PPC glossary

Cost per click (CPC)

Cost per click (CPC) is the amount an advertiser pays each time someone clicks an ad. In Google Ads there are three versions: max CPC is the most you are willing to pay, actual CPC is what a click is charged, and average CPC is total click cost divided by total clicks.

Reviewed by Gareth Hoyle, Managing Director
Last reviewed 31 October 2026

How is CPC calculated?

Average CPC is the simple one: divide the total cost of your clicks by the number of clicks. Spending £600 for 400 clicks gives an average CPC of £1.50.

Actual CPC is set by the auction. Google ranks ads by Ad Rank, which combines the bid, ad quality, Ad Rank thresholds, the competitiveness of the auction and the context of the search. You pay only what is needed to clear the Ad Rank thresholds and stay ahead of the advertiser ranked below you, which is often well under your max bid. If nobody is ranked below you, you pay the reserve price.

Can you pay more than your max CPC?

With manual bidding, Google says you are normally never charged more than your max CPC. Bid adjustments, such as raising bids for mobile, are the exception. With automated bidding Google sets a bid for each auction, so individual CPCs move around and the more useful figure becomes cost per conversion.

What pushes CPC up or down?

Competition: more advertisers bidding on the same searches raises the price of beating the one below you
Ad quality: stronger expected clickthrough rate, ad relevance and landing page experience lower the cost of a given position
Match types and targeting: broader matching reaches more searches, some cheap and some expensive
Context: device, location and time of day all change who else is in the auction

Example

A solicitor pays £4.00 a click for 'divorce lawyer Leeds' and £1.20 for 'free legal advice'. The expensive keyword converts 10% of clicks into enquiries, a cost of £40 per enquiry, while the cheap one converts 2%, or £60 per enquiry. We look at CPC alongside conversion rate for exactly this reason: the cheaper click is the costlier lead.