Here is what I do.
I make a landing page optimized with keywords that I want to rank for. Spend time optimizing just like you would for organic rankings. I don't hesitate to have a couple links out to my homepage and supplemental information pages or even parallel product pages.
Then I open a new campaign and ad group. Enter some keywords that I want to advertise. These keyword must tightly match my landing page. I enter some negative keywords that I know will be duds. I compose six to ten different ads that tightly match my landing page and I think will pull clicks for my offer.
I bid high enough to rank #1... settle for #2 if it takes an insane bid for #1. I hang in there with these high bids to get my CTR healthy. I watch keywords that bring in traffic and make negatives for any that will bring low quality traffic. This will improve CTR and conversion rate. I watch the performance of my different ad copies and drop those that perform poorly... again improving CTR and conversion rate.
I am willing to take a beating on bidding and click costs at the start of a campaign. I do this to establish a strong negative KW list, drop poor ads and get my CTR and conversion rate up. This is really important for your quality score.
After you have a nice amount of data you can start making decisions. Do the math to be sure that you are making money. You can loose your shirt easily with adwords.
Your goal should be to make maximum amount of profit per day. Not max profit per sale or max number of sales.
If you sell at MSRP you better be bidding for top position and hope that nobody in your niche comparison shops. If you sell at deep discount max profit per day will probably not occur with you in the #1 position. Usually a few positions from the top (who you underprice) will be where the sweetspot occurs. Your results could vary.
Take Brad Geddes adwords seminar and read his book if you are spending serious money on PPC. This is not a fluffy course. You will do lots of math and think really hard. If you go there thinking that you will listen, sip coffee and fart then stay home. You also better be a guru with excel because anybody who is not doing lots of heavy math is probably loosing his shirt. Just sayin' that adwords is not easy way to make money for the average person. You gotta be smart and think hard and have a little bravery with your money.