I've read in a number of places that you should overbid early on in a campaign so that you start off with a high CTR, thus resulting in a better quality score and lower costs down the road. But just how much should you overbid, and what's it based on? For instance some guideline like 'instead of a 20% profit margin per click, you should be willing to take 30% in losses early on, for such and such period of time'. Or maybe some rule of thumb like: the keyword 'ppc' has an estimated CPC of $1.93-$2.89 according to the Traffic estimator, and you should bid 80% of the upper estimate.
Pay as much as you can without losing a ton of money. I always start campaigns in the red and slowly lower bids to make them profitable.
Yes I always do extreme overbidding. I want minimum 200 clicks fast so I can apply my bid optimizing strategy making every keyword deliver as much as it can. Also keeping a good overall quality on the account will lower your costs. If I overbid say 200%, I still don't pay more than maximum bid (my bid excluded). To me that is the best strategy.