Free tool · Ecommerce metrics
MER vs ROAS: what MER tells you, and your break-even and target MER
MER vs ROAS comes down to one question: whose numbers do you trust? MER, the marketing efficiency ratio, is total revenue divided by total marketing spend, and no ad platform can inflate it. The calculator also shows the MER you need to break even this month and to hit your profit goal.
Break-even MER
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Your MER
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Target MER
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Revenue to break even
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MER vs ROAS: what's the difference?
MER = total revenue ÷ total marketing spend
Every platform calculates ROAS on its own, using the sales it claims. The catch is that platforms overlap: the same customer sees an Instagram ad, searches your brand on Google and buys. Meta and Google both count the sale, and their reports added together can exceed your real revenue.
MER starts from your store's revenue, the number in Shopify, and divides it by everything you spend on marketing. Blended ROAS is the same idea limited to ad spend.
How do you calculate break-even MER?
The margin left on revenue has to cover two things: marketing spend and fixed costs. The revenue you need to break even is marketing plus fixed costs, divided by margin; divide that by marketing spend and you have a MER.
Break-even MER = (marketing spend + fixed costs) ÷ (margin × marketing spend)
Target MER = (marketing spend + fixed costs + profit goal) ÷ (margin × marketing spend)
Here's the example the calculator starts with, one month before sales tax:
| Month | |
|---|---|
| Revenue | $50,000 |
| Marketing spend | $12,000 |
| Margin before marketing (45%) | $22,500 |
| Fixed costs | $8,000 |
| Profit this month | $2,500 |
| Current MER | 50,000 ÷ 12,000 = 4.17 |
| Break-even MER | 20,000 ÷ 5,400 = 3.70 |
| Revenue to break even | 20,000 ÷ 0.45 = $44,444 |
| Target MER for $3,000 profit | 23,000 ÷ 5,400 = 4.26 |
One thing that surprises many founders: break-even MER depends on how much you spend. Raise the budget and fixed costs weigh less on each dollar, so the minimum MER drops, but you need more revenue in absolute terms.
MER, break-even ROAS and CAC: when to use which
- Break-even ROAS: for a single order or campaign, in the break-even ROAS calculator.
- Cost per purchase and CAC: what a customer costs you, starting from CPM and CTR, in the CAC calculator.
- Break-even MER: whether the month, fixed costs included, ends in profit.
- Target MER: to plan budgets around the profit you want.
What is a good MER for ecommerce?
There's no good MER for everyone. A store with high margins and few fixed costs can make money at a MER of 3; one with thin margins and a big team can lose money at 5. A good MER is one above your break-even MER, and the gap between them is your profit. It's also the second number in the 6-number weekly scorecard.
If you'd like this view built on your store's real numbers, that's what I do as an ecommerce consultant. Every metric is explained in the ecommerce KPIs glossary.
FAQ
MER: frequently asked questions
What is MER in marketing?
MER stands for marketing efficiency ratio: your store's total revenue divided by total marketing spend in the same period. A MER of 4 means every marketing dollar goes with four dollars of sales.
MER vs ROAS: what's the difference?
ROAS measures a campaign or a platform using the sales that platform claims. MER looks at your store's total, so no platform can inflate it.
What is blended ROAS?
The same idea as MER, limited to advertising: total revenue divided by ad spend across all channels. Many people use it as a synonym for MER.
Should MER include sales tax?
No. Use revenue before sales tax so it matches your margin. Whatever you choose, calculate break-even MER on the same revenue.
How often should I check MER?
The trend every week, to catch drops early. The comparison with break-even MER every month, once you know your fixed costs.
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