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Cost Per Sale
Glossaries
| Term | Definition |
|---|---|
| Cost Per Sale | Cost Per Sale (CPS) is a performance metric in digital marketing that indicates the total cost incurred by a company to generate a single sale or acquire a paying customer, following interaction with a specific advertising campaign or marketing channel. It is the result of dividing the total campaign cost by the number of sales generated. What it's for / why it's importantCPS is vital for measuring the profitability and direct financial effectiveness of every marketing initiative. It is fundamental for assessing whether an advertising activity is sustainable: if the CPS is significantly lower than the average profit generated by a sale, the campaign is considered efficient and scalable. It is also the preferred payment model in Affiliate Marketing, ensuring that the advertiser only pays when an actual economic return occurs. When it's used / in what contextIt is used in all contexts where the primary marketing objective is the final conversion, which is the sale of a product or service. It is the main measurement and compensation model for:
Practical exampleA personal care product company decides to launch a promotion for 7 days, spending €7,500 in total on Instagram and Google Ads. At the end of the promotion, the system tracks 150 completed orders resulting from these campaigns.The calculation is: CPS = Total Campaign Cost / Number of Sales CPS = 7.500 € / 150 = 50 € The company spends €50 to obtain every single sale.
Extra insightCPS belongs to the family of CPA (Cost Per Action) metrics, but it is its purest form, as the action is specifically the sale. A closely related and even more comprehensive indicator is the Customer Acquisition Cost (CAC), which also includes non-advertising costs (e.g., team salaries, software) necessary to acquire a customer, giving a long-term view of business sustainability. In the Software as a Service (SaaS) world, the CPS is often compared to the Customer Lifetime Value (LTV) to ensure that acquisition costs do not exceed the expected future revenue. |
