Lore

Daily Budget Formula (Target Units × Price × Target ACoS)

A starting daily budget for a Sponsored Products campaign is calculated as: Daily Budget = Target Units Sold Per Day × Product Price × Target ACoS. This sizes the budget to the campaign's actual sales goal and margin tolerance rather than picking an arbitrary spend cap, and pairs with the Revenue-Per-Click (RPC) Bid Formula (which sizes the per-click bid using the same target ACoS and price inputs) — together the two formulas derive both 'how much per click' and 'how much per day' from the same target ACoS, price, and conversion/unit assumptions. See TACOS vs. ACOS for how target ACoS itself should be chosen relative to overall account-level TACoS goals.

Diagnosing Which Lever to Pull

If the daily budget is being exhausted too early, or too little is being spent, raise the budget. But if the underlying issue is low impressions, adjust the bid instead of the budget — a bigger budget doesn't help a campaign that isn't winning enough auctions to spend it.

TACoS-Based Method (Existing Products)

For products with existing sales history, an alternate way to derive the daily budget target uses TACOS vs. ACOS instead of ACoS:

The ceiling on this — the maximum daily budget before ads erase all profit — swaps in the break-even TACoS (the product's margin after COGS, shipping, returns, FBA fee, and seller fee) for the target TACoS:

Spending right up to that break-even ceiling (zero ad profit) is framed as a legitimate aggressive strategy — trading margin for rank and market share, not a mistake — for sellers who can absorb it.

Whichever method is used, both variants of the formula are meant to replace guessing: never take Amazon's suggested daily budget, never pick a number based on what's affordable, and never set a placeholder number "to adjust later" — the number should come from campaign-level planning first, with individual campaign budgets derived from it afterward. See New-Launch Ad Budget Formula (CPC ÷ CVR × Target Sales) for the equivalent when there's no sales history yet.