CPA Calculator — Cost per Acquisition

With this CPA calculator, we aim to help you to calculate the cost per acquisition of a business. This metric can help you understand the how much money the company is spending to acquire a customer. To understand more about this topic, please check out our Google AdSense calculator and social media calculator.

We have written this article to help you understand what cost per acquisition is and how to calculate the metric using the cost per acquisition formula. We will also demonstrate some practical examples to help you understand the concept.

The CPA definition is the amount of money a business spends in acquiring a customer on average. This metric is typically used in the e-commerce industry, but can also be applied to other sectors in general. The CPA also helps you understand the effectiveness of your marketing efforts in getting customers.

This metric can be used in an aggregate way, in which you measure the average CPA across different marketing channels, such as display ads, paid ads, social media marketing, etc. This will tell you how the marketing effort is doing overall. You can also calculate it for each marketing channel individually to compare the effectiveness between them.

Good. Now you understand the definition of CPA. It's time to look at the example and understand how to calculate the cost per acquisition. We will take Company Alpha as our example:

• Name: Company Alpha
• Number of clicks: 200,000
• Average cost per click: $5
• Total attributed conversions: 4,000,000

We can calculate the CPA in three steps:

1. Calculate the total ad spend.

   The first step is to determine the total ad spend. This is the total amount of money the business spends on advertising its products or services. It is defined as the number of clicks and average CPC:

   total ad spend = number of clicks × average CPC

   Hence, the total ad spend for Company Alpha is 200,000 × $5 = $1,000,000.

2. Determine the total attributed conversions.

   The next step is to determine the total attributed conversions, defined as the number of customers or purchases converted using the ads spent above.

   The total attributed conversion for our example is 4,000,000.

   You can use our conversion rate calculator to facilitate yourself on this calculation.

3. Calculate the CPA.

   The last step is to calculate the CPA using the cost per acquisition formula below:

   CPA = total ad spend / total attributed conversions

   Thus, Company Alpha's CPA is $1,000,000 / 4,000,000 = $0.25.

Now that we understand the meaning of CPA, we can discuss interpreting the metric.

In general, you can use CPA in two ways:

• You can calculate and compare the CPAs for different acquisition channels used in your business.

  For example, say the CPA for your Facebook ads is higher than the CPA for your Instagram ads. It either means that your target customers tend to be people who use Instagram more than Facebook, or the way you are currently working with Facebook ads is not good enough.

• The CPA calculation can also help you understand the factors that impact your CPA the most.

  For example, if your high CPA is mainly due to a low conversion rate, your focus should be on improving conversion instead of lowering your cost per click (CPC).