How costs are calculated in AdWords

Adwords gives full control over your advertising costs. There are no criteria defined(like minimum amount spend). You can set daily budget of your advertising campaign, and also you can choose how you want to spend your money.

Whenever somebody searches on Google, Adwords runs an auction to decide the ads that show on the serach result page, and their rank on the page. To get a place in this auction you will have to decide first what type of customer action you would like to pay for.

Like, you may choose to pay for the following actions:

• When Someone clicks on your ad (CPC or cost-per-click).

• How frequently we show your ads (CPM or cost-per-impression available only for Display Network Campaigns only).

• How many conversions you receive (CPA or cost-per-acquisition).

These are the biding options. CPC biding option is mostly used. In this option the amount you will be charged per click depends on cost-per-click bid you already set in your account, it is also known as maximum CPC bid. This is represent the amount you will pay for an ad click.

Like you have set a maximum CPC bid of $2 for your ads. Then you will pay when a customer clicks on your ads is $2.