Right now I am doing some experiments. I raised my budget to $40 a day. I had the default max CPC of 1.40 but m funds would always be exhausted very quickly usually before 12 noon. A few days ago I lowered my default max to MOST of my keywords to .25 cents. True, the Ad rank won't be ask good but at least I will get more clicks. I did leave a 1.00 for my most important keywords. I guess I am desperate to try anything because Google Adwords seems like its costing more than its worth.
That's a huge drop in CPC you implemented there. True you will get more visitors but only if the new rank you're getting still gets a lot of exposure. In regards to your question, generally in low search volume markets paying more per click gets you more exposure and thus more conversions. But this is going purely on more visitors=more sales theory. It's much better to change your landing page copy frequently and try to eek out more sales that way. And to eliminate broad keywords that do not exactly match what you offer. Go for less visitors but better quality. If your search volumes get so low that a sale is only made once in a while at least you'll have made profit on the sale and not blown it away through your AdWords budget.. one sale from a slow quality campaign is better than lots of sales from a fast expensive campaign. The key is lots of products on slow, quality campaigns.
I would advise to read more about PPC before using it. You can lose lots of money for nothing. Start with that: High CTR vs High ROI
Its all about the conversions...... I do find that when I lower my cost per click my conversion rate goes up, but there is a balancing act to stay on the first page. More targetted exact keywords is also a great way to go. Good luck. -Patz
The google segment is only responsible for traffic, so the answer there is "relevancy" Your website is directly responsible for your conversions