Cost per acquisition (CPA): What is it and how do you calculate it?

When it comes to measuring marketing success, few metrics are more talked about – or more misunderstood – than cost per acquisition (CPA).

Tight budget? ROI pressure? Costs creeping up while your pipeline remains steady?

Whatever’s behind it, understanding CPA helps you fix conversion drop-offs and double down on what’s working.

This guide covers what you really need to know about CPA – how it works, how to improve it, and why it matters more than you think.

And, if you’re a fan of initialisms, strap yourself in. This guide has them BTB (by the boatload).

What is cost per acquisition (CPA)?

CPA tells you exactly how much it costs to win a paying customer – a purchase, a booked meeting, a subscription. If it drives revenue, CPA measures the price you pay to get it.

In most cases, CPA refers to the cost of turning a lead into a customer – it’s the price your business pays for a specific, revenue-driving action like making a purchase, requesting a demo, or signing up for an email newsletter.

Basically, CPA shows how well your marketing turns interest into income – that’s what makes it so powerful. 

Why is CPA important?

CPA gives you the clearest view of how your marketing efforts are working and if you’re spending your marketing budget wisely.

Tracking CPA allows you to:

• Know which campaigns actually bring in profit
• See which channels are worth the spend
• Cut what’s wasting budget
• Keep your goals and your growth aligned

In other words, CPA focuses your team on the outcomes of its activity.

Is there a difference between cost per acquisition and customer acquisition cost (CAC)?

In short, yes, there is a difference. But they’re closely related.

CPA typically refers to the cost of converting a specific marketing campaign into a defined action (like a purchase or signup).

Customer acquisition cost (CAC) takes a broader view. It includes all the costs of turning a lead into a long-term customer, including sales, onboarding, support, and other costs.

So while CPA is often part of your CAC calculation, the two metrics aren’t interchangeable.

CPA is all about measuring marketing efficiency, while CAC zooms out, covering your whole acquisition strategy. 

How to calculate CPA

Before you can improve your CPA, you need to know how to calculate it properly.

Basic CPA formula

The basic cost per acquisition formula is:

CPA = Total cost of campaign / Number of conversions

For example:

• You spend £5,000 on a paid campaign
• It results in 100 new customers

Your CPA is:

£5,000 / 100 = £50 per acquisition

This works across marketing channels, but it’s only as accurate as your inputs. Don’t forget to include every campaign cost – ad spend, creative, tech fees, agency support, the lot.

How to measure CPA across different channels

CPA looks different on every channel; that’s why you’ve got to track each one separately

Channel-by-channel CPA tracking shows what’s working and where your budget’s being wasted.

You’ll also want to adjust your measurement based on the action you’re targeting:

• For ecommerce, this might be a purchase
• For B2B, it could be a booked sales meeting or a submitted form
• For SaaS, it might be a product sign-up or a free trial

The key is to define what counts as an acquisition and stick to it. Our advice is to use things like UTM parameters, platform-specific tracking, and unified reporting dashboards to ensure accurate attribution. Be cautious of channels like display or paid social, where view-through conversions may distort CPA if your team hasn’t segmented properly.

CPA vs other cost metrics: what’s the difference?

It’s easy to confuse CPA with other marketing metrics. Here’s how it stacks up against similar metrics and why it matters. 

Cost per lead (CPL)

CPL tracks how much you spend to generate a lead, i.e. someone who shows interest but hasn’t converted yet.

CPA, on the other hand, tracks what it costs to turn that lead into a paying customer.

• CPL = top of the funnel
• CPA = bottom of the funnel

→ Want to know the average CPL in your industry? Read our report on B2B cost-per-lead benchmarks. 

Cost per conversion

This is often used interchangeably with CPA, but it depends on how you define a conversion. If your conversion is a customer purchase, the two metrics align. If your conversion is just a lead, they don’t.

Cost per click (CPC)

CPC measures how much it costs to get someone to click an ad.

It’s an engagement metric, not an acquisition metric. A high CPC may be fine if it leads to high-value conversions, and a low CPC means little if clicks don’t convert.

Cost per action

Often used in affiliate or performance marketing, cost per action means you pay when a specific action is completed (like signing up, downloading, or making a purchase). It’s similar to CPA, but the action can be broader than just customer acquisition.

Cost per acquisition benchmarks

What is a good CPA?

There’s no single definition of a good CPA. Instead, it’s based on what makes sense for your business. 

A good cost per acquisition is one that fits your:

• Customer lifetime value (LTV)
• Average order value (AOV)
• Sales funnel
• Margins
• Business model

If you’re paying £200 to acquire a customer who brings in £2,000 over their lifetime, your CPA is great. But if that same customer is worth £150? You’re burning your budget.

