I have been using this strategy since quite some time now to develop a frontend product. And then use the profits from that product to advertise and attract enough visitors that lead to at least 1 more sale - and create a perpetual traffic cycle out of it. (I'm writing a 60 page book on it.)

Some things I've learned from experience.

1. You don't want to use the Google Keyword Tool. Thats a good tool for keyword suggestions. Not for keyword bidding. You want to use Google's Traffic Estimator tool instead. You will have to login to your Google Adwords account to use it. (Adwords > Tools & Analysis > Traffic Estimator)

2. You don't want to use category defining keywords. You want to make it slightly long tail. Don't search for "crossfit". Search for "crossfit training". Don't search for "speed reading". Search for "learn speed reading". Why? Because Google starts minimum bids for category defining keywords from $1 - even if there aren't any competing advertisers on that keyword. This inflates the numbers in your formula.

3. After searching for a keyword in the Traffic Estimator tool, click on "Impressions" and hover your mouse over the cliff in the graph they show. That is the Max CPC you want to take while calculating your price. (http://i.imgur.com/upj77.png)

With the above steps, the CPC you get for learn speed reading is 41 cents. If you expect a 1% conversion rate, you need a product that sells for about $41 minimum.

If you go to the clickbank.com marketplace and search for speed reading, you will see that the most popular product on speed reading (Quickeye Speed Reading Software) is infact priced at $47.