The only thing that matters is CPC and LTV (lifetime value of your customer). If you know your LTV is $50, you can afford $50/click.

You get NO value from raising your bid except better placement and more clicks. I'd first try going long tail and bidding on MORE keywords (with low bids). Exhaust that option before you raise your bids.

Work on your copy, too. Adwords makes it easy to test different ads. Test a lot. Steal shamelessly from the #1 ad slot in terms of style.