Amazon ads have no fixed price and no minimum contract: Sponsored Products charge per click, you set a daily budget, and the cost of each click is decided by an auction, so it varies by category, keyword, placement and time of day. What an ad is worth depends on your numbers: the most you can afford to pay per click is your price times your conversion rate times your break-even ACOS.
How are Amazon ads charged?
You choose a daily budget for each campaign and a bid for each keyword or target, and you can stop at any time. Sponsored Products are charged per click. Sponsored Brands and Sponsored Display are mostly charged per click too, with an impressions-based option for awareness goals. Amazon DSP is a separate product priced per thousand impressions and usually used by larger advertisers.
| Ad type | How you pay | What mostly drives the cost |
|---|---|---|
| Sponsored Products | Per click | Keyword competition in your category, placement, relevance of your listing |
| Sponsored Brands | Per click (impressions-based option for reach) | Competition for top-of-search, brand and category |
| Sponsored Display | Per click or per thousand impressions | Audience and product targets chosen |
| Amazon DSP | Per thousand impressions | Audience size, format, campaign scale |
What makes a click cost more or less?
The auction: more advertisers bidding on the same search term pushes the price up. Placement matters too, since top-of-search usually costs more than product pages, and so do your own settings. A bid strategy of up and down, or a placement adjustment, lets Amazon raise your bid for placements it expects to convert.
Relevance cuts cost. A listing that converts well for a search term needs a lower bid to win than one shoppers ignore.
How much can you afford to pay per click?
Work it out from your own numbers rather than an industry average. Maximum cost per click = selling price × conversion rate × break-even ACOS.
For illustration only: a $30 product that converts 10% of clicks and has a 30% break-even ACOS can afford up to $0.90 per click (30 × 0.10 × 0.30) before every ad sale loses money. Bid below that line and the campaign can be profitable; bid above it and it can't, however many sales it brings.
What else should you budget for?
Ad spend is separate from Amazon's selling fees, and from any agency or software fee for managing the ads. Budget for a learning period on new campaigns, when the search term data is still too thin to cut anything.
Or read how the ongoing work runs before you book: Amazon PPC management.