How to calculate the cost per acquisition (CPA)

sakibkhan29188 · Post by **sakibkhan29188** » Sun Apr 20, 2025 4:14 am

Now let's move on to what is arguably the most important cost factor when it comes to Facebook ad decisions: cost per acquisition. There are a handful of other terms for this cost, but they all essentially mean the same thing. So, when someone mentions CPO or CPA, these are the costs they're referring to.

The CPA indicates how much it costs you to get a customer to buy. Or rather, how macedonia phone number data expensive it is for you when someone buys. Therefore, the CPA should always be below your selling price (hello, contribution margin!) to ensure your ads are profitable. The CPA is also an essential factor for bidding and determining your target costs.

So, how do you calculate CPA?

For this, we need some metrics again. The most important one is the conversion rate in your online store. If you don't have any experience with this, you can use this as a guideline. The average conversion rate in e-commerce is around 2-4%.

First, however, we need to calculate how many clicks are actually necessary to achieve a conversion.

To do this we use this simple formula:

1/Conversion rate = Required clicks

So if we have a conversion rate of 2%, 50 clicks are needed to achieve a conversion.

Now we take this number and multiply it by our already known CPC.

Required clicks x CPC = Cost per Conversion

Also:

50x 0,31€ = 15,50€.

So, on average, a conversion costs us €15.50. This means that this price can be reduced if the required clicks per conversion and/or the CPC decrease.

Bidding Strategy
In order to ensure that the feeds of billions of Facebook and Instagram users not only display advertising but also organic content, the space for ads must of course be somewhat limited.

For this reason, Facebook, like other advertising platforms, has an auction system. This auction system essentially "distributes" ad space. This is also one of the reasons why Facebook doesn't charge additional fees for placing ads. The ads that users ultimately see also depend on competition.