence
- Week 1-2 — set bids at 70% of max, gather data
- Week 3-4 — raise bids on keywords with ACoS below break-even
- Week 5+ — lower or pause keywords with ACoS above break-even after 15+ clicks
The 15-click rule matters. A keyword with 3 clicks and no sales is not statistically meaningful.
Why Conversion Rate Changes Everything
Notice that conversion rate sits in the bid formula. Improving your listing conversion from 8% to 12% lets you bid 50% more at the same profitability. That is why listing optimization and PPC are the same problem, not two problems.
Tools
Use the Target CPA Calculator to find your allowable cost per acquisition, and the ACoS Calculator to track whether current spend is sustainable.
Review bids weekly, not daily. Daily adjustment chases noise.