Cost Per Acquisition (CPA)

What is Cost Per Acquisition?

Cost Per Acquisition (CPA) measures how much you spend to acquire one new customer. It includes all marketing and sales costs divided by new customers gained. CPA helps evaluate channel efficiency and set acquisition budgets.

CPA is similar to Customer Acquisition Cost (CAC) but often refers specifically to paid marketing costs rather than fully-loaded costs including sales team salaries.

Why CPA Matters

CPA determines whether your marketing is profitable. If CPA exceeds customer lifetime value, you're losing money on growth. Tracking CPA by channel reveals where to invest more and where to cut.

Efficient CPA enables faster growth. Companies with low CPA can outspend competitors on acquisition while maintaining profitability.

Optimizing CPA

Test and iterate on ad creative and targeting. Improve landing page conversion rates. Focus on high-intent channels. Build organic acquisition through content and referrals. Track CPA by channel and shift budget to winners.

Monthly campaign performance:

• Ad spend: $10,000
• New customers acquired: 200

CPA = $10,000 ÷ 200 = $50

Each new customer costs $50 to acquire. If your average order is $75 with 40% margin ($30 profit), you lose $20 on the first order but may profit on repeat purchases.