Reasonable Max CPC

I'm trying to get some clicks from Google Adwords. I'm quite new to it, what's the reasonable CPC?

I noticed that my ads are not showing and I think it's about my CPC budget. To me over $2 CPC is crazy but seems like that's the price for the keywords I'm aiming to.

What do you think? Our software price tag is about $1000 so in theory I need to get at 1 sale out of 500 clicks which is not that realistic.

This varies wildly depending on your market. From pence (cents?) to tens (hundreds?) of dollars per click.

$2/click is in the right ballpark for a many of software products I have looked at.

You are on the right lines in that you have to compare your cost of customer acquisition to the lifetime value of that customer in order to work out an appropriate CPC.

So long as this is a positive figure, and you have enough money to 'float' your Adwords campaigns, Adwords will always give an ROI.

A few points to consider though -

I think I'm right in saying that people would be looking for a conversion rate much higher than 1 in 500. 1-2% conversion rate is a common target on < $1000 software products, though others will come in and answer with their own experience.

Adwords is a definite skill. Writing good copy that attracts a high number of tailored clickthroughs is like black magic to me. It can be done though and you will improve with practise, seeing what works, and good use of analytics. One tip is to check the affiliate marketing communities at sites such as wickedfire.com, for some fabulous insight into writing Adwords that convert.

The other one is, Adwords isn't necessarily the best route to market to your customers. Lots of succesful products try it, never make it work, and bin it. I've been running a test campaign recently to try to learn something pre-startup. It has performed dismally, but I'm finding lots of enthusiasm when approaching people via other routes, so I'm not deterred as yet.