Quick Answer (TL;DR)
Cost Per Acquisition (CPA) measures average cost to acquire one customer. The formula is Total marketing spend / New customers acquired. Industry benchmarks: SaaS: $50-$500; Consumer: $1-$50. Track this metric when evaluating marketing efficiency.
What Is Cost Per Acquisition (CPA)?
Average cost to acquire one customer. This is one of the core metrics in the acquisition metrics category and is essential for any product team serious about data-driven decision making.
In the acquisition stage of the funnel, cost per acquisition (cpa) helps you understand how efficiently you are attracting potential customers. Without visibility into this metric, you risk over-spending on channels that do not convert or under-investing in channels with untapped potential.
Understanding cost per acquisition (cpa) in context --- alongside related metrics --- gives you a more complete picture than tracking it in isolation. Use it as part of a balanced metrics dashboard.
The Formula
Total marketing spend / New customers acquired
How to Calculate It
If your total marketing spend totals $50,000 in a month and you generate new customers acquired equal to 200:
Cost Per Acquisition (CPA) = $50,000 / 200 = $250
This means each unit costs $250 to produce or acquire.
Benchmarks
SaaS: $50-$500; Consumer: $1-$50
Benchmarks vary significantly by industry, company stage, business model, and customer segment. Use these ranges as starting points and calibrate to your own historical data over 2-3 quarters. Your trend matters more than any absolute number --- consistent improvement is the goal.
When to Track Cost Per Acquisition (CPA)
When evaluating marketing efficiency. Specifically, prioritize this metric when:
You are building or reviewing your metrics dashboard and need acquisition indicators
Leadership or investors ask about acquisition performance
You suspect a change in product, pricing, or go-to-market strategy has affected this area
You are running experiments that could impact cost per acquisition (cpa)
You need a quantitative baseline before making a strategic decision
How to Improve
Reduce the numerator. The formula divides total marketing spend by new customers acquired. Find ways to decrease costs without sacrificing quality --- renegotiate vendor contracts, cut underperforming channels, or automate manual processes.
Increase the denominator. More new customers acquired from the same spend directly reduces your per-unit cost. Improve conversion rates at every stage of the funnel.
Invest in compounding channels. Organic acquisition (SEO, content marketing, community) grows over time while paid channels hit diminishing returns. Shift budget toward sustainable growth engines.
A/B test landing pages and campaigns. Small improvements in conversion rates at the top of the funnel compound into significant acquisition gains. Test headlines, CTAs, and page layouts systematically.
Track by channel and segment. Blended metrics hide underperformance. Break this metric down by acquisition channel, geography, and customer segment to find optimization opportunities.
Common Pitfalls
Excluding hidden costs. Many teams forget to include salaries, tool subscriptions, overhead, and opportunity costs. Under-reporting costs creates a false sense of efficiency.
Not attributing correctly. Multi-touch attribution is difficult, and last-click models over-credit bottom-of-funnel channels. Use a consistent attribution model and acknowledge its limitations.
Measuring without acting. Tracking this metric is only valuable if you have a process for reviewing it regularly and a playbook for responding when it moves outside acceptable ranges.
Related Metrics
Traffic by Source --- breakdown of visits by channel (organic, paid, referral, direct, social)
Customer Acquisition Cost (CAC) --- fully loaded cost to acquire a customer including sales and marketing
Unique Visitors --- distinct individuals visiting your site
CAC Payback Period --- months to recover acquisition cost
Product Metrics Cheat Sheet --- complete reference of 100+ metrics