Rather than chasing a magic number, focus on your CPA-to-LTV ratio. A common benchmark is to aim for a CPA of 10-30% of a customer’s LTV.

Average CPA by industry

There’s a huge variation in average cost per acquisition by industry, and even by channel. For example:

• In B2B, the average CPA is often higher due to longer sales cycles and more complex buying journeys
• Email marketing tends to offer lower CPAs thanks to lower media costs and more personal outreach
• Google Ads and paid social can vary significantly depending on competition and targeting quality

How to evaluate your business’s CPA

To evaluate whether your CPA is sustainable:

• Compare it against your LTV and AOV
• Benchmark it against similar businesses or past performance
• Segment by channel, campaign, or customer type
• Track how it evolves over time

Just be cautious of vanity comparisons. What works for a SaaS business might not work for a management consultancy firm or a marketing agency, as each will have a totally different business model and target audience.. Your CPA only needs to make sense in the context of your goals, so make sure you don’t get caught up in the noise of what others are doing or tracking.

How CPA works across different marketing channels

CPA in email marketing

According to our research on the best-performing marketing channels, email marketing, particularly B2B email prospecting, often delivers some of the lowest CPAs in digital marketing.

Why?

• It’s highly targeted
• You only pay for direct outreach (not impressions or clicks)
• It’s scalable but personal

→  We’re a B2B email marketing agency that builds campaigns to keep CPA low with smart targeting, personalised messaging, and a strong multichannel follow-up strategy.

CPA in paid search and social

Google Ads, LinkedIn, and Facebook can all drive the right traffic fast, but if your targeting’s off, your CPA can suffer. 

To reduce the risk of this, you need to refine: 

• Ad creative
• Landing page experience
• Conversion rate optimisation

CPA in affiliate and performance marketing

With CPA-based performance and affiliate marketing, you only pay when a conversion occurs. This sounds perfect, until you think about:

• Having less control over where your brand appears
• The risk of lower-quality traffic
• Depending on third-party affiliates

Handled right, it’s a great way to scale. But cut corners, and you risk wasting money.

Why your CPA might be increasing, and how to fix it

Common reasons for rising CPAs

If your CPA is creeping up, it could be due to:

• Increased competition in paid channels (higher CPCs, more noise)
• Poor targeting or segmentation
• Low-performing creatives or copy
• Landing pages that don’t convert
• Longer sales cycles
• Wasted ad spend on low-intent traffic

It could also reflect a mismatch between your offer and your audience or just fatigue in a saturated channel. It’s not necessarily that your ads are bad; it’s that they’re presenting the wrong value proposition to the wrong people, potentially via the wrong outreach channel.

How to reduce your CPA

Want to shrink your CPA without slashing quality? Start here: 

• Get sharper with your targeting – speak to the right people, not the loudest
• Tune up your conversion flow – forms, pages, CTAs. Test everything
• Shift spend to lower-cost, higher-intent channels (hello, email)
• Don’t ghost warm leads – follow up, retarget, and stay visible
• Rewrite, retest, repeat – stale messaging kills conversions

The golden rule: track every step of your sales funnel, from click to close, and optimise the drop-off points.

How to use CPA in practice: examples by industry

How CPA shapes marketing strategy

Here’s how businesses in different sectors use CPA to make smart decisions:

• SaaS – use CPA to assess the cost of trial signups and demo requests, then align spend with customer lifetime value.
• Ecommerce – compare CPA to average order value to determine profit margin per acquisition.
• B2B lead generation – track CPA by channel (email, PPC, events) to optimise for lower-cost, higher-intent meetings.

Ways to use CPA to aid lead generation

• Set cost-per-lead and cost-per-acquisition targets for your marketing team
• Compare CPA by campaign to focus on high-performing offers
• Use CPA to evaluate team performance, internal and outsourced

Bonus tip: Don’t reduce CPA at the expense of quality. A lower CPA is great. A lower CPA with a stronger close rate is better.

→ Tap into Sopro’s suite of specialised tools and take your strategy to the next level with our expert B2B lead generation service. 

CPA is a starting point, not the finish line

CPA is one of the most powerful metrics in marketing, but it’s only part of the story.

Used in isolation, it can lead you down the wrong path. Used wisely (alongside LTV, conversion rate, and funnel performance), it becomes a strategic tool that drives smarter spend, stronger ROI, and sustainable growth.

Ready to lower your CPA, win better leads, and finally get marketing that pulls its weight? Let’s talk. We’ll show you how performance-led lead gen drives real results, with smarter targeting, sharper strategy, and leads that convert. Book a demo to get started.