Cost per acquisition
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The cost to acquire a customer or conversion through a specific marketing channel. The bottom-line efficiency metric for paid campaigns.
CPA measures what you paid to acquire a specific outcome: a signup, a lead, a demo, or a customer. If you spent $10k on Google Ads and acquired 20 demo requests, your CPA for demos is $500.
CPA is more useful than CPC or CPM because it measures what you actually got, not just clicks or eyeballs. A channel with a $50 CPC but 10% demo conversion has a $500 CPA per demo. A channel with $5 CPC but 0.5% demo conversion has a $1,000 CPA per demo. The cheaper clicks produced worse results.
The right CPA depends on what you are acquiring and what it is worth. A $500 CPA for a demo that converts to a $100k deal is excellent. A $500 CPA for a newsletter subscriber is probably too high unless your newsletter has unusually strong conversion rates.
Examples
Comparing CPA across channels.
Google Ads CPA per demo: $400. LinkedIn Ads CPA per demo: $650. Conference leads CPA per demo: $1,200. But conference demos close at 3x the rate. Cost per closed deal: Google $8k, LinkedIn $13k, Conferences $8k. CPA per demo is misleading without conversion data.
CPA targets guide budget allocation.
Target CPA per SQL: $1,500. Google Ads delivers SQLs at $1,200 CPA. LinkedIn delivers at $2,000. The team shifts 20% of LinkedIn budget to Google Ads. Total SQLs increase by 15% at the same total spend.
CPA increases as a channel matures.
In year one, Google Ads CPA was $300. In year three, it is $600. The easy keywords are exhausted. Competition increased. The team expands to new channels (content, partnerships) instead of pouring more money into an increasingly expensive channel.
In practice
Read more on the blog
Frequently asked questions
What is the difference between CPA and CAC?
CPA measures the cost per specific action (demo, signup, lead) on a specific channel. CAC measures the total cost to acquire a paying customer across all channels. CPA is a channel metric. CAC is a business metric. CPA feeds into CAC but they measure different things.
What is a good CPA for B2B SaaS?
It depends on what you are acquiring and your deal size. CPA per lead: $50-200. CPA per demo: $200-1,000. CPA per SQL: $500-2,500. CPA per customer: should be well below LTV. As a rule, CPA per customer should be at most one-third of the first year contract value.
Related terms
How much you pay each time someone clicks your ad. The basic unit of cost in pay-per-click advertising.
Revenue generated per dollar spent on advertising. A ROAS of 5:1 means every $1 in ad spend generated $5 in revenue.
The total cost of sales and marketing divided by the number of new customers acquired in a period.
The percentage of people who take a desired action. Visitors who sign up. Leads who become customers. The measure of how well each stage of the funnel works.
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