Wow facebook ads have gotten expensive.

I think it was onliy six months ago that I tried some facebook advertising, and ads at that time I considered expensive for a PPC network. (I think between $0.50-$1). Didn't really pursue it because was just 'breaking' even. (Wasn't worth the time/effort).

Thought I would give it a shot now, for some highly targeted demographics -- and wow -- the "suggested" bid is $4.50 per *click*. Plus, the now offload taxes to the consumer. (I believe 'taxes' were included before, but now they decided to add that on to your existing ads. So if you spent $100, it would be $100 + tax).

a) Just priced me right out of the ad market for facebook. Would have to have a ridiculously high conversion rate in order to make money with that. (I.e., for a $20 product, you'd get *four* clicks, and of those four, one of them would have to buy for you to break even, of course excluding refunds/chargebacks/etc.).

b) I'm curious what on earth is being sold that people can actually make money across the spectrum with an ad price of $4.50/click... Some people are lucky if they get a 10-15% purchase rate, which would mean that the product would have to be $300-$450 'lifetime' per customer for them to make money, which doesn't seem right. Either they've figured out a fantastic click->purchase formula, or facebook ads are way overpriced...

What are your thoughts?

John