Cost Per Acquisition (CPA)
Cost Per Acquisition (CPA) is a marketing metric that measures the total cost of acquiring a new customer, including all marketing and sales expenses associated with the conversion.
What is Cost Per Acquisition?
Cost Per Acquisition (CPA), also known as Cost Per Action or Customer Acquisition Cost (CAC), is a marketing metric that measures how much it costs to acquire a new customer or drive a specific conversion action. For SaaS companies, understanding and optimizing CPA is crucial for sustainable growth and profitability.
How to Calculate CPA
CPA Formula
CPA = Total Marketing & Sales Costs ÷ Number of New Customers Acquired
For campaign-specific CPA: Campaign Cost ÷ Conversions from Campaign
CPA vs Other Cost Metrics
Why CPA Matters for SaaS
- • Profitability Assessment: Helps determine if customer acquisition is profitable
- • Marketing Efficiency: Measures how efficiently marketing budget is being used
- • Channel Comparison: Allows comparison of different marketing channels
- • Growth Planning: Essential for scaling marketing efforts sustainably
- • Investor Metrics: Key metric investors look at when evaluating SaaS companies
CPA Benchmarks
SaaS Rule of Thumb
CPA should be recovered within 12 months (LTV:CAC ratio of 3:1 or better)
B2B SaaS
Typically higher CPA ($100-$500+) due to longer sales cycles and higher customer value
B2C SaaS
Generally lower CPA ($50-$200) with higher volume and lower customer value
Enterprise SaaS
Can exceed $1,000+ per customer but with much higher lifetime value
Strategies to Reduce CPA
Improve Targeting
Focus on high-intent audiences most likely to convert
Optimize Landing Pages
Improve conversion rates through better design and messaging
Implement Retargeting
Re-engage visitors who showed interest but didn't convert
Leverage Content Marketing
Generate organic traffic and leads through valuable content
Common CPA Calculation Mistakes
- • Not including all acquisition costs (just counting ad spend)
- • Counting free trial users as acquisitions before they convert
- • Not differentiating between new customers and expansions
- • Using too short a time period for calculation
- • Not segmenting CPA by marketing channel or customer segment
Need to Optimize Your Acquisition Costs?
Our SaaS marketing experts can help you reduce CPA while maintaining or increasing growth.