When choosing a maximum cost–per–click (max. CPC) bid, you should consider the amount that you make from a purchase because you want to set a bid amount that’s:
based on how much your product is worth
50% of how much your product is worth
the same amount as the profit generated by your product
the same amount as the revenue generated by your product
Explanation:
Do we really need to know something about AdWords to answer this question? At least even AdWords exam can be funny. Anyway, here is appropriate explication from google help center “Most people starting out in AdWords use cost-per-click (CPC) bidding to pay for each click on their ads. With this option, you set a maximum cost-per-click bid (max. CPC bid) that’s the highest amount that you’re willing to pay for a click on your ad. Set your bid by thinking about how much an ad click is worth to you.”
Most people starting out in AdWords use cost-per-click (CPC) bidding to pay for each click on their ads. With this option, you set a maximum cost-per-click bid (max. CPC bid) that’s the highest amount that you’re willing to pay for a click on your ad. Set your bid by thinking about how much an ad click is worth to you.
Choosing the right bid is essential for your campaigns. Often finding the optimal bid for your specific business is a long process which requires multiple tests. In other words, there’s no single recommended bid amount that works perfectly for everyone. The bid you choose will depend on your campaign, goals, cost of keywords, location, industry, and many other factors. However, the first thing you should consider is how much a click and your product worth. If you’re selling new cars a bid of 0.10 USD will look just funny. Also, if your product is priced 1 USD, you just can’t pay 2USD for a click.
Tip: If you’re just starting out in Google Ads, make a budget and bid amount that you’re comfortable with. One of the most common mistakes I see is overspending. Usually, small businesses owners who tend to manage their accounts themselves stop after few weeks saying that it’s too expensive for them. In most cases that happens because of bad account structure, poor optimization, and not tailored bids.
Read more here: https://support.google.com/adwords/answer/2471184?hl=en
