MER calculator

How it is worked out

• MER = total store revenue divided by total ad spend, all platforms together.
• Break-even MER = 1 divided by your margin. At a 40% margin it is 2.50.
• Left after ads = revenue times margin, minus ad spend.

Example: a $60,000 month

• $60,000 in store revenue on $15,000 of ads is a MER of 4.00.
• At a 40% margin the month makes $24,000 before ads. After ads, $9,000 is left for staff, rent and apps.
• Break-even MER is 2.50. At this revenue, ad spend above $24,000 uses up the whole margin before staff and rent are paid.

Questions

How do you calculate marketing efficiency ratio (MER)?

• MER = total store revenue divided by total ad spend, all platforms.
• $60,000 in revenue on $15,000 of ads is an MER of 4.00.

What is the difference between MER and ROAS?

• ROAS is what one ad platform says its ads brought in.
• MER uses your store's total revenue and all ad spend, so a sale two platforms both claim is only counted once.

What is a good MER?

• Comfortably above your break-even MER, so enough is left for staff, rent and apps.
• At a 40% margin break-even is 2.50, so aim for about 3 or more. At a 60% margin break-even is 1.67.

Does MER include returning customers?

• Yes. It uses all revenue, so MER can look healthy while new customers cost too much.
• Check that with the CAC calculator.