How to use the CPA Calculator
You have two options to use our cost-per-acquisition or cost-per-lead calculator tool:
1) CPA Calculator: Calculate the CPA or cost-per-lead with your existing budget, estimated Cost-per-Click (CPC), and website/landing page conversion rate.
2) Budget calculator: Start with the number of desired leads and determine the campaign budget you need to generate your desired number of new contacts.
Cost per Lead Formula
The cost per lead calculation is a simple formula that can determine the profitability of your marketing campaign. This calculation will help you understand how much you are spending to earn a new customer.
The cost per lead calculation is not complicated to do. Here are the steps: Find out how much you are spending on a given campaign, and divide that by the number of leads you generated. So if you are spending $1500 for an advertising campaign, and I get 10 leads, your CPA would be $1500/10 = $150 per lead.
Cost / Number of leads = Cost per lead.
What is the difference between the cost per lead and cost per acquisition?
Cost per lead (CPL) is the amount of money spent on each new lead.
Cost per acquisition (CPA), on the other hand, is used to measure marketing and sales campaign performance by calculating what you spend on an acquisition campaign to acquire a new customer.
Hence, the CPA calculation is one level deeper. Let’s say you generated 10 new leads at a cost of $10 per lead. (total cost = 10 * $10 = $100)
Assuming you convert 1 of the 10 leads to become a customer, your conversion rate is 10% and Cost-per-Acquisition is $100.
Total cost / number of new customers = Cost-per-Acquisition
CPA can also mean Cost per Action but the Back2MarketingSchool CPA calculator determines the cost per acquisition.
How to use the Back2MarketingSchool CPA Calculator?
Our CPA calculator is a swiss army knife for marketing metrics. It’s a ROMI, Cost-per-new-customer, and CPL calculator in one.
Ad Campaign Budget/Marketing Cost
Type in a number that reflects your media or marketing budget. You can use the daily, monthly, or total budget.
Recommendation: Use larger numbers (e.g. monthly or total costs) to get more accurate results.
Estimated CPC (Cost-per-Click)
Insert the estimated CPC for the campaign. You can get the forecast from previous campaign costs or advertising platforms when planning your campaign. Google Ads, LinkedIn Campaign Manager, or Facebook Ad Manager all have CPC forecasts available.
You can also play around with this number to see the effect of different platforms. However, keep in mind that different platforms may result in different lead quality and the lead-to-customer conversion rate may decrease.
Number of Clicks
The number of clicks will automatically be calculated by dividing the budget by the estimated CPC.
Estimated website conversion rate
Insert your estimated website conversion rate. A good landing page conversion rate for advertising campaigns is between 1% and 2%.
You can get this number from your current website or previous campaigns.
Our website conversion rate calculator can help you calculating that percentage if you don’t have the number handy.
Estimated Number of Lead
The automatically calculated number of leads is based on your inputs. (Formula: Number of clicks times the website conversion rate)
Estimated Cost per Lead (CPL)
The automatically calculated cost per lead: Total cost divided by the estimated number of leads.
Estimated lead to customer conversion rate
This number depends on your business. Content campaigns may have a longer marketing and sales cycle compared to demo requests and free sign-ups. You need to estimate from your existing marketing efforts how high the conversion rate from lead to paying customer really is.
Estimated number of new customers
The automatically calculated number of new customers is based on your number of estimated leads times the customer acquisition rate.
Estimated Cost-per-Acquisition (CPA)
The final estimated CPA is the total cost divided by the calculated number of new customers.
You can end here or also calculate your Return-on-Marketing-Investment (ROMI).
Estimated Average Revenue per new Customer
Estimate the average revenue a new customer generates for the business. It’s important to use the average, and not the total revenue generated by the campaign.
The ROMI will be calculated and presented in the multiple as well as the percentage.
How to calculate ROMI
ROMI in % = (Marketing revenue — Marketing expenses) / Marketing expenses * 100
Back2MarketingSchools free marketing calculators offer easy-to-use, real-time results. You can play around with the numbers and see how a single number adjustment impacts the entire marketing strategy outcome. Isolated optimizations like call-to-actions may improve a single conversion rate in the entire marketing campaign funnel, but have a big impact on the bottom line of the business. The tools are designed to give you fast answers and play around with changing numbers.