CPA formulas
| You know | Formula |
|---|---|
| Spend and conversions | CPA = total spend ÷ conversions |
| CPC and conversion rate | CPA = CPC ÷ conversion rate |
$2,400 of ad spend that produced 64 sales gives a CPA of $37.50. If clicks cost $1.20 and 3% of visitors buy, you need about 33 clicks per sale, so the CPA is $1.20 ÷ 0.03 = $40.00.
What counts as an "acquisition"?
Define it before you compare numbers. Common choices:
- Cost per sale, for e-commerce and digital products.
- Cost per lead (CPL), for sign-ups, quote requests or webinar registrations.
- Cost per trial or install, for software and apps.
What is a good CPA?
A good CPA is one that leaves profit. Compare it with what a customer is worth:
Maximum CPA = gross profit per customer
If a customer brings $60 of gross profit on the first order, a CPA under $60 is profitable on that order. If customers come back and buy again, you can afford a higher CPA, up to the gross profit over their lifetime, as long as you can wait for the repeat purchases.
How the numbers connect
CPA ties together everything that happens between an impression and a sale:
CPA = CPM ÷ (1,000 × CTR × conversion rate)
At a $12 CPM, a 1% CTR and a 3% conversion rate, one sale costs $12 ÷ (1,000 × 0.01 × 0.03) = $40. Improving any one of the three lowers CPA. Doubling the conversion rate halves CPA without touching the ads.
How to lower CPA
- Raise the conversion rate of your landing page: one clear offer, fast loading, social proof and a simple checkout.
- Improve CTR with more relevant ads, which usually lowers CPC.
- Cut audiences, keywords and placements whose CPA is above your maximum.
- Capture leads first. An email sign-up costs less than a sale, and email follow-up turns leads into buyers at no extra ad cost.
- Track ROAS too; see the ROAS calculator.