CPA Calculator — The Best Place to Get Your Estimated Cost Per Action based on CPM
Quick and easy way to calculate the CPA of your ads.
Determine your cost per mille (CPM)
The first step is to determine your cost per mille (CPM), which is how much you pay for 1000 impressions on a given ad campaign. You can easily find this metric by using our CPM calculator.
Determine your click-through rate (CTR)
Next, input your click-through rate (CTR). If you don't already have this metric available, you can calculate it by dividing your total number of clicks by your total number of impressions, and then multiplying the result by 100. Your CTR should come out as a percentage, like 35%. Input that number (minus the percentage sign) into the calculator.
Determine your conversion rate
The third and final metric you need to plug into the calculator is your conversion rate. Conversion rate is a measure of how many of your clicks lead to conversions. Like CTR, it's calculated as a percentage. So, if you have 100 total clicks and 50 total conversions, you have a 50% conversion rate. In that example, you'd plug “50” into the calculator.
CPA using CPM
What is CPA?
CPA stands for cost per action or acquisition. It basically refers to how much it costs you to earn one customer via your paid ad campaigns. You probably have to pay for every click or impression that your ads earn, but only some of those clicks lead to conversions.
That begs the question, how many customers are you getting for what you’re paying? What does each customer end up costing you? That’s the question CPA allows you to answer.
Why does CPA matter?
CPA is important because, in a way, it shows you the true cost of your advertising.
Think of it like this. Let’s say you’re running a paid ad campaign where you pay one cent per click. One cent is cheap, right? A bargain!
But the thing is, framing it that way can trick you into thinking that you’re paying one cent for every customer you earn. And you’re not — you’re paying one cent per click.
So, what if it turns out that only 0.001% of clicks lead to conversions? In that case, if you do the math, you’ll find that you’re paying $1000 for every customer. Depending on what you sell, that may or may not be a good deal.
Learning more about your CPA can help you reoptimize your campaigns, so you can boost sales and lower costs.
How can you calculate CPA?
There’s more than one way to calculate CPA. Arguably the simplest way is to use the below formula:
The formula is incredibly basic, so if you wanted to simply calculate your CPA manually, you could do it that way. Alternatively, though, you can just plug some numbers into our calculator and let it do the work for you.
This calculator helps you find CPA by using your CPM, or cost per mille (“mille” referring to 1000 impressions). If you don’t know your CPM or would prefer to calculate it using a different metric, you can use the above formula, or you can try out our other calculator that determines your CPA using your cost per click (CPC).
Why use a CPA calculator?
You may be wondering why you should use a CPA calculator instead of just doing the math yourself. There are a few reasons, including:
- You don’t have to worry about miscalculating. Doing the math manually, there’s always a chance you’ll greatly miscalculate something and hinge your whole budget on an incorrect number. But you can be sure a calculator will always get it right.
- It’s fast and free. Even with a simple formula, it’s still faster to plug some numbers into a calculator and hit “Solve.” Plus, since the tool is free, there’s no reason to avoid using it — it’s not like you have to pay to access it.
- You can test out different scenarios. You don’t only have to use the calculator to see your current CPA. You can also quickly switch out different hypothetical numbers to see what your CPA could be in a variety of circumstances, which helps you plan.
How can you lower your CPA?
The higher your CPA is, the more you’re spending on each customer. Obviously, then, you’ll want to keep it as low as possible. So, how do you do that?
Ultimately, it depends on what the source of the problem is. One possibility is that you have a great conversion rate, but you’re just paying way too much for each click. If that’s the case, you can try to find a better deal elsewhere, perhaps by targeting less expensive keywords.
Alternatively, your CPC might be fine, but you just have a very low conversion rate. In that case, you simply need to reevaluate your ads, finding ways to make them more compelling so that more users will convert.
Both of those options will readjust the ratio between your costs and your conversions, lowering your CPA and allowing you to spend less to earn each customer.
Get help decreasing your CPA from WebFX
WebFX is more than happy to keep helping you calculate your CPA with our free calculator tool. But if you need help reoptimizing your marketing to apply what you learn through our calculator, we can help with that too.
WebFX offers top-tier paid advertising services where we assess and optimize your ads, helping you drive more conversions and ultimately bring down your CPA. When you partner with us, you’ll even receive a dedicated account representative to keep you up-to-date on everything we do for you.
To get started with us, just call 888-601-5359 or contact us online today!