How do you calculate CPA?

Divide the ad spend by the number of conversions it bought, for the same ads and the same period. €5,000 of spend and 125 purchases is a CPA of €40.00.

What is a good CPA for an ecommerce store?

One below your break-even CPA: your average order value times your gross margin. At an €80 order and a 60% margin that is €48, so a €40 CPA leaves €8 per order before shipping, fees and returns. Another store's CPA, with other prices and margins, tells you little about yours.

What is the difference between CPA and CAC?

CPA divides spend by whatever conversions you choose, often every purchase from new and returning customers alike. Customer acquisition cost (CAC) divides the cost of winning new customers by the number of new customers won. A campaign can show a low CPA because it mostly reaches people who were going to buy again anyway.

Why is my CPA in the ad platform lower than my blended CPA?

Each platform counts the conversions it can tie to its own ads, inside its own window, so a sale that touched two platforms can be counted by both, and Google Ads can count more than one conversion per click. More conversions over the same spend make a lower CPA. Total ad spend over your store's orders counts each order once.

How do CPA and ROAS relate?

They are two views of one result: ROAS equals order value divided by CPA, so an €80 order at a €40 CPA is a 2.00x ROAS. Break-even CPA and break-even ROAS mark the same line; at an €80 order and a 60% margin that is a €48 CPA, or a 1.67x ROAS.

Can I pay more than my break-even CPA?

Only as a bet on repeat orders. If new customers come back and buy again, a first order can cost more than it earns, but then the case rests on how many come back and how soon, and that is something to measure rather than assume.

CPA Calculator: Cost Per Acquisition

Result

Fill in ad spend, conversions to see the result.

How it works

Cost per acquisition is the ad spend divided by the conversions it bought. For a store the conversion is usually a purchase, so CPA is what the ads spent to win one order.

On its own a CPA is neither good nor bad. It means something next to what an order leaves: the order value times the gross margin. That is the most one order can pay for the ads that won it before it loses money, which makes it your break-even CPA.

CPA = ad spend ÷ conversions

break-even CPA =
  average order value × gross margin

gross profit per order after ad cost =
  break-even CPA - CPA

ROAS at this CPA =
  average order value ÷ CPA

What each term means

Ad spend: What the ads cost for the scope you are measuring: one campaign, one channel or all of them, over one period.
Conversions: The actions that spend bought, counted for the same ads and period. For a store, purchases. Whose count you use matters; see below.
CPA: Ad spend per conversion.
Average order value: Revenue per order, on the same basis as your margin.
Break-even CPA: The gross profit on one average order: the CPA at which the order exactly pays for its ads. Shipping, payment fees and returns are not in it and lower it further.
ROAS at this CPA: The same result as a return: order value divided by CPA.

Whose conversions?

An ad platform's. Each platform counts the conversions it can tie to its own ads, inside its own window, and Google Ads can be set to count every conversion after a click rather than one. Two platforms can each count the same order, so a platform's CPA can look lower than what an order really cost.
Your store's orders. Total ad spend over total orders is a blended CPA that counts each order once. It includes orders no ad caused, so it errs the other way.
New customers only. Ad spend over first orders is close to customer acquisition cost, the figure to hold against what a customer is worth over time.

Worked example

Example numbers, round on purpose. They are not a real store.

Ad spend: €5,000
Conversions: 125
Average order value: €80
Gross margin: 60%

1CPA: €5,000 ÷ 125 = €40.00
2Break-even CPA: €80 × 60% = €48.00
3Gross profit per order after ad cost: €48.00 - €40.00 = €8.00
4ROAS at this CPA: €80 ÷ €40.00 = 2.00x

Each order keeps €8.00 after its ad cost, before shipping, payment fees and returns. If those cost more than €8.00 an order, this campaign loses money at a CPA that looks healthy on its own.

Frequently asked questions

How do you calculate CPA?
Divide the ad spend by the number of conversions it bought, for the same ads and the same period. €5,000 of spend and 125 purchases is a CPA of €40.00.
What is a good CPA for an ecommerce store?
One below your break-even CPA: your average order value times your gross margin. At an €80 order and a 60% margin that is €48, so a €40 CPA leaves €8 per order before shipping, fees and returns. Another store's CPA, with other prices and margins, tells you little about yours.
What is the difference between CPA and CAC?
CPA divides spend by whatever conversions you choose, often every purchase from new and returning customers alike. Customer acquisition cost (CAC) divides the cost of winning new customers by the number of new customers won. A campaign can show a low CPA because it mostly reaches people who were going to buy again anyway.
Why is my CPA in the ad platform lower than my blended CPA?
Each platform counts the conversions it can tie to its own ads, inside its own window, so a sale that touched two platforms can be counted by both, and Google Ads can count more than one conversion per click. More conversions over the same spend make a lower CPA. Total ad spend over your store's orders counts each order once.
How do CPA and ROAS relate?
They are two views of one result: ROAS equals order value divided by CPA, so an €80 order at a €40 CPA is a 2.00x ROAS. Break-even CPA and break-even ROAS mark the same line; at an €80 order and a 60% margin that is a €48 CPA, or a 1.67x ROAS.
Can I pay more than my break-even CPA?
Only as a bet on repeat orders. If new customers come back and buy again, a first order can cost more than it earns, but then the case rests on how many come back and how soon, and that is something to measure rather than assume.

Related terms: CPA, customer acquisition cost, ROAS and average order value.

Next: which channels win orders you would not have had?

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