MER target calculator
Platform ROAS tells you whether a campaign covers its own orders. MER tells you whether the business covers its costs. Enter your monthly P&L and get the MER that breaks even, the MER that hits your profit target, and the ad budget each allows.
Revenue is held at the level you entered. MER counts all revenue against all ad spend, so it answers how much advertising this month can afford, not how much revenue more spend would buy.
The math is the easy part.
The calculator gives you the number. We send what moves the inputs — from accounts we run every day.
How target MER is calculated
Revenue times contribution margin is what the month earns before advertising. Fixed costs come out of that, then the profit you want to keep. Whatever is left is the most you can spend on ads. Dividing revenue by that budget gives the MER you need.
contribution before ads = revenue × margin
max ad spend at breakeven = contribution − fixed costs
max ad spend at target = contribution − fixed costs − target profit
breakeven MER = revenue ÷ max ad spend at breakeven
target MER = revenue ÷ max ad spend at target
breakeven ROAS = 1 ÷ marginA worked case: $100,000 of revenue at a 40% margin earns $40,000 before ads. With $10,000 of fixed costs, you can spend $30,000 on ads and break even, a breakeven MER of 3.33. To keep $10,000 of profit, ads can take $20,000, so the target MER is 5.0. Breakeven ROAS is 2.5, well below either, because it does not carry any fixed costs.
Why breakeven ROAS is not enough
A campaign at 2.6 ROAS on a 40% margin clears breakeven ROAS. If every campaign ran there, the business would still lose money, because nothing is left over for payroll and rent. Breakeven ROAS is the floor for a single order. Target MER is the floor for the company.
That is why the two numbers should live on the same page of any monthly review. Platform ROAS tells you which campaigns to fund. MER tells you whether the total you are funding leaves the business where you want it.
The assumption to keep in mind
Revenue is held at the level you enter. In practice, cutting ad spend to raise MER also cuts some revenue, and raising spend adds some. Use this calculator to set the ceiling for a month you have already forecast, then use the peak season budget planner or the ecommerce growth milestone planner when the question is how revenue responds to spend.
What is MER?
MER, or marketing efficiency ratio, is total revenue divided by total ad spend across every channel. It does not care which platform claims the sale, which makes it the number the P&L actually feels. A 4.0 MER means every dollar of advertising came with four dollars of revenue from all sources.
What is the difference between breakeven MER and breakeven ROAS?
Breakeven ROAS is 1 divided by contribution margin. It answers whether an order pays for its own advertising. Breakeven MER also has to cover fixed costs: payroll, rent, software, agency fees. So breakeven MER always sits at or above breakeven ROAS, and the gap widens as fixed costs take a bigger share of revenue.
How do I set a target MER?
Decide the profit you want left at the end of the month, then work back. Revenue times margin is your contribution. Subtract fixed costs and target profit, and what remains is the most you can spend on ads. Revenue divided by that figure is your target MER. If the figure is zero or negative, no MER works at this revenue and the fix is margin, fixed costs, or the target itself.
Does a higher MER always mean a better month?
No. You can raise MER by cutting spend, and profit can fall if the spend you cut was bringing in new customers above breakeven. MER is a ceiling check on total advertising, not a growth plan. Use it alongside new-customer numbers, not in place of them.
Why does the calculator hold revenue fixed?
Because the question it answers is what this month can afford. Revenue moves when spend moves, and the size of that move depends on your market and your channels. To model how revenue responds to more spend, use the peak season budget planner, which builds in diminishing returns.
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