"Are my AdWords CPCs too expensive?"
Source: WordStream.com The answer to this question is highly dependent on your industry. Wordstream's study (which includes over a billion dollars in annualized AdWords spend) showed an average CPC of $2.32 across the search network and $0.58 for the display network. Individual industry averages vary wildly. Legal services have the highest CPCs on the search network at around $5.88 per click (and can be much higher) with Employment Services coming in second at $4.20 per click.
On the low end of the scale, Dating & Personals sees average CPCs as low as $0.19 per click on the search network and $0.18 on the display network, a bargain compared to other industries. Employment Services has the highest display network CPCs at $1.66 per click with the remaining industries falling between $0.18 and $0.88/click.
Just like our post on average click-through-rates, the key takeaway here is context. Even though data from this study shows an average of $0.88/click for the e-commerce industry, this can be much higher in certain verticals, such as furniture, and less in others, such as craft supplies. That said, the aggregate data can still help you shape expectations and know where to steer your ship. Know your margins well and identify a successful cost-per-conversion for your business so you can assess which keywords you have the greatest likelihood of success with.
After analyzing the data, if you feel that your CPCs are higher than they should be the first area to focus on is Quality Score, and by extension, your Ad Rank. Improving your Quality Scores will help improve your Ad Rank, as will landing page improvements and including useful ad extensions in your Search ads.