Unlock Profitability with our Free Breakeven MER Calculator: Find the Minimum Expense Ratio to Turn Your Facebook, Google, and TikTok Ads into Profit!
Why is it important?
Marketing Efficiency Ratio, commonly known as MER, is a key metric for e-commerce stores aiming to gauge the overall efficiency of their marketing investments. Achieving a breakeven MER means that the net revenue generated by the store matches its overall marketing spend. At this point, the store is neither losing money on its marketing efforts nor gaining a profit from them. Reaching the breakeven MER is a critical milestone as it indicates that the store’s marketing investment is paying for itself.
How is it calculated?
The breakeven MER for an e-commerce store is determined by dividing the total marketing costs by the total revenue generated from those efforts.
The formula is: Gross Profit/ Total Revenue = Breakeven MER
For example, if an e-commerce store has net revenue of €10,000 and total marketing costs of €6,000, the breakeven MER would be 0.4. To ensure that the store is making a gross profit, it’s crucial to maintain an MER above this breakeven point.