Bidding competitively in an ad auction is a key ingredient in obtaining your desired ad position and getting traffic to your website. While your budget controls how often your ads are shown, your Max cost-per-click (CPC) controls your ad rank, or where your ads show on Google.com.
Decide how much you are willing to spend on each set of keywords. Analyze average CPCs for similar terms using Google's keyword tool as well as third-party tools, such as SpyFu, which you can access at http://www.spyfu.com/. Keep in mind that SpyFu only provides data for the US and UK. If you need international data, try KeywordSpy at http://www.keywordspy.com/ or SEMrush at http://www.semrush.com/.