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Cost Per Purchase
What is Cost Per Purchase?
Cost Per Purchase (CPP), generally called cost per order, is a marketing metric that calculates the cost of acquiring a genuine user by dividing the total cost of a marketing campaign (cost of media spend, user acquisition, promotions, marketing, etc.) by the number of purchases made. With CPP, businesses can measure a marketing campaign's efficiency in terms of how much it costs to make a sale, how popular its products are, and how much users spend.
Why is CPP important?
Buyers are more likely to consider the cost per unit when purchasing. If one of your products is significantly more expensive than the others, the chances of it being purchased decline. To ensure competitive pricing across all items, offering a range of cost options is crucial. This allows customers to select the cost that suits them best.
For instance, if you have five products priced at $10, $15, $20, $25, and $30, your customers can freely choose their preferred price range. Instead of buying several products at one price point, they may only select a few options with more balanced cost ranges.
How to calculate CPP?
Cost Per Purchase = Total cost of the campaign / Total number of new users acquired from the campiagn
A practical example to calculate cost per purchase
Suppose you want to calculate the CPP for a month in which you acquired 200 users. Now, let’s assume that the following are your total costs:
| App market research | $300 |
| Ad campaigns | $900 |
| ASO | $400 |
| Branding | $1200 |
| Total cost | $2800 |
Hence, the CPP here will be calculated as below:
$2,800/200 = $14 (CPP)
Related Terms
Cost Per Download
Cost Per Download (CPD) is a revenue model in which the advertisers only pay when users download their app or a specific file. For example, if CPD is decided at $10 for a particular app and there are 100 downloads, then the advertiser is entitled to pay $1000 to the publisher.
Cost Per Lead
Cost Per Lead (CPL) is a revenue metric representing the cost of acquiring each lead for a business. As advertisers are the ones who pay the CPL, they always want low CPL campaigns. This metric helps businesses understand their marketing efforts' effectiveness and determine the return on investment (ROI) on the advertising spend.
User acquisition
Advertisers use the process of user acquisition to create and deploy advertising campaigns that generate app installs.
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