smallcompany - 5:43 pm on Jun 30, 2010 (gmt 0)
Actual CPC = (AdRank to beat/Quality Score of Advertiser) + $.01
And yet you pay $0.75 or more for some keywords even if your ad is the only one in space.
Of course, Google has the explanation for that as well.
My explanation is that each keyword at the given moment has its own price that has been predicted based on the keyword's history (within Google, not your account) and therefore Google's system knows how much it is going to charge for it before the click happens.
Hey, they do budgeting like other companies. . .