Cost per Order (CPO): Definition + Calculation & Examples

What is the cost per order?

The billing model CPO (Cost per Order) describes the costs that arise as part of online marketing measures to generate orders. In affiliate marketing, this billing model is a widespread way of paying your partner a commission based on the CPO. The affiliate integrates a banner into its website, as soon as a user uses this to access the publisher's online shop, for example, and places an order there, the affiliate receives a CPO as a fixed value or %. “Cost per sale” is also a synonym.

How is the CPO calculated?

The total cost of the promotion divided by the number of orders:

However, the CPO does not represent a company's profit, it is much more used to measure the effectiveness of your advertising campaign. When calculating the CPO, also consider factors such as returns, shipping costs, and other factors that can affect your CPO. The higher your margin, the higher CPO you can pay out to your advertising partner.

Examples of CPOs

Your advertising can be integrated in various ways, e.g

The partner integrates these accordingly on his website and refers to your product or your specific product. Amazon has also been able to set up an attractive partner program with the help of numerous affiliates, in which the affiliates receive a commission through mediation based on the cost per order.

Benefits Cost per order

The CPO model is a planning-safe billing model for the advertiser. He can pay out clearly calculated commissions and thus generate relevant traffic for his website. He only has to pay a commission if he is successful

Disadvantage of the cost per order

It is important for the affiliate that the website that is being promoted is suitably well optimized. One speaks here of conversion optimization , ie to achieve the best possible number of customers from the generated traffic.

Conclusion on the cost per order

For advertisers, the cost per order (CPO) model is a safe way to scale their sales accordingly. However, it is important to monitor the current shopping carts, returns and the resulting margins in order to calculate your commissions and marketing costs as effectively as possible. You should also work on your website to achieve the best possible conversion rate , otherwise affiliates will drop out as partners if the result rate is poor.