When you add a keyword to a Sponsored Products campaign, Amazon shows a number beside it and calls it a suggested bid. Most new sellers use it, because the screen offers no alternative.
It is a reading of the market: roughly what other advertisers have paid for that keyword. It knows nothing about your selling price, your fees, your landed cost, or how often your ad clicks turn into orders, and those decide what a click is worth to you.
01What is the suggested bid, and what is it telling you?
It appears in the advertising console. As you add keywords or product targets to a campaign in Campaign Manager, Amazon shows a suggested bid beside each one, plus a suggested bid range with a low end and a high end.
Amazon describes these recommendations as calculated by analysing a group of winning bids for recent, similar ads within your category, refreshed as competing bids change. They summarise what others paid; they do not forecast what you will pay.
The suggested bid reads the market, not your business. Every input that decides whether a click is worth buying is absent from it. Two sellers seeing the same $1.35 suggestion can be right to bid $2.00 and $0.40.
When a keyword gets no impressions, the range invites you to jump to its high end and stop thinking. You then pay a price you never checked against your own numbers.
02How much can you afford to pay for a click?
Start with contribution per unit: what one sale leaves after every cost except advertising. For an imported product that is the selling price minus the referral fee, the FBA fulfillment fee and the unit’s landed cost.
- Selling price$30.00
- Referral fee at 15%$4.50
- FBA fulfillment fee$5.80
- Landed cost per unit, imported goods$7.20
- Contribution per unit before ad spend$12.50
That $12.50 is the whole advertising budget one sale gives you. Your ad conversion rate is the share of ad clicks that become ad-attributed orders. At 8%, one sale takes 12.5 clicks, since 1 divided by 0.08 is 12.5.
Contribution per unit | $12.50 Ad conversion rate | 8% Clicks per sale, 1 divided by 0.08 | 12.5 Break-even cost per click, $12.50 multiplied by 8% | $1.00 Break-even ACOS, $12.50 divided by $30.00 | 41.7%
At $1.00 you keep nothing, so break-even is not your ceiling; it is the wall behind it. If advertising may take half the contribution, your ceiling is $0.50 per click: $6.25 of ad spend per sale, and $6.25 of profit.
The most you can pay for a click is contribution per unit multiplied by ad conversion rate. Every input is yours, and none appears where the suggested bid does.
Pay the $1.35 suggestion instead and a sale costs $1.35 multiplied by 12.5 clicks, or $16.88 against $12.50 of contribution: a loss of $4.38 per unit.
Take your ad conversion rate from Campaign Manager: clicks and ad-attributed orders for the ASIN over at least 30 days, the second divided by the first. Do not use unit session percentage from Seller Central Business Reports, which counts organic sessions too and describes your listing, not your ads.
A new product has no measured ad conversion rate, and assuming one that is too high inflates your ceiling. Products with few reviews usually convert worse, so plan low and replace the assumption once you have a few hundred clicks.
03What do the three bidding settings do to your bid?
The bidding strategy is a campaign setting. It decides what Amazon may do with your bid before it enters an auction.
| Setting | What Amazon does with the bid you entered | Can it raise that bid? |
|---|---|---|
| Dynamic bids - down only | Lowers it for auctions judged less likely to convert | No |
| Dynamic bids - up and down | Raises it for auctions judged more likely to convert, lowers it for the rest | Yes — Amazon states up to 100%, for all placements |
| Fixed bids | Uses the exact bid you entered | No |
Amazon’s published limit for up and down is the 100% in that table. A $0.50 bid can therefore compete at up to $1.00 — the break-even price above, and twice the ceiling you set.
Under all three, a placement adjustment can still be applied on top — a separate campaign setting, explained below.
04Why do many advertisers prefer down only while learning?
Because it removes one unknown. On up and down, what you paid for a click results from two things you cannot see: what the auction demanded, and how much Amazon raised your bid. When the cost comes back higher than expected, you cannot tell which caused it.
On down only the bid entering the auction is never more than the number you typed, before any placement adjustment, so the bid you set and the cost you observed are comparable. While you are learning, that cleaner reading is usually worth more than the impressions up and down might win. It is a preference, not a law: down only does let some winnable sales go.
05What are placement adjustments, and why are they set per campaign?
Sponsored Products ads appear in three kinds of position. Top of search (first page) is the row of sponsored results above the organic results on a search’s first page. Rest of search is every other sponsored position inside search results. Product pages are the sponsored slots on a detail page.
Amazon allows an adjustment of up to 900% on each, for all targeting types and all bidding strategies. It multiplies the bid you entered, for that placement only.
- Bid you entered$0.50
- Top of search adjustment50%
- Bid competing at top of search, $0.50 multiplied by 1.50$0.75
- Bid competing at every other placement$0.50
The campaign now competes at $0.75 in one placement, above the ceiling you set. That can be deliberate, but only if you chose it.
The adjustment belongs to the campaign, not the keyword: one campaign, one set of three percentages, applied to every keyword in it. A campaign holding twenty keywords cannot give any one of them its own placement strategy. That is the strongest practical argument for few keywords per campaign.
Read Amazon’s placement report for Sponsored Products before you set an adjustment.
06How do you test what a click really costs?
Sometimes a keyword returns almost no impressions, and waiting does not help: a bid below the level the auction clears at collects no data. The only way to learn the price of entry is to raise the bid and watch.
- Write down the date, the keyword and the bid you are changing from.
- Set that campaign to down only or fixed bids, so the cost you observe belongs to the bid you set.
- Cap what the test may spend, using the daily budget and an end date.
- Raise the bid in one step, not in several spread across weeks.
- At the end, read the average cost per click Amazon reports for that keyword, return the bid to your ceiling and mark the test dates in your notes.
Marking the dates protects your data: the test inflates cost per click and ACOS on purpose, and the raised bid may win clicks in placements you do not normally reach, so that window’s conversion rate is not your normal one.
Sales usually rise during the test, because a higher bid buys more clicks. That is not evidence it is affordable: clicks above your ceiling produce more sales and less profit at once.
07What does your bid actually control?
A bid is the most you are willing to pay for a click: a limit you set, not a price you agreed. It influences whether you enter the auction and how often you win. Amazon is explicit that it is not the only factor, because your ad’s relevance to the shopper’s search also decides whether it appears.
Your bid does not set your cost per click. The auction does, and it is made of other advertisers’ bids, which change daily and have nothing to do with your margin. Raising a bid from $0.90 to $1.20 does not buy a $1.20 click; it buys permission to be charged up to that.
So judge a keyword by the cost per click Amazon reports — spend divided by clicks — never by the bid you typed.
Frequently asked
My bid was $0.90 and my reported cost per click is $1.60. How?
Check the bidding strategy, since up and down can raise a bid by up to 100%. Then the campaign’s placement adjustments, which apply under every strategy, down only included. And the reported figure is an average across the period’s clicks, not the price of one click.
What if my ceiling comes out below the suggested bid?
Then the keyword is probably not affordable today. Three things move a ceiling: a higher selling price, lower costs, and a better ad conversion rate.
Final thoughts
The suggested bid tells you, quickly and for free, roughly what a keyword costs other people. It cannot tell you whether that is a price you should pay.
There is one way to follow this guide exactly and still lose money. A ceiling is only as current as the two numbers behind it, so if your ad conversion rate falls, or your fees or landed cost rise, last quarter’s ceiling is too high today. Recompute it per product whenever price, costs or conversion rate move.