What is cost per acquisition?
Cost per acquisition, or CPA, is what you pay in ad spend for each conversion: a signup, a trial, or a customer, depending on how you define the acquisition. It is the headline efficiency metric for performance campaigns.
CPA is close to CAC but not identical. CPA is usually the paid cost per conversion on a channel; CAC is the fully loaded cost per customer across all sales and marketing, including salaries and tools.
The CPA formula.
CPA = total ad spend divided by the number of acquisitions in the same period. Be explicit about what counts as an acquisition, since a cost per signup and a cost per paying customer are very different numbers.
Match the spend to the conversions it produced. Counting this month's spend against last month's conversions distorts it.
A worked example.
You spend 10,000 dollars and get 50 conversions. CPA is 10,000 divided by 50, which is 200 dollars per acquisition.
What is a good CPA?
There is no absolute benchmark, because a good CPA is entirely relative to what a customer is worth. A 200 dollar CPA is excellent for a product with a 5,000 dollar LTV and ruinous for one with a 150 dollar LTV. The test is the ratio of value to cost, not the cost alone.
Read CPA against lifetime value and your payback period. A CPA you can recover quickly is affordable even when the headline number looks high.
How to lower your CPA.
Improve conversion rate so more clicks become customers, tighten targeting to reach better-fit buyers, and cut spend on what does not convert. The structural lever, again, is channel mix.
Paid CPA tends to rise as you scale and as competition bids up costs. Organic search lowers blended CPA as it compounds, because the traffic does not carry a per-conversion media cost. See the Workwize numbers, where organic became the lowest-cost acquisition channel.