Marketing & agency
Cost Per Acquisition (CPA) Calculator
Works cost per acquisition, which is the figure worth optimising.
Result
Maximum CPA here is break-even on the first job only. If customers return, you can afford more. The lifetime value calculator gives the fuller picture.
Get a Free Business AuditHow the calculation works
Spend divided by acquisitions, where an acquisition is whatever action the campaign exists to produce. Because it sits at the end of the chain, it incorporates click price, click-through rate and conversion rate together, which makes it the measure that reflects the whole funnel.
What moves the number
- Click price and click-through rate.
- Landing page conversion rate.
- Audience intent.
- What counts as an acquisition.
Where this one goes wrong
Defining the acquisition loosely is how this figure gets gamed, because counting a form fill as an acquisition when the business needs a paying customer produces a comfortable number and a failing campaign. Define it as something that has value. Comparing cost per acquisition against the margin on what was acquired is the test, since an acquisition costing more than it earns is a loss regardless of how it compares to last month.
Before you quote
- Define the acquisition as something with real value.
- Compare against the margin on what was acquired.
- Track it through to paying customer where possible.
Questions
About this calculator
Why is cost per acquisition the key metric?
Because it sits at the end of the chain and incorporates click price, click-through rate and conversion rate together. Optimising the earlier metrics in isolation can worsen it, which is why this is the one to manage.
How should an acquisition be defined?
As something with real value. Counting a form fill when the business needs a paying customer produces a comfortable figure and a failing campaign, and the further down the funnel the definition sits the more honest the metric.
What should it be compared against?
The margin on what was acquired. An acquisition costing more than it earns is a loss however it compares to last month, and that comparison is the only one that establishes whether the campaign should continue.
The formula
CPA = spend ÷ conversions; maximum CPA = job value × gross margin
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Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Total spend ($). Enter your own figure; the page starts at $7,500.
- Conversions. Enter your own figure; the page starts at 45.
- Average job value ($). Enter your own figure; the page starts at $950.
- Gross margin (%). Enter your own figure; the page starts at 42%.
The result updates as you type, so you can try a figure, see what it does to cost per acquisition, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Total spend | $7,500 |
| Conversions | 45 |
| Average job value | $950 |
| Gross margin | 42% |
What comes out
| Result | Value |
|---|---|
| Cost per acquisition main result | $166.67 |
| Maximum affordable CPA | $399.00 |
| Gross profit per acquisition after CPA | $232.33 |
| Headroom before you lose money | 139% |
CPA of $166.67 against a maximum of $399.00 leaves $232.33 of gross profit per job.
How sensitive the answer is
Holding everything else steady and changing only total spend, this is what happens to cost per acquisition. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Total spend ($) | Cost per acquisition |
|---|---|
| $3,750 | $83.33 |
| $5,625 | $125.00 |
| $7,500 example above | $166.67 |
| $11,250 | $250.00 |
| $15,000 | $333.33 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Total spend ($)
- A money amount, starting at $7,500.
- Conversions
- A number, between 0 and 1000000, starting at 45.
- Average job value ($)
- A money amount, starting at $950.
- Gross margin (%)
- A percentage, between 0 and 100, starting at 42%.
What the results tell you
| Result | What it is |
|---|---|
| Cost per acquisition | The headline result. A money figure. |
| Maximum affordable CPA | A money figure. |
| Gross profit per acquisition after CPA | A money figure. |
| Headroom before you lose money | A percentage. |
Attribution is the weak link
Return and cost-per-lead figures depend on knowing which enquiries came from which source, and most home-services businesses do not track that reliably. If the source data is guesswork, so is the return.
Keep going
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