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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

CPA
Cost to acquire a customer
CPC
Cost per click on an ad
CPM
Cost per thousand impressions

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.