Cost per click (CPC) is the formula with which the actual cost of clicks is calculated. The formula is the Ad Rank of the seller next to us divided by our expected CTR.
So, let’s say you are the seller who offered 0.60$. To calculate the CPC , you have to take the Ad Rank of the next seller (the one with the 0.76$ bid) and divide it by the expected CTR.
To calculate the CPC you need to do: 0.0152/0.05 = 0.30$
As you can see, we got a better position on the search results page despite offering less. And, the reason for this competitive advantage over others is the high expected CTR.