# What is a price floor? Minimum bid in an ad auction

A minimum bid threshold set for an eligible auction; a bid below it may be rejected under the auction setup.

The threshold applies to a defined set of bids or inventory. It is a rule for accepting demand, rather than a promise that an impression will sell at that price.

## Tracing the rejected bid

Illustrative auction: the floor is $1.60 CPM (cost per thousand impressions), and a buyer bids $1.50 CPM. Under a setup that applies this floor to that bid, it may be rejected; a separate buyer at $1.80 CPM could still win. If no other bid qualifies, the opportunity may be empty, so compare the revenue and fill across all eligible opportunities.

## Why a higher floor can lower total revenue

Use revenue from the same number of eligible opportunities to judge the change. Looking only at prices on sold impressions leaves out the opportunities that no longer sell. The linked guide calculates the fill rate needed to make up for that loss.

## What an experiment needs to keep fixed

Keep the same placements and comparable traffic in the control and test. If one group includes more premium placements, a higher realized price might reflect their mix rather than the floor. Report both paid impressions and opportunities so the reader can see the tradeoff.

[Ad price floor break-even calculator](https://digitalpublishingnews.com/tools/price-floor-break-even/)

## Related terms

[Fill rate](https://digitalpublishingnews.com/dictionary/fill-rate/)

[RPM](https://digitalpublishingnews.com/dictionary/rpm/)

## Continue reading

[Prebid price floors: calculate the fill rate needed to break even](https://digitalpublishingnews.com/articles/price-floors-test/): It calculates the minimum fill rate needed at a higher realized price to match the old setting’s revenue.

## Sources

https://docs.prebid.org/dev-docs/modules/floors.html

https://docs.prebid.org/dev-docs/modules/floors.html

Editorial method: https://digitalpublishingnews.com/how-we-use-ai/

Canonical: https://digitalpublishingnews.com/dictionary/price-floor/