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Adwords 'Suggested bid' prices too high?

I signed up for adwords for the first time yesterday, and did some keyword research via their 'keyword planner' tool.

It seems that for any keyword that seems valuable at all, the suggested bid price is over $1. Usually $2, and in some cases, upto $20.

Does that mean that anytime someone clicked that keyword, they'd pay $20? That seems really high. As the conversion rates tend to be 1% or less, does anyone really make money off a $20 per click price?

Or does the suggested bid not mean anything, and the actual CPC price is much lower?

Thanks.
IdeaSkeer Send private email
Wednesday, November 13, 2013
 
 
I wouldn't set much store by their suggestions - treat them as an attempt to squeeze more money out of you.  Try various bid prices and measure the effect - don't take their word for it.

A couple of weeks ago I received this in an email from AdWords:

-----------------------------------------

To help you get started with your 'Attach' campaign, check out the following suggestion.

Keyword: visual studio attach debugger
Clicks: 5
Estimated first page bid: £550,000.00

-----------------------------------------

Like I said, I wouldn't set much store by their suggestions.  :-)
Richie Hindle Send private email
Wednesday, November 13, 2013
 
 
Thanks Richie.. is there any way to get a more accurate CPC price for a keyword? Or do you just have to find it by trial and error?
IdeaSkeer Send private email
Wednesday, November 13, 2013
 
 
All the default campaign settings and suggested bids are set very much in Google's favour. Take them with a pinch of salt.

If you bid $20 CPC they might charge you up to $20 per click. Or they might charge you less. It depends what the next highest bidder bid.

I suggest you start much lower than Google suggests and gradually try increasing the bids. Also set a max daily budget, in case you do something stupid.
Andy Brice Send private email
Wednesday, November 13, 2013
 
 
How much do people around here pay in general per click?
IdeaSkeer Send private email
Wednesday, November 13, 2013
 
 
@IdeaSkeer: I'm only paying up to about 25p (UK) per click, but I only get a handful of clicks per day at that price.
Richie Hindle Send private email
Thursday, November 14, 2013
 
 
8 years ago I could get targetted clicks for a few pennies each. Not any more.

http://successfulsoftware.net/2013/05/26/the-declining-profitability-of-google-adwords/
Andy Brice Send private email
Thursday, November 14, 2013
 
 
$1 and $2 CPC prices are not uncommon at all, depending on the niche you're targeting.  You can always get lower quality clicks for less money (ie clicks coming from 3rd world countries), but clicks from good paying customers do cost. 

The other thing you'll find is AdWords doesn't scale linearly -- you'll get X clicks for Y amount of money, but if you want 2X clicks, you might have to pay 3Y money or more.
Doug Send private email
Thursday, November 14, 2013
 
 
What other people in search of different markets pay is not relevant to you. If you're selling mortgages, car loans or high performance vehicles, then $20+ a click is not unusual or expensive at all. Why would it be when the sale could net 6 or 7 figures?

I work with one eCommerce company that pays £0.60 per click and drops about £8k a year on Google ads. It pays, and it pays well.

I work with an Australian trekking company who pay £1.10 per click, and it also pays, and pays well.

I sell software in the $60 price range, and Google ads, running at £0.40, have never worked. Never - not 5 years ago, and not today.

Google Ads might simply not be viable for your product.
Marlee Ammon Send private email
Friday, November 15, 2013
 
 
That would make sense, but I've seen ads in the $20 range even for software products, e.g 'legal document software' had a suggested bid price of $20. Does this software really go for thousands?
IdeaSkeer Send private email
Saturday, November 16, 2013
 
 
IdeaSkeer, maybe.  A high-end document system might.  Think of having to have documents available for legal discovery.

Sincerely,

Gene Wirchenko
Gene Wirchenko Send private email
Monday, November 18, 2013
 
 

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