Glossary
Cost Per Acquisition (CPA)
What it costs you, on average, to get one completed action such as a sale or a signup, calculated as total spend divided by acquisitions.
Cost per acquisition, or CPA, is what you pay on average to get one completed action. That action is usually a sale, but it can be any goal you have defined, such as a paid signup or a booked call. You work it out by dividing total spend by the number of acquisitions.
Total spend / Acquisitions = CPA
$500 spent / 20 sales = $25 CPA
CPA matters because it connects your advertising to your actual economics. A low cost per click looks good, but if very few of those clicks turn into sales, your CPA can still be painful. The click price is only the entry ticket. CPA is the price of the outcome you actually wanted.
The number only means something next to your margin. If you earn $60 on a sale and your CPA is $25, you have room. If your CPA climbs to $70 on that same sale, every customer costs more than they bring in.
You will also see CPA used to describe an entire style of affiliate deal, where you are paid a fixed amount per action rather than a percentage. To see how CPA fits the full advertising picture, read how paid advertising actually makes money.