Cost per acquisition — what each sale, signup, or lead costs you in ad spend — and the most you can pay for one before a campaign stops making money.
Cost per acquisition (also called cost per conversion or cost per action) is total ad spend divided by the number of conversions it produced. It is the single most useful number for judging a performance campaign, because it can be compared directly with what a customer is worth.
You spent $4,000 and got 80 purchases. CPA = 4,000 ÷ 80 = $50.
If your average order is $120 at a 45% gross margin, each order leaves $54 of gross profit before advertising — so you can pay up to $54 to acquire it and break even on the first order. Subtract the profit you want to keep per order to get a target CPA. If customers buy again, you can justify a higher CPA based on lifetime value instead of the first order.
CPA usually counts ad spend only and any conversion the platform reports. CAC counts all sales and marketing costs and only genuinely new customers. Use CPA to optimise campaigns and CAC to judge the business.
How do you calculate cost per acquisition? Divide ad spend by conversions. $4,000 of spend for 80 purchases is a $50 CPA.
What is a good CPA? Any CPA below your break-even CPA — average order value × gross margin — is profitable on the first order. If customers return, compare CPA with lifetime gross profit instead.
Is CPA the same as cost per conversion? Yes, in most ad platforms. "Acquisition" and "conversion" both mean whichever action you are optimising for.
