So your logged in to your Google Adwords or Yahoo Search Marketing account and your ready to start promoting your website when the question arises : how much should you pay for each visitor to your website?

The cost for a keyword or key-phrase can vary quite dramatically from a few pennies to a few dollars per click depending upon the amount of competition for that keyword/phrase!

$0.50 cents may seem like a lot to spend for a single click but is it really?

To answer that question we need to learn a little something about visitor conversion rate.

Visitor conversion rate is the percentage value assigned to the number of visitors to your website which turn into customers.

So if you receive 100 visitors to your website and one of those visitors actually buys something then your visitor conversion rate is 1% (1 in 100).

Before we continue let me say that a 1% conversion rate is not a guarantee. Your actual conversion rate may be much higher or much lower. There are many tools which can help you track your visitor conversion rate. A good place to start is at www.hotscripts.com :

Do a search for "conversion tracking" and you should find a good number of web-script applications which will provide you with the information you need to effectively use any PPC service.

For the purpose of this article we will assume that your conversion rate is 1%.

Now all that is left in this equation is the cost of your product. If you sell a product valued at $50.00 and your conversion rate is 1% for that product : then your maximum bid for a key phrase should be $0.50!

Lets check our math :

$0.50 x 100 visitors = $50.00

So if you bid $0.50 per click and your product cost $50.00 and your conversion rate is 1% : you should break even!

This should be enough to set you in the right direction when deciding how much to bid for your PPC keywords. Remember that PPC is about increasing your sales and website revenue. It is not about finding low paying keywords and drawing visitors to your website. Its a mathematical equation that states : if I am to spend [b>this much on promotion it will turn around an increase in sales by this percentage.

A simple concept but it is something that most people do not realize when beginning their PPC ventures!

Enough for today : good luck!