In a pay-per-click model, showing the ad is free and the click is billed. What one click costs is decided by an auction that runs every time somebody searches, and the price depends on who else wants that search, how relevant you look, and what a customer is worth to everyone bidding.
Briefly explained
- Impressions cost nothing. Clicks cost money.
- The price is set live, in an auction, not by a fixed rate card.
- It buys the top of the page immediately and stops when you stop.
- A high click price is only a problem next to what the click produces.
How does the billing actually work?
You set a maximum you are willing to pay. You rarely pay it. The auction charges what was needed to hold the position you won, which is usually less than your ceiling.
Two things follow. Raising a bid does not raise what you pay on every click, and lowering one does not reliably save money — it often just moves you down to traffic that converts worse.
What decides the price?
- Competition: How many others want the same search, right then.
- Relevance: How well your keyword, ad and page answer it. See Quality Score.
- Value: What a customer is worth in that market. High-ticket work has expensive clicks for a reason.
- Timing and place: The same keyword costs differently at 2pm on a Tuesday in one town and at midnight in the next one over.
How does it compare to paying per lead?
Both exist on Google, and they behave differently.
- Pay-per-click: You pay for the visit. Whether it becomes an inquiry is down to your page, your offer and your phone.
- Pay-per-lead: Local Services Ads charge when someone contacts you. Simpler to read, less to control, and disputes are part of the routine.
Neither is cheaper by nature. Per-click wins where your page converts well; per-lead wins where it does not, or where you want a floor under the risk.
What makes it profitable?
Rarely the bid. Four things, in this order.
- The clicks are the right searches, in the places you serve
- The landing page answers that exact search
- Somebody answers the phone during the hours the ads run
- Conversions are tracked well enough to cut what is not working
A business with a strong page, fast answering and clean tracking can pay more per click than a competitor and still make more per customer.
What do the terms mean?
- CPC: Cost per click, what one click cost you.
- Max CPC: Your ceiling, not your usual price.
- Ad rank: Bid and relevance combined. What decides your position.
- Impression share: How much of the available traffic you captured.
- Cost per lead: Spend divided by the inquiries it produced. The first number worth reading after CPC.
Owner questions
