How the calculation works
Revenue per conversion equals total revenue divided by conversions. Multiply that amount by your pre-acquisition margin to estimate contribution per conversion. If you spent all of that contribution acquiring the customer, the first transaction would break even before other omitted costs.
For example, $10,000 in revenue from 100 purchases produces $100 revenue per purchase. At a 30% contribution margin, the break-even acquisition cost is $30. If you want to keep $10 contribution on that first purchase, your working CPA target would be $20 or lower.
Use the right margin
Include product, fulfillment, payment, returns, and other variable costs in the margin when possible, but exclude the acquisition spend you are trying to calculate. A net margin that already includes the same campaign spend would make the calculation circular. For a lead rather than a sale, estimate the chance that a lead becomes a paying customer before assigning a target CPA.
Target CPA in Google Ads
Google describes Target CPA as an automated bidding strategy aimed at an average cost per conversion, not a guarantee that each conversion will cost exactly the target. Actual results can be above or below it. Review conversion tracking and campaign history before translating this break-even estimate into a platform setting.