CPA Definition

The Cost Per Acquisition (CPA) measures the costs associated with acquiring one new paying customer for your product

Cost Per Acquisition (CPA) is an important measure looking at the costs associated with acquiring a new paying customer for your product. It is a term heavily used in marketing, where the costs of a particular campaign can be directly associated with the resulting sales coming from the marketing activity.

How to calculate CPA

CPA is simply the costs attributable to new sales divided by the number of new sales in the period:

$$ CPA = \frac{costs} { new users } $$

When thinking about costs in a software context, think about:

  • Marketing campaign costs (e.g. paid for advertising)
  • Sales team salary / bonus costs
  • For Enterprise software, costs of workshops, sales meetings, demos etc.
  • Any costs associated with contracting the new paying user
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