This calculator will allow you to calculate your cost per acquisition.
You can also calculate your campaign cost or the number of acquisitions if the CPA is known.
How To Use This Calculator:
Fill out any two values and this calculator will calculate which ever value is missing.
Note: This calculator will properly handle dollar signs and commas, but not symbols like the € symbol, so make sure that if you are using currency values, that you eliminate the symbol that indicates the currency.
How to Calculate CPA
There are three important numbers that you need to understand when trying to calculate your cost per acquisition.
Campaign Cost: This is the total cost of the campaign, but can also be the monthly advertising budget.
Number of Actions: This is the total number of desirable individual actions that your users completed. These can be any action, ranging from becoming a new customer, to installing an app, or opting in to an email form. It is important that different actions should be calculated separately and not to mix the different goal completions together.
Cost Per Action (CPA): This is the average cost per completion of whatever the desired goal was. It’s important to understand that this number is an average and does not represent the value of each individual goal completion. Some individual goal completions may cost little to nothing while others may cost so much that it is unlikely that acquisition was profitable.
There are three separate formulas for determining the remaining value based upon which ever two data points you have.
Cost Per Acquisition = Campaign Cost / Number of Actions
Number of Actions = Campaign Cost / Cost Per Acquisition
Campaign Cost = Number of Actions * Cost Per Acquisition
Why CPA is One of the Most Important Metrics in Online Advertising
For many advertisers, this metric defines their cost to acquire a new customer, which in many cases, is the most difficult and expensive thing an advertiser can do for a brand.
Once a customer has gone through the sales funnel and is actually converted into a customer, it should be much easier for an advertiser to generate return sales from the data the user entered to complete the purchase.
With advertising channels like retargeting, email marketing, social media, and physical mail, there’s plenty of ways to connect with existing customers in an effort to generate more sales.
In an ideal world, each customer’s experience was enjoyable so they will be much less resistant to buying again as they already know what to expect.
This is also why building a sales funnel that collects email leads and generates social media followers is critical for online advertisers, as each step the user takes moves them closer to becoming a customer, since each engagement should reduce the friction of becoming a customer as their awareness of the brand expands.
Since many brands are utilizing many marketing channels to generate sales, it’s important to remember that the costs of the different channels can be summed together to calculate CPA for an entire business.
CPA is Very Useful for Comparing Campaign Profitability
CPA is actually one of the most valuable metrics when comparing online marketing campaigns because unlike other metrics like EPC, CTR, and CPM, the campaign with the lower CPA is almost always the campaign that is more profitable.
As long as the goals of the advertiser are being met, it’s hard to imagine a situation where a campaign with a lower CPA would not be chosen over other campaigns if the exact same audience or ad inventory is being targeted.
Other metrics are useful when optimizing campaigns, but CPA gives you a ‘10,000 foot view’ of the campaign, although it does not necessarily provide any incite in to how the campaign can be optimized.
It’s important to remember that one can not simply ‘wave a magic wand’ to reduce CPA and some other metric will have to be analyzed and tested so that the new CPA values can be compared to the old ones.