Second, you only pay when someone clicks on your ad. So if your ad is shown 1000 times and you have a 1% clickthrough (very high percentage) that would only be 10 clicks. Assuming you are paying a $1 a click that is only $10.
With that said, while an Adwords campaign can be setup and left alone, you will find yourself spending more than you hoped if you do not continuously monitor and adjust. Your results and conversions will be much better with long-tail keywords too. For example if you were to select the keyword "web design" you are most likely going to spend more than if you were to select "$YourState web design" or something like that.
There is an art and science to running an Adwords campaign and sadly it does take a little money to get it just right. It also takes time. But if you monitor and adjust accordingly, over time you will find that you are paying less and less for each conversion.
I was originally referring to my site's conversion rate. About .5% of visitors buy my product for $25.