How is CPO calculated?
The formula is:
CPO = advertising costs ÷ number of orders
Worked example: a Shopping campaign costs €2,000 a month and brings in 80 orders. €2,000 ÷ 80 = €25 CPO.
Decide beforehand which costs and which orders count, and stick to it. Only then can you compare months and channels:
- Costs: at least the media costs. In affiliate marketing, commissions, network fees and the agency fee belong in the calculation, because these costs arise with every order.
- Orders: ideally only valid orders. If 10 of the 80 orders are cancelled or returned, the CPO rises to €2,000 ÷ 70 = €28.57.
- Period: costs and orders from the same period and the same source, such as the ad account or the shop.
CPO, CPA, CRR and ROAS: how they differ
CPO is a special case of CPA (cost per acquisition): with CPA, any agreed action can be the conversion, while with CPO it is always an order. Cost per sale (CPS) is usually used to mean the same thing. For enquiries, cost per lead (CPL) is the right metric.
CPO says nothing about the value of the order. That is what the cost-revenue ratio (CRR) and ROAS are for, as they relate costs to revenue.
| Metric | Formula | What it shows |
|---|---|---|
| CPO | Advertising costs ÷ orders | Cost per order in euros |
| CPA | Advertising costs ÷ conversions | Cost per conversion of any kind, the umbrella term |
| CRR | Advertising costs ÷ revenue × 100 | Share of revenue spent on advertising, in per cent |
| ROAS | Revenue ÷ advertising costs | Revenue per euro spent on advertising |
Example: two campaigns each have a CPO of €25. With an average basket of €50, the CRR is 50%; with an average basket of €200, it is 12.5%. The same CPO can therefore mean very different profitability.
What CPO can you afford?
There is no generally good CPO. The upper limit is your contribution margin per order, meaning what is left of the basket value after cost of goods, shipping, payment fees and returns, before advertising costs:
Break-even CPO = average basket value × contribution margin in per cent
Worked example: with an average basket of €80 and a contribution margin of 35%, €28 per order remains. A CPO of €25 leaves €3 profit; a CPO of €30 turns every order into a loss.
For new customers, a higher CPO can be acceptable if they come back. In that case, calculate with the customer lifetime value (CLV), the value of all orders from one customer. This calculation needs reliable data on repeat purchases.
CPO in affiliate marketing
In affiliate marketing, CPO is the usual commission model for online shops: the shop pays the publisher a commission for every order placed via their link, usually as a percentage of the order value and sometimes as a fixed amount. The risk for the shop is lower than with click or reach models, because only orders are paid for.
Before payout, the shop validates the orders in the network. Cancelled or returned orders are usually not paid. To get the true CPO, add the network fees and the agency fee to the commission.
How to lower your CPO
- Increase the conversion rate: with the same click costs, CPO falls when more visits lead to an order. Fast product pages, clear shipping costs and a short checkout all help.
- Allocate budget by CPO per channel: compare campaigns, ad groups and partners using the same calculation and shift budget to the cheaper ones.
- Improve your product data: for Shopping ads, the feed helps determine which searches a product appears for. Precise titles and attributes bring more relevant clicks.
- Record orders reliably: if orders are missing from conversion tracking, your CPO looks too high and bid strategies steer in the wrong direction.
CPO calculator
Enter your advertising costs and the number of valid orders for the same period. The calculator shows your average CPO.
