Set a first-order target CPA from contribution
By Drizzle team
1 min read
A target CPA should leave room for the product costs you actually pay.
Start with net revenue
Use the average order after discounts and expected refunds. Subtract product and fulfillment costs. Then decide the contribution to retain.
Calculate the ceiling
The remainder is a planning acquisition allowance for one order. Try different reserves in the target CPA planner.
Handle repeat value separately
A lifetime-value argument needs a real cohort, retention period, and margin. Do not lift a target because future purchases merely seem likely.
A worked example
A pouch sells for $60 net after discount. Product and fulfillment costs total $30, and the seller wants $10 contribution before overhead. That leaves a $20 planning CPA ceiling on the first order. If observed purchase CPA is $27, the issue may involve conversion, price, or costs; changing the hook alone will not restore the missing margin.
Decision check
Keep the numerator, denominator, date range, currency, and attribution definition with every reported result. A metric describes one part of the shopper path; compare it with visits, purchases, and order contribution before changing the creative or budget. State what the observation cannot establish.