1. The keyword phrases you bid on will determine how much you spend.
If you take a viewpoint that you only want to target the top 10 traffic driving keyword phrases, then your cost will be high – no matter where your ad is positioned. The proper approach for most people is to keep those keywords live but at a lower cost, and focus your attention on the long tail keyword phrases that only get 1 click a day. These will generally be less expensive and more accurate to those ready to buy, make a phone call, etc..
2. Your ad copy will help to determine your click through rate and average cost per click.
Test at least 10 different ads at a time to determine which are the top performers to stick with, and always run at least 5-6 at all times to prevent ad blindness. Poorly written ads will get low clicks and will drive up the cost.
3. Location – Location – Location.
Just like local brick and mortar stores, your location on Google Places (tied to your PPC ads) and the location you are targeting your ads will help to increase leads and sales for the prospect that is only 15-30 minutes away. As an example: If you business is in Dallas, only advertise to those in Dallas – do not advertise to people in Fort Worth unless you service both equally. And your phone numbers can increase or decrease your clicks in an area.