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Payment and models

CPA (Cost Per Action)

Also called Cost Per Action, Cost Per Acquisition, pay per action, PPA.

Short answer

CPA (cost per action) means the advertiser pays an amount every time an agreed action happens – a sale, a lead, an install or a sign-up. As a metric, CPA is the total cost divided by the number of actions.

Definition of CPA (Cost Per Action).

CPA, which stands for both Cost Per Action and Cost Per Acquisition, is the umbrella for every model where payment is triggered by an action rather than by an impression or a click. CPS pays for a sale, CPL for a lead, CPI for an install. All three are CPA with the action filled in, and if a program just says CPA, the most important piece of information is missing.

The amount is usually fixed per action, whereas a percentage-based commission follows the order value. That makes CPA well suited to products where the value per conversion is uniform: a subscription at the same price, a test drive, a credit application. If order size varies a lot, a percentage rate suits both parties better.

For the advertiser, CPA moves the risk away from the media buy: they pay for a result at a price known in advance. For the affiliate, the risk goes the other way. All the work of creating the traffic has been paid for before the action happens, and a poor landing page at the advertiser hits the affiliate's earnings directly.

How it is calculated

CPA = total cost ÷ number of approved actions

total cost
all commission and all fees in the period, excluding VAT
number of approved actions
actions that have passed approval, not all recorded ones

Example

Commission to affiliates
DKK 18,000
Network fee
DKK 3,600
Approved actions
240
CPA
DKK 90.00

A CPA of DKK 90 only means something when it is set against what the action is worth – the contribution margin on the first purchase or the expected customer lifetime value.

Define the action narrowly enough that it can be rejected

A usable CPA definition contains three things: what must happen, what must be true about it, and when it is counted. A lead is not a completed form. It is a form with a phone number that can be called and an address in the area where you sell. If the third element is missing, the discussion ends up taking place after invoicing.

The description belongs in the program terms, not in an email. The affiliate must be able to read it before buying traffic, and the store must be able to read it when a sale has to be rejected. If the criterion is not written down, the rejection is arbitrary in practice.

CPA is not CAC

CPA measures the price of an action in one channel. CAC measures what a paying customer costs across all channels, including salaries, tools and discounts. A CPA of DKK 90 can easily sit in a setup where CAC is DKK 400, because only some of the actions turn into customers. If the budget is shifted on CPA alone, the money often ends up in the channel that delivers the actions that are easiest to generate and hardest to turn into revenue.

CPA vs. CPS

AspectCPACPS
Triggered bya defined action, from lead to installa completed sale
Form of the amountusually a fixed amount per actionusually a percentage of the order value
Follows the order valuenoyes
Advertiser's riskpays for actions that do not necessarily become revenueonly pays once there is revenue
Suitsleads, trials, apps, uniform ordersonline stores with varying basket sizes

Choose CPS when the value follows the order, and CPA when the action is worth roughly the same every time.

How it goes wrong

  • 01

    The action can be generated without intent

    The easier the action, the easier it is to fake. A free sign-up without verification can be created by the thousand, whereas a purchase with a payment card cannot. The price should reflect how hard the action is to fake.

  • 02

    No agreed deduplication key

    Without a rule on what makes two actions the same, you pay twice for the lead who fills in the form again the next day. The key must be agreed in advance: order ID, invoice ID, email or phone number.

  • 03

    Mistaking the CPA rate for profit

    For the affiliate, the rate is a gross price per action. If the traffic cost DKK 60 per action to acquire, DKK 90 in CPA is a margin of DKK 30, not earnings of DKK 90.

At Affilyflow

CPA (Cost Per Action) in practice

When a conversion is recorded in Affilyflow, the same rules apply regardless of which action triggered it. The rate and commission type were copied to the click record at the moment of the click, so a later change to the program cannot shift the price of a click that has already happened. Commission is calculated excluding VAT – via the Shopify app, however, on the value of the goods excluding shipping, where it has not yet been confirmed whether VAT has been deducted.

No action credits a balance automatically. Everything is created as pending, the same order can never count twice thanks to deduplication on order or invoice ID per program, and the store has the program's approval period (30–90 days) to reject with a reason the affiliate can read. If nothing happens within the approval period, the sale is approved automatically. The affiliate gets exactly the rate the program shows – our fee is part of the store's total price and is not deducted from the commission.

Frequently asked questions

What does CPA mean?

CPA stands for cost per action and is also used for cost per acquisition. It is both a payment model, where you pay per agreed action, and a metric: if a campaign costs DKK 21,600 and delivers 240 approved actions, the CPA is DKK 90.

What is the difference between CPA and CPS?

CPS is a subcategory of CPA where the action is a completed sale and the payment is typically a percentage of the order value. CPA is broader and is also used for leads, installs and sign-ups, usually with a fixed amount per action.

How do you calculate CPA?

Divide the period's total cost, meaning commission plus fees excluding VAT, by the number of approved actions. DKK 21,600 spread across 240 actions gives a CPA of DKK 90.

Is CPA better than a percentage-based commission?

It depends on how uniform the value per conversion is. If the order size is stable, a fixed amount is simple and predictable for both parties. If it varies a lot, a percentage rate gives a fairer split.

When do I get paid for a CPA action?

Only once the action has been approved. The commission is created as pending, the store has the program's approval period (30–90 days) to reject with a reason, and after that it is approved automatically and added to your balance.

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