they charge by how many times your ad is shown. you have an account in which you put say �1000. when the money is used up your ad will no longer be shown. if you pay for ads, your ad will appear on websites using google ads, such as theanswerbank.co.uk, as well as appear on the sponsored results of google searches.
its not as simple as saying that google will charge x ammount every time. it is like an auction of ads. you say how much the max ammount you want to spend on each ad shown, and it will be compared against other relavent google ads, the ones who pay the most will be on top. the ones who pay the least will be on bottom if shown at all. if you offer �1 per ad shown for a book shop you will not get any ads shown as amazon probably pays like �20 (this is a guess. im sure they pay lots) per ad, but you could be second if no other relavent ads are suggested by google or if others offer less than �1.