Cost Per Action (CPA)

Cost-per-Action (CPA), also known as Cost Per Acquisition, is a performance-based advertising model in which advertisers pay only when a user completes a specific action.

This action is typically a purchase, a sign-up, a form submission, or a predefined activity that leads to a conversion.

CPA is a key performance indicator (KPI) that helps advertisers determine their online advertising campaigns’ return on investment (ROI) by focusing on the results that help their business goals.1


cpa formula

How to Calculate Cost per Action?

Cost per action (CPA) is calculated using a simple formula:

CPA = Total Cost / Number of Actions

Here’s a breakdown of what each part means:

  1. Total Cost: The total amount you spend on your marketing campaign or advertising effort.
  2. Number of Actions: The total number of times users completed your desired action. This action could be a purchase, signup, download, or anything else you defined as a conversion.2


Suppose you had an online ad campaign with a $5,000 budget. From this campaign, you got 50 new customers.

Here’s how you’d figure out the Cost per Action (CPA):

  • Total Campaign Cost = $5,000
  • Number of Actions (new customers in this scenario) = 50

To calculate the CPA, you divide the total cost by the number of actions:

CPA = $5,000 / 50 = $100

So, for this campaign, it costs you $100 to gain each new customer.


The main goal of cost-per-action is to optimize advertising spending by paying only for results that matter to your business.

CPA helps you spend smarter, not harder, on your marketing efforts. It allows you to target the right audience with the right message and measure the effectiveness of your campaigns based on concrete actions.3

How It Works:

Cost per Action (CPA) benefits both advertisers and publishers (platforms showing the ads).

It connects advertisers with platforms to show ads, where advertisers only pay if someone takes a specific action, like buying or signing up after clicking an ad.

Advertisers choose who sees the ads to ensure they’re targeting likely customers, and they set a price they’ll pay for each successful action.
Meanwhile, platforms display these ads and earn money when actions are completed.

It’s a system where advertisers save money by paying only for results, and platforms profit by delivering those results.4


Cost per Action (CPA) is primarily used in online advertising where advertisers want to drive specific user actions on a website or app.

This method is popular on various platforms, including search engines, social media, and affiliate networks.

It is especially valuable for businesses with direct response goals, such as e-commerce sites aiming to boost sales or service providers seeking new leads.5

Related Terms:


1. Google. (n.d.). Cost per action: Definition. Google Ads Help.

2. Cost per acquisition (CPA): KPI Example. Geckoboard. (n.d.).

3. Cost per action (CPA) explained – the printify glossary. Printify. (2022b, January 31).

4. Addey, O. (2021). Cost Per Action Marketing Formula: How To Do CPA Marketing. (n.p.): Amazon Digital Services LLC – KDP Print US.

5. Hu, Y., Shin, J., & Tang, Z. (2016). Incentive problems in performance-based online advertising pricing: Cost per click vs. cost per action. Management Science62(7), 2022-2038.

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