CPA Calculator (Cost Per Acquisition)

What is CPA?

Cost Per Acquisition (CPA), sometimes called Cost Per Action, is a financial metric that measures the total cost of a user taking a specific action that leads to a conversion. Most commonly, this “action” or “acquisition” is a sale, making CPA the average cost to acquire a new customer.

How to Calculate CPA

The formula for calculating Cost Per Acquisition is direct and powerful:

For instance, if you spent $2,000 on Google Ads and acquired 50 new customers, your CPA would be $40.00 ($2,000 / 50 customers).

Why is CPA Important?

CPA is arguably one of the most important marketing metrics for determining the profitability and scalability of a business:

• Measures Profitability: By comparing your CPA to your Customer Lifetime Value (LTV), you can instantly see if your customer acquisition efforts are profitable. A successful business model requires LTV to be significantly higher than CPA.
• Optimizes Channel Spend: Calculating the CPA for each marketing channel (e.g., SEO, social media ads, email marketing) reveals which channels are the most cost-effective at acquiring customers.
• Informs Pricing Strategy: Understanding your acquisition cost can influence your product pricing to ensure you maintain healthy profit margins.
• Sets Realistic Budgets: Knowing your CPA allows you to set predictable budgets to achieve specific growth targets. If you want 100 new customers and your CPA is $40, you need a budget of $4,000.