A question I often hear from prospects when I talk to them is "how do i find out how much a keyword costs on Google AdWords." I understand why they are asking, as they want to know what each click will cost and how much they'll get out of their marketing budget.

Yet, it’s a question I have difficulty answering for them without first doing some research.

And even with the research, you can only really find out how much Google Ads cost until you go live.

How much does Google AdWords cost? There are a lot of factors
Figuring out how much Google Ads cost isn't a simple calculation

The simple fact is there is no set answer. It often depends on how competitive your word is in the market you’re targeting, what time of the day it is, and even which day of the week it is.

And it also depends on the quality of your ads and the strength of your landing page.

The focus of this article is on manual bidding. Google has a number of automated bidding options, but most of these aren't effective with new campaigns. You need data, particularly conversion data, and lots of it before you can let Google take control.

How Costs Are Determined on Google Ads

First of all, you have to understand how the system works. It’s not like a newspaper ad, where you pay based on the size of the ad. Or like the old days when you took out an ad in your local yellow pages. With those, you knew in advance the cost. You could set your budget for the year and be done with it.

Google Ads is an auction-based system, except that the top spot doesn’t always go to the highest bidder.

The amount you bid isn’t always the amount you actually pay. It simply the most your willing to pay.

Say you bid 4 dollars on a keyword and your next highest competitor bids 3 dollars. The most you’ll have to pay then is just 3.01. Then another competitor comes on the scene and he bids 3.50. Now that same keyword costs you 3.51. And if they outbid you then you must decide if it’s worth bidding over them.

Even if you’re the highest bidder, however, you’re not guaranteed the top spot, especially over time.

Google only gets paid when an ad is clicked, so a large bid means nothing if nobody clicks on an ad. This is why Google has AdRank to determine where ads appear.

Your AdRank is determined by your bid times your Quality Score for a keyword. I’ll explain this later when I talk about Quality Score.

Researching Your Keyword Costs

You can get an estimate of what the cost per click will be when you use Google’s Keyword Planner Tool. It will give you an idea of the cost per click on average. You have to be logged into your Google account, however, or you won’t see this data. To find it click on the wrench in the upper right-hand corner.

When running the tool make sure you have the location set to your market. If you only serve Atlanta, then don’t be caught up reviewing data that is based on the entire United States.

The location setting can be found along the top navigation bar.

Use the keyword planner to determine how much to spend on Google AdWords
The Google Keyword Planner can help you decide on how much  bids could cost

And even if you have the location set correctly, don’t believe the number they show you is the actual number you’ll spend. It’s meant to give you an idea of the cost, but because the market constantly changes that amount they show can often be inaccurate.

While they can give you a ballpark figure of what your ad might be, you often have to bid significantly higher than what they show. And in a few cases less.

One nice feature is that it shows the amount of interest each month for the keywords you listed. If you see large fluctuations during the past year, then you can expect your costs to fluctuate, as well.

Yes, You Can Bid One Penny, But That Won’t Make First Page Bid

The nice thing about Google is that you can bid whatever you feel comfortable with. You can bid as little as you want, but if the campaign is live you’ll get a warning that your keyword is below the first-page bid.

If your bid is too low you'll get a warnng that your below first page bid
A low bid will result in a status of below first page bid.

The amount they suggest is the bid that it will likely take to get onto the first page of the Google search results. The number you're shown is not the number to get to number one, but simply to show up on the page, most likely at the bottom. Where no one will likely see you.

Yet, I do suggest you start out bidding low. Then gradually raise your bid until you start to see impressions, meaning people are being exposed to your ads.

You want to get near the top, but not necessarily pay the top price. And as I’ll discuss later there are ways to improve your results without paying the top price.

Understanding Monthly Budget on Google Ads and How Budget Influences Your Bids

A major factor in deciding on what you want to bid is what your total budget for the month will be.

If you can only afford $1000 a month to spend, then bidding 25 dollars on a single word doesn’t make sense. Your daily spend would be 33 dollars and with one click it could potentially be nearly used up.

Your betting everything that a single click could result in a conversion. That's not very likely. According to a report from Wordstream, the average conversion rate on search is 3.75%

A good rule of them is that your budget should allow for 10 clicks a day. Obviously, this isn’t always possible if you have a limited budget and I’ve helped clients succeed on less that number of clicks. But it's tough.

You want to get as many clicks as you can for your budget, yet you want to get clicks that have the potential to succeed.

Something you must also be aware of is that Google can double the spend on certain days. Their philosophy is that certain days your products or services will be in more demand. They want your campaign to take advantage of it. What they’ll do is then lower the spend on other days to compensate.

Google assumes that your campaign is running every day and will average out the spend over that time period. That can be a problem if you only have your campaigns running certain days of the week, such as Monday through Friday.

When starting out think about keeping your monthly budget lower than what you initially plan to spend. There are going to be hiccups along the way and until you understand everything about your campaign you want to keep your mistakes to a minimum.

Factor in Wasted Spend

At the beginning of nearly any campaign, there will be wasted spend.

The unfortunate fact is that you’re likely to see clicks for phrases that aren’t related to your business.

For example, you’re bidding on the phrase HVAC repair, which seems like a strong phrase to be targeting. Yet, when you look at your search term report, you see someone typed in HVAC repair school.

You’ll want to add negative keywords even before you start your campaign to prevent this from happening. Yet, no matter how long your campaign is running and how many negative keywords you’ve added, you’re still going to find phrases that don’t apply.

