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It would be better to do some testing with much lower bids. You'll start with less traffic, of course, but you can watch how well it converts to sales and get a better idea whether bidding higher to get more traffic would be cost-effective.
You might indeed end up paying 1.50 per click, but rather than starting there it's safer to work your way up to it based on proven cost-effectiveness.
That doesn't really work. SERP position plays a huge role in conversion. If you make decisions on which keywords you should bid higher on based on the conversion rate of a listing that is sitting at number 20 on Overture's site, you will miss the boat on dozens of phrases.
Instead, you should start by having a tracking system in place so you can track both the keyword phrase, and the specific partner that sent the visitor.
Once you have your tracking system running, do time-measured tests of each of the phrases in the top 3 spots. And don't overlook the bigexpensive words just because they are expensive. Quite often, they are expensive for a valid reason.