How to calculate CPA
Posted: Sat Dec 28, 2024 7:11 am
If you work with a contractor or network that you pay to perform targeted actions, you need to determine the cost of CPA before entering into an agreement so that both parties understand their KPIs. There are several ways to calculate it.
Percentage of sales
This option is beneficial if the business sells many different products, the cost of a lead for them varies significantly, and the target action is considered to be an order. The calculation scheme is absolutely transparent: the partner will receive a percentage for each sale, the business includes this percentage in the price. As a rule, the commission in this case is up to 30% of the cost of the product.
Fixed rate
A fixed partner commission can be offered by a business here’s some information about the overseas in usa that already has enough statistics on sales and advertising budget expenditure. The company calculates how much each lead costs it and offers a rate based on this.
Classic calculation formula:
CPA = Business advertising expenses / Number of completed target actions.
For example, a construction company placed ads in Yandex Direct and social networks. 75,000 rubles were spent, 1,000 requests (calls, consultations in a chat bot) were received, and 20 contracts with clients were concluded on a pre-payment basis.
If lead = request, then 75,000 / 1,000 = 75 rubles per request.
If lead = concluded contract, then 75,000/200 = 3,750 rubles per client.
Thus, the company can offer the partner a commission equal to or lower than the calculated values.
CPA Calculator
To avoid wasting time on manual calculations, you can use an online calculator. It is easy to find by searching on the Internet. Any calculator works according to the formula from the previous point - you only need to enter the data.
Percentage of sales
This option is beneficial if the business sells many different products, the cost of a lead for them varies significantly, and the target action is considered to be an order. The calculation scheme is absolutely transparent: the partner will receive a percentage for each sale, the business includes this percentage in the price. As a rule, the commission in this case is up to 30% of the cost of the product.
Fixed rate
A fixed partner commission can be offered by a business here’s some information about the overseas in usa that already has enough statistics on sales and advertising budget expenditure. The company calculates how much each lead costs it and offers a rate based on this.
Classic calculation formula:
CPA = Business advertising expenses / Number of completed target actions.
For example, a construction company placed ads in Yandex Direct and social networks. 75,000 rubles were spent, 1,000 requests (calls, consultations in a chat bot) were received, and 20 contracts with clients were concluded on a pre-payment basis.
If lead = request, then 75,000 / 1,000 = 75 rubles per request.
If lead = concluded contract, then 75,000/200 = 3,750 rubles per client.
Thus, the company can offer the partner a commission equal to or lower than the calculated values.
CPA Calculator
To avoid wasting time on manual calculations, you can use an online calculator. It is easy to find by searching on the Internet. Any calculator works according to the formula from the previous point - you only need to enter the data.