You have to realize you're always going to have some wasted spend and factor this into your costs. Even when professionals set up campaigns there is going to be wasted spend.

How Good Is Your Website and How Does It Look on Mobile

You also have to consider what happens after they click on your ad. If you’re targeting word that is expensive, but which you don’t even mention on your website, then its more wasted money.

Make sure that what the phrase is about and what you talk about on your ad can also be found on the page you take them to.

Also if your site doesn’t look good on mobile then having visitors finding your ads on their phone is more waste. The better option is to lower your bids on mobile so that most of the traffic goes to desktop.

What Makes Some Keywords So Expensive

You’re going to find that some keyword will cost much more than others. And most likely these are the words that have the most potential to convert.

As I mentioned there are several factors that will influence how much you’ll have to bid.

First, it comes down to how competitive your market is. If you sell awnings in a town of 50,000 with only a couple of competitors, you likely only have to spend a couple of dollars to bid for your words.

If you’re a lawyer in Atlanta, then you can expect to spend significantly higher because of how many firms are in your market. Often in the hundreds of dollars.

Second, it depends on how valuable a sale is to your business or or a lead.

If you market pencils that only sell for a few cents, then do you really want to bid much to reach customers.

If you’re a plumber who does sewer repair (a job that costs thousands, even in a small market), then bidding 50 dollars makes sense, even if you only convert a few of the prospects that clicked on your ad.

A third factor is what the keyword phrase means in terms of the prospects buying process.

Words like which tv to buy aren’t as valuable as something like 52-inch Vizio TV’s. The first person is early in the buying process and doesn’t even know which brand to buy. The second phrase indicates they’ve likely settled on a model and now are looking to buy. So, bid lower on the first word and higher on the second.

Another factor can be what time of the day it is or even the day of the week. Some advertisers bid higher at different times of the day or even during the week because they feel that a particular time converts better.

When reviewing your keywords focus on the words that you think will benefit your business the most. You can still bid on the other phrases that lack potential but bid much lower.

Ways to Keep Your Google Ad Bids Down

The beauty of Google Ads is that there are ways to get clicks without breaking the bank.

Don’t Try To Be Number 1 The cost per click is based on how much someone is willing to spend on a click. If you’re trying to be number 1 and are some of your competitors, then you’ll just drive up bids. I’m often more content with being number 3. This way your costs are lower, but over a day you should get just as much exposure.

Google Ads doesn't show your actual position anymore. Instead in competitive metrics you can now find Search Top Is, which is the percentage of time your ad appears above the organic listings. Typically this means in the top 3 or 4. Search Absolute Top Is reveals how often your ad was number one.

Now use competitive metrics to determine your avearge position on Google.
Average position is no longer available on Google Ads

Reaching the top spot and staying there can be costly. Instead, settle for being in the top group as long as you’re getting enough clicks. You'll often pay less to be there and get more clicks as a result.

Let the Competition Burn Their Budgets Up Early If you’re targeting a market and your competitors are from the same market, then they may be like you and have a limited budget.

If they’re trying to be number 1, but have a daily cap, then this might be used up halfway through the day. Because you’ve had fewer clicks and are spending less your campaign should still have funds in it.

Your reaching your daily spend, so lower bids. If your spending your budget each day, Google will alert you that your campaigns is limited by budget. Their hope is that you'll raise your budget. If this isn't an option, then lower all your bids by a certain percentage. Don't go crazy, but lowering it bit by bit you might still be reaching your budget, but have more clicks to show for it.

Quality Score And Why You Should Be Aware Of It

Over time the best way to lower your costs is to improve your Quality Score.

Quality Score is the number that Google gives to each keyword you are targeting. It’s a number up to 10, with 10 being the best.

Your score is based on factors such as click-through rate and how well your landing page relates to the phrase being targeted. And ad relevance.

If you have a high Quality Score for a phrase and your competition has a low one, then they’ll show your ad higher even if your competition is willing to pay more per click. That’s because that competitors’ ads with its higher bid aren’t getting clicks.

The main factor for Quality Score is click-through rate. That means having ads that your prospects respond to better. And it's not just the ads, but the ad extensions, as well. These help to make your ads take up more space and provide more information on your company or what you’re marketing.

This is why it’s worth it to continuously test out new ads. Improving your results can help lower your costs and improve your return on investment.

Be Cautious of Google Ads Recommendations or Google Reps

In your Google Ads Recommendations, you'll often see a lot of suggestions that you raise your budget. They’ll even provide specific amounts and how many more clicks you’ll get as a result.

If you call into Google, their reps will also often focus on you spending more.

Be wary of their suggestions and stick to the budget you can live with.

Yet, don't discount all the recommendations. Some will alert you to features you might not be aware of and that could benefit you.

Hire a Professional Google Ads Consultant

One would think that hiring a Google Ads Consultant or an agency would add to your costs, but in fact, the opposite is often true.

When I take on a new client, I do an audit of their current campaign. I often see anywhere from 25% to as much as 75% wasted spend with their campaigns. So even with adding in my fees, they could still be improving their results by a significant amount.

Another reason to hire a professional is that AdWords constantly rolling out new features to their advertising platform. In fact, Google AdWords has now become Google Ads.

A professional will know of Google's latest features and incorporate them into your campaign. Often these new features make ads stand out that much more. If your competitors are doing the work themselves, they might not be aware of them for a while, giving you a distinct advantage.

If you’re concerned about how much Google Ads cost, then contact a pay per click consultant. I’m a Google AdWords Consultant who manages search campaigns that spend $3000 or more on Google each month.