CPA (cost per acquisition)
Also called cost per action, cost per acquisition, cost per result, CPA
What is CPA?
CPA, or cost per acquisition, is the average ad spend it takes to get one conversion, such as a purchase, a sign-up or a lead. It is calculated as total spend divided by the number of conversions. If $300 of ads brings 15 orders, your CPA is $20. It is also called cost per action or cost per result.
What counts as the "acquisition" is up to you: a first purchase, a free trial, a booked call, an app install. Name it clearly, because a $5 cost per email sign-up and a $5 cost per sale are very different results.
CPA sits at the end of a chain: CPM sets the cost of reach, click-through rate turns that into CPC, and your conversion rate turns clicks into customers. Improving any link lowers CPA.
Why CPA matters
CPA is the number that tells you whether advertising makes money. If a customer is worth $60 in profit and your CPA is $20, you can scale. If CPA is $70, every sale loses money unless customers come back to buy again.
It also lets you compare channels and creatives on the same basis, regardless of how they are billed.
How to calculate CPA
Divide ad spend by conversions over the same period. Set a target CPA from your numbers: the most you can pay for a customer and still profit, based on margin and how often customers buy again. Then pause ads and audiences that sit above the target and move budget to those below it.
CPA example
CPA = ad spend / conversions
$450 spend / 18 class bookings = $25 CPACPA FAQ
What is the difference between CPA and CAC?
CPA usually counts only ad spend per conversion in a campaign. Customer acquisition cost (CAC) usually includes all sales and marketing costs per new customer, such as salaries and tools, so it is higher.
What is a good CPA?
Any CPA below what a customer is worth to you in profit. Work it out from your margin and repeat purchase rate rather than from industry averages.
Related terms
ROAS, or return on ad spend, is the revenue earned for each dollar spent on ads. A ROAS of 4 means $4 in sales for every $1 of ad spend.
CPC, or cost per click, is what you pay on average each time someone clicks your ad. It equals ad spend divided by the number of clicks.
CPM, or cost per mille, is what an advertiser pays for 1,000 ad impressions. It is the standard way to compare the price of reach across platforms.
Conversion rate is the percentage of people who take a desired action, like buying or signing up, out of everyone who could have.
A/B testing compares two versions of an ad, page or post that differ in one thing, to see which performs better on a chosen metric.
A landing page is a web page built for one goal, like a signup or booking, that visitors reach from an ad, post or email.