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Bill calculation questions

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

Our business has an account that we deactivated last year.  I am considering re-activating it, but need an explanation on some of the bill calculations.

 

1--How does my Max CPC relate to my monthly bill?

 

Is it simply that my maximum bill for any given day will not exceed this number?  That SEEMS to be the way it works, but, to me, that describes a "maximum daily budget", rather than "maximum cost per click".

 

2--How is Average CPC calculated?

 

I see that my "cost" divided by "clicks" is roughly equal to my Average CPC.  That is simple math.  Where does the "cost" figure come from? 

 

Help me understand.

 

>>I want to be a returning user, but we've had a TERRIBLE time getting a clear answer on a few questions that are key to our continuing with Adwords.

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Accepted Solutions
Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Bill calculation questions

Top Contributor
# 2
Top Contributor

Hello EXNW,

 

1--How does my Max CPC relate to my monthly bill?

 

Monthly billing depends upon the amount of the total spend your account has accrued. It's your total advertising cost for a given month. Adwords often assign a threshold (in case you have automatic payments) depending upon how much you are spending every month. I will actually not correlate max. CPC with billing because max. CPC is simply the maximum  bid which you are willing to pay and most of the times you are charged less than that.

 

2--How is Average CPC calculated?

 

It is the lowest amount which you have to pay for the respective position with respect to your Quality Score and CPC bid. So in case you have a high QS, good ad rank, Avg. CPC would be low and vice versa.

 

For more details, you can refer to these links:

Billing threshold

How much do I pay for click on ad?

 

Hope that helps!

Pankaj

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Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Bill calculation questions

Top Contributor
# 3
Top Contributor

Hi EXNW, if I can answer as well...

 

1)  As Pankaj has said, there is no direct link between the Max CPC figure and your "monthly bill".  Max CPC is the maximum amount of money you are prepared to pay for any click on an ad triggered by a specific keyword, group or campaign.  For example, if you set a "max CPC" of £1.00 for the keyword "red shoes", when your ad is shown because someone searches for red shoes, you'll pay no more than £1.00 for a click on your ad.

 

Billing is based upon the number of clicks you've received within a specified period, so if the only ad you ran was the one for red shoes, and it was clicked 200 times in 30 days, your bill for that 30 days would be no more than £200.  As Pankaj mentioned, the max CPC figure is a maximum so I would normally expect 200 clicks like this to cost quite a bit less than £200.

 

2)  I'm afraid I must totally disagree with Pankaj here. 

 

Average CPC is simply the average of all the actual click costs for a particular keyword over a specified time period.   So for example, if one of your keywords received 2 clicks in a day, one at £0.50 and one at £0.80, the average CPC would be £0.65.  The "cost" figure is the total of all the click costs for that keyword, so here the "cost" is £1.30.

 

Does this help?

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

View solution in original post

Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Bill calculation questions

Top Contributor
# 2
Top Contributor

Hello EXNW,

 

1--How does my Max CPC relate to my monthly bill?

 

Monthly billing depends upon the amount of the total spend your account has accrued. It's your total advertising cost for a given month. Adwords often assign a threshold (in case you have automatic payments) depending upon how much you are spending every month. I will actually not correlate max. CPC with billing because max. CPC is simply the maximum  bid which you are willing to pay and most of the times you are charged less than that.

 

2--How is Average CPC calculated?

 

It is the lowest amount which you have to pay for the respective position with respect to your Quality Score and CPC bid. So in case you have a high QS, good ad rank, Avg. CPC would be low and vice versa.

 

For more details, you can refer to these links:

Billing threshold

How much do I pay for click on ad?

 

Hope that helps!

Pankaj

Marked as Best Answer.
Solution
Accepted by Zee (Community Manager)
September 2015

Re: Bill calculation questions

Top Contributor
# 3
Top Contributor

Hi EXNW, if I can answer as well...

 

1)  As Pankaj has said, there is no direct link between the Max CPC figure and your "monthly bill".  Max CPC is the maximum amount of money you are prepared to pay for any click on an ad triggered by a specific keyword, group or campaign.  For example, if you set a "max CPC" of £1.00 for the keyword "red shoes", when your ad is shown because someone searches for red shoes, you'll pay no more than £1.00 for a click on your ad.

 

Billing is based upon the number of clicks you've received within a specified period, so if the only ad you ran was the one for red shoes, and it was clicked 200 times in 30 days, your bill for that 30 days would be no more than £200.  As Pankaj mentioned, the max CPC figure is a maximum so I would normally expect 200 clicks like this to cost quite a bit less than £200.

 

2)  I'm afraid I must totally disagree with Pankaj here. 

 

Average CPC is simply the average of all the actual click costs for a particular keyword over a specified time period.   So for example, if one of your keywords received 2 clicks in a day, one at £0.50 and one at £0.80, the average CPC would be £0.65.  The "cost" figure is the total of all the click costs for that keyword, so here the "cost" is £1.30.

 

Does this help?

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: Bill calculation questions

Visitor ✭ ✭ ✭
# 4
Visitor ✭ ✭ ✭

Ok, well thanks guys. 

Re: Bill calculation questions

Explorer ✭ ✭ ☆
# 5
Explorer ✭ ✭ ☆
Hi Pankaj,
Can you please tell more about, How Google calculate the actual CPC amount for an advertiser.
Whats the pricing model..?

Thanks
Puneet