Cost Per Acquisition (CPA)
The total cost of acquiring one new customer, calculated by dividing your total marketing spend by the number of new customers gained.
Cost per acquisition tells you how much you’re spending to win each new customer. If you spend $1,000 on Google Ads in a month and those ads bring in 10 new customers, your CPA is $100. This metric is essential because it connects your marketing spend directly to actual business results — not just clicks or impressions, but paying customers.
Understanding your CPA helps you make smarter decisions about where to invest your marketing budget. If your CPA from Facebook Ads is $150 but your CPA from Google Ads is $75, you know where to shift your dollars. It also helps you determine whether a marketing channel is profitable at all. If your average customer spends $200 and your CPA is $180, your margins are razor-thin and you need to either reduce acquisition costs or increase customer value.
For small businesses, CPA should be evaluated alongside customer lifetime value. A $200 CPA might seem expensive for a single transaction, but if that customer returns monthly and generates $3,000 over their lifetime, it’s actually a bargain. This perspective is especially important for subscription-based businesses, service providers with recurring clients, and any business where repeat purchases are common.
To lower your CPA, focus on improving your conversion rate (so more clicks become customers), refining your targeting (so you attract better-qualified leads), and nurturing leads who don’t convert immediately through email follow-ups and retargeting.