Calculate the bid before you type it — the maths in plain English.

The Amazon Sponsored Ads console will happily let you put any number in the bid field. Most operators put in whatever the suggested-bid box hints at, then tune up or down based on whether they like what they see. That is not a strategy. The bid is a function of unit economics, conversion rate, and the goal — and every defensible bid in your account should be derivable on paper from those three inputs.

Step 1 — start from contribution margin per unit

Take your sale price minus VAT, minus referral fee, minus FBA fee, minus COGS, minus inbound freight, minus the variable share of returns. What is left is the contribution margin per unit — the cash an extra unit puts in your pocket before fixed overhead. Call this CM. Every bid calculation starts here.

Step 2 — multiply by your allowable ACOS (or TACOS)

If your goal is to be break-even on advertising, the maximum ad spend per unit is exactly CM. If your goal is to hit a 20% ACOS, the maximum ad spend per unit is 20% of the sale price. If your goal is a 15% TACOS, the maximum ad spend per unit is 15% of the sale price taking total organic + paid revenue into account. The number you derive here — call it max ad spend per order — is the ceiling on what an order can cost you.

Step 3 — divide by clicks-per-order (the inverse of conversion rate)

If your conversion rate on a given keyword is 10%, you spend ten clicks for every order. Your maximum bid is max ad spend per order divided by ten. If CVR is 5%, divide by twenty. CVR is the lever that makes a keyword profitable or not — at fixed unit economics, doubling the CVR doubles the bid you can afford to pay.

Worked example

Sale price 30 EUR. Contribution margin 8 EUR. Target ACOS 25% — so max ad spend per order is 7.50 EUR. Conversion rate on the keyword 8% — so 12.5 clicks per order. Max profitable bid: 7.50 / 12.5 = 0.60 EUR. That is the headline number, but Module 2 episode 24 told us the bid should sit above the target CPC, because the bid is a ceiling not an average. The actual bid you place is closer to 0.70–0.80 EUR; the realised average CPC should still land near 0.60.

Where each input comes from

Contribution margin comes from your unit economics spreadsheet, refreshed any time fees change. Goal comes from the goals framework in Module 2 — pick reach, clicks, revenue or profit, and the number falls out of that choice. CVR comes from history: the search-term report on that keyword over the last 30–60 days, or — for brand-new keywords — a defensible analogue from a similar keyword in the same account.

Brand-new ASINs with no CVR history

For an ASIN with no history, derive a starting CVR from category benchmarks (3–8% for most physical-goods categories) and explicitly bound the launch with a maximum allowable loss per order instead of an ACOS target. We will come back to this in the launch episodes — for now, the takeaway is that a CVR estimate is required either way; you cannot bid without one.

The two-minute version

Bid = (contribution-margin × target-ACOS%) ÷ clicks-per-order, with the realised CPC expected to land below the bid. Every keyword bid in a manual campaign should be traceable back to that line.