What is cost per acquisition (cpa)?
Cost per acquisition is total acquisition spend divided by the number of resulting sales or enrollments. It captures what a customer actually costs, as opposed to what a lead costs.
Lead price and CPA move independently, which is why optimising lead price alone is a trap. Buying leads at half the price doubles CPA if they convert at a quarter of the rate. The only figure that matters commercially is cost per acquired customer.
CPA should be calculated on total spend, including leads that never converted, leads that were never reached, and leads rejected after purchase. Excluding them produces a flattering number that does not correspond to money actually spent.
Pre-bid scoring attacks CPA by changing the mix rather than the unit price. Declining leads unlikely to convert and paying more for leads likely to convert can raise average lead price while lowering CPA, which is the intended outcome and often surprises buyers who are managing to lead price.
Related terms
- Price-per-Probability — Price-per-Probability is a lead buying principle: pay for each lead in proportion to its predicted probability of converting, rather than paying one flat price for every lead from a given source.
- Conversion propensity — Conversion propensity is a model's estimate of how likely a specific lead is to result in a completed sale or enrollment, usually expressed as a probability or a score derived from one.