{
  "slug": "mer-roas-breakeven-calculator",
  "title": "MER & Blended ROAS Breakeven Calculator",
  "heading": "MER / ROAS Breakeven Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/mer-roas-breakeven-calculator",
  "summary": "Find the marketing efficiency ratio where ad spend stops being profitable.",
  "description": "Marketing efficiency ratio (MER) — total revenue divided by total marketing spend — is the top-line health check most e-commerce and DTC operators watch daily because it's immune to attribution gaming across channels. This calculator works out the breakeven MER for your business given gross margin, fixed overhead you need spend to cover, and a target profit margin, then compares it to your current MER to show exactly how much room (or how much of a hole) you're in. Breakeven MER is simply 1 ÷ contribution margin: at a 40% gross margin, you need at least $2.50 of revenue per $1 of spend just to cover the cost of goods, before touching fixed costs or profit. Add a required contribution toward fixed costs and a target profit, and the true breakeven MER climbs further. This is the same math as breakeven ROAS applied at the whole-account level instead of per-channel, which matters because per-channel ROAS numbers get inflated by cross-channel attribution overlap while total revenue over total spend cannot be gamed the same way.",
  "formula": "Breakeven MER = 1 ÷ gross margin; Target MER = (fixed cost allocation + target profit + COGS) ÷ revenue, solved as 1 ÷ (margin − fixed% − profit%).",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=mer-roas-breakeven-calculator",
  "inputs": [
    {
      "id": "grossMargin",
      "label": "Gross margin",
      "kind": "number",
      "hint": null,
      "default": 55,
      "unit": "%",
      "min": 1,
      "max": 99
    },
    {
      "id": "fixedPctRevenue",
      "label": "Non-marketing fixed costs as % of revenue",
      "kind": "number",
      "hint": null,
      "default": 15,
      "unit": "%",
      "min": 0,
      "max": 90
    },
    {
      "id": "targetProfitPct",
      "label": "Target profit margin",
      "kind": "number",
      "hint": null,
      "default": 10,
      "unit": "%",
      "min": 0,
      "max": 90
    },
    {
      "id": "currentRevenue",
      "label": "Current monthly revenue",
      "kind": "number",
      "hint": null,
      "default": 400000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "currentSpend",
      "label": "Current monthly marketing spend",
      "kind": "number",
      "hint": null,
      "default": 90000,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "targetMer",
      "label": "Target MER for your profit goal",
      "format": "decimal",
      "hint": null,
      "primary": true
    },
    {
      "id": "currentMer",
      "label": "Current MER",
      "format": "decimal",
      "hint": null,
      "primary": false
    },
    {
      "id": "breakEvenMer",
      "label": "Pure breakeven MER (margin only)",
      "format": "decimal",
      "hint": null,
      "primary": false
    },
    {
      "id": "gapPct",
      "label": "Current vs. target gap",
      "format": "percent",
      "hint": null,
      "primary": false
    },
    {
      "id": "maxSpendAtTarget",
      "label": "Max monthly spend to hit target MER",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Gross margin: 55 %",
      "Non-marketing fixed costs as % of revenue: 15 %",
      "Target profit margin: 10 %",
      "Current monthly revenue: 400000 $",
      "Current monthly marketing spend: 90000 $"
    ],
    "outputs": [
      "Target MER for your profit goal: 3.33",
      "Current MER: 4.44",
      "Pure breakeven MER (margin only): 1.82",
      "Current vs. target gap: 33.3%",
      "Max monthly spend to hit target MER: $120,000"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter gross margin (%).",
      "Enter non-marketing fixed costs as % of revenue (%).",
      "Enter target profit margin (%).",
      "Enter current monthly revenue ($).",
      "Enter current monthly marketing spend ($).",
      "Read your target mer for your profit goal on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "grossMargin": 33,
        "fixedPctRevenue": 9,
        "targetProfitPct": 6,
        "currentRevenue": 240000,
        "currentSpend": 54000
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "grossMargin": 55,
        "fixedPctRevenue": 15,
        "targetProfitPct": 10,
        "currentRevenue": 400000,
        "currentSpend": 90000
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "grossMargin": 88,
        "fixedPctRevenue": 24,
        "targetProfitPct": 16,
        "currentRevenue": 640000,
        "currentSpend": 144000
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How is MER different from ROAS?",
      "a": "ROAS is usually measured per channel or per campaign using platform attribution, which double-counts conversions that touched multiple ads. MER is total revenue over total spend across the whole business, so it can't be inflated by attribution overlap — it's the number that reconciles with your P&L."
    },
    {
      "q": "Why would target MER be higher than breakeven MER?",
      "a": "Breakeven MER only covers cost of goods sold. Once you add rent, salaries, software, and the profit margin ownership actually wants, the true number you need to hit is meaningfully higher than the point where you're merely not losing money on the goods themselves."
    },
    {
      "q": "What if my current MER is below breakeven?",
      "a": "You're losing money on marketing-driven revenue even before overhead, which usually means either your paid channels are inefficient, your creative/targeting has drifted, or you're chasing volume at the expense of margin through heavy discounting. Cut spend to the channels and campaigns with the worst MER first."
    },
    {
      "q": "Does this work for subscription or SaaS businesses?",
      "a": "The mechanics work, but use LTV-based margin instead of first-order gross margin, since a lot of subscription profit comes from renewals, not the first transaction. Pair this with a CAC payback period calculation for a fuller picture."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/paid-vs-blended-cac-decomposition",
    "https://www.revenuelab.fyi/toolbox/marketing-budget-payback-allocator"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — MER & Blended ROAS Breakeven Calculator (https://www.revenuelab.fyi/toolbox/mer-roas-breakeven-calculator)"
}