Since its introduction in the Adsense program, Google has not been forthcoming with any details on how Smart Pricing actually works (to the chagrin of many publishers!). Jenstar however reports on some details that a publisher got from Google's support staff. Surprising tidbit: smart pricing is calculated per account, not per site, so if you have one site in your account that sends poorly-converting traffic it is probably affecting your earnings across all sites.
More coverage at Threadwatch, Problogger and Jensense.
