For the AdWords display auction, several important factors impact the ultimate price you pay. Much of this is based on your current position – you will only have to pay for incremental clicks from being in your current position to rank higher than the “next best” position.
Likewise, you’ll pay the price you would have for the next best position for the entirety of the remaining clicks you receive. It’s very similar to an income tax bracket that way – just because you’re in a 25 percent bracket doesn’t mean you’re paying 25 percent on every dollar you earn.
You may be required to pay additional service fees for ads that use other features like audience targeting, for example. In this case, your maximum bid is reduced, and the fee for audience targeting is added on top of the closing auction price.