You should be using a keyword tracking program so you can see what keywords are actually bringing in sales. Once you figure this out and get a consistent conversion rate, you basically decide how much money you want to make my increasing your bid for converting keywords.
A small ROI can still bring in more money over playing it safe with low bids because with more of the right traffic will bring in more sales. This is true if your conversion rate stays consistent
You can afford to pay a little more and still bank big when you know what keywords got buying power.
Lets say your bidding .20 a click. Your landing page conversion rate is
3% and your product commission is $30
If Bidding .20 per click got you 100 visits per day @ 3% conversion rate
100 clicks = $20 ad spend, Sales 3 @ $30 = $90, ROI = $70 Daily
Now if bidding .60 cents a click got you 500 clicks per day
500 clicks = $300 ad spend, Sales 15 @ $30 = $450, ROI = $150 Daily
In this case you would have more than doubled your ROI by spending $280 more daily.
Understanding and mastering your metrics will put you in a position to practically control your profit.
Spending $500 a day too only make $100 profit daily is not to uncommon in the internet marketing world.