How does Google's Traffic Estimator calculate the “Estimated Avg. CPC”?

Question

I use Google's Traffic Estimator to calculate the Estimated Average Cost Per Click.

I use the following filters:

Locations: Australia
Languages: English

and the following phrase air conditioner melbourne.

When I use Max CPC = $100, the result is: AU$6.08.

But, when I use Max CPC = $10, the result is: AU$3.87.

Why is this difference?

Answer 1

The "Max CPC" field is the maximum you wish to pay per click. If you enter a Max CPC of $100 then you will never pay more than $100 per click, so the average will always be less than $100 - in this case $6.08.

However, restricting it to $10 Max CPC means you're cutting out all the clicks from $10 to $100, therefore the average CPC will be less.

Quick example: two companies by ads at $20 per click and $2 per click respectively. The Average CPC here is $11. Now, if your Max CPC was $10 then the $20 ad is ignored, meaning the new average is just $2.

Answer 2

Basically you can use the formula for calculating the average cpc average cpc= (ad rank/quality score)+ estimated first page bid max cpc=$100 you find the quality score of that keyword estimated first page bid =$.01 then you can calculate average cpc of that keyword