How to use the CPA calculator
Enter what a campaign cost and how many results it produced, and you get your cost per result: cost per lead, cost per install, cost per sign-up, or cost per sale, depending on what you count. Then add what an average customer is worth, your margin, and the share of results that turn into customers. The calculator shows the most you can pay per result and still break even, and how much room is left between that ceiling and what you pay today.
The formulas
Cost per result = campaign spend / number of results
Maximum cost per result = customer value x gross margin x share of results that become customersA lead that becomes a paying customer one time in ten is worth a tenth of a customer. If a customer brings $60 over time and you keep half of it, a customer is worth $30 to you, and a lead is worth $3. Pay less than $3 per lead and the campaign makes money; pay more and it does not, however cheap the leads look.
A worked example
A software company spends $300 and collects 120 trial sign-ups, a cost of $2.50 per result. Customers are worth $60 at a 50% margin, and 10% of trials convert, so the ceiling is $3.00 per sign-up. There is $0.50 of room per result, a signal that the company could raise its bid to win more volume. The figures are made up to show the method; your own ceiling is the number that matters.
Turning the ceiling into a bid
- Bid below the ceiling, not at it. Leave space for results that never convert and for your own profit.
- Set bids by country. Close rates and customer value differ by market, so the ceiling does too. Set bids by country shows how to pick starting prices.
- Pay for the result you measured. If you calculated value per sign-up, buy sign-ups, not clicks. CPM vs CPC vs CPA compares the pricing models.
For the definitions behind each metric, read What is CPL? and What is CPI?.
Frequently asked questions
How do you calculate CPA?
Divide total campaign spend by the number of acquisitions. $300 spent for 120 sign-ups is a CPA of $2.50.
What is a good cost per acquisition?
Any CPA below what an acquisition is worth to you after costs. Work out that ceiling from customer value, margin, and close rate, then aim below it.
Is CPA the same as CPL?
CPL is a type of CPA where the acquisition is a lead. The same formula works for leads, installs, sign-ups, and sales; only what you count changes.
How can I lower my cost per result?
Improve the page people land on, stop paying for placements and countries that never convert, and pay per result instead of per impression so you only buy what you can measure.