Converting PPC to Sales - Advice Needed!

Hey all, have some quick questions about AdWords PPC.

Have recently set up a campaign a few weeks ago, and it's going well.

My average PPC has went down from $1 to ~0.35 cents, which for my target market and niche is profitable if done right.

1) Is there anyway to figure out if clicks are converting to sales?
2) Is it wise to add a discount code in to the Ad itself, which would influence sales and generate proof that the ads are converting?
3) Are there ways to ONLY pay if a user makes a specific action on the site? Or is it always PPC.

I'm relatively new to AdWords, and I know you can burn through money fast as hell if you don't know what you're doing and can't convert the clicks to sales/profit.

If anyone has advice on how to really convert clicks into accurate sales, I'd greatly appreciate it. My campaign has a good click rate and a decently low PPC for the niche. Tried researching and reading as many articles on my own as I could, but it's highly confusing. Thanks

Answering your questions:
1. You have to set up the goals in Google Analytics or set up the Conversions in Adwords account. For example, you need to track "events" like click on button or if your users reach the another page (Ex: "thank you page") after they buy something, you can add the common goal in Google Analytics to track this thank you page.
2. I can't answer
3. You will always pay Google per click if your strategy is not for a branding (Cost-per-thousand viewable impressions). But you can use Conversion Optimizer or Enhanced cost-per-Click - Google will show your ads which are more likely will lead them to conversion and automatically set up the bids. I can't publish links about these strategies, so you need to find them at Google Adwords support.

Thanks for your input. Still looking for advice

As mentioned, there is conversion tracking. You can track any action or event. So if you sell a product online, every sale can be tracked down to the ad and keyword that was responsible for it. Same for downloads even phone calls.

Test. A coupon or discount code in the ad could help increase click rate as well as conversion rate. Then again, it may not. Test and find out the effect. If you put it in the ad itself, the cost is using precious characters but it may be worth it. I never did this but I certainly would try. In fact, I think the callout extensions may work better but again, test. Of course, callouts don't always show and you need to be in positions 1-3.

Always pay per click. There's no such thing as pay per conversion. Google doesn't work on a commission basis.

You should use Google Analytics to see if the click are converting to sales and which keywords are converting best, and build landing pages for your ad groups for better conversion.

1) Set up google analytics (try data funnelling) to track your conversions. Add the tracking to your adwords account to map them and you will start getting data to better manage your campaign. This will reduce your costs further and help you get your business keywords.
2) It is always better to make your ads as attractive as possible. Announcing discounts directly in your ads is acceptable by adwords. Just make sure it really an offer that the visitor will find on your LP.
3) NO such ways present