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Total revenue ÷ total marketing spend: the revenue each €1.00 of marketing brings, across every channel. Decision: whether total marketing spend can grow, read against 1 ÷ your margin.
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MER and nCAC calculator
This calculator turns your account totals into your marketing efficiency ratio (MER) and your new customer acquisition cost (nCAC). It also gives blended ROAS and cost per order, and, with a contribution margin, first-order profit and marketing ROI.
Your results
A first order covers its nCAC, with €36.00 left over.
- MER
- 5
- Total revenue ÷ total marketing spend
- nCAC
- €64.00
- Ad spend ÷ new customers
- Blended ROAS
- 6.25
- Total revenue ÷ ad spend
- Cost per order
- €40.00
- Ad spend ÷ orders
With a contribution margin
- First-order profit
- €100.00
- Average order value × contribution margin
- First-order profit minus nCAC
- €36.00
- First-order profit − nCAC
- Marketing ROI
- 100%
- (Revenue excl. VAT × margin − marketing spend) ÷ marketing spend
- Revenue excl. VAT
- €50,000.00
- Average order value (excl. VAT)
- €250.00
MER and blended ROAS use revenue as entered, the basis of your ad platform. Profit and ROI use revenue excl. VAT, so enter your VAT rate if revenue includes it.
The start values are illustrative data.
How it works
Every step behind the numbers, worked through for the start values.
Illustrative data. An example shop made €50,000.00 revenue (excl. VAT, so the VAT rate is 0%) from 200 orders, 125 of them from new customers. It spent €10,000.00 on marketing, of which €8,000.00 was ad spend. Its contribution margin is 40%.
| Step | Calculation | Result |
|---|---|---|
| MER | €50,000.00 ÷ €10,000.00 | 5 |
| Blended ROAS | €50,000.00 ÷ €8,000.00 | 6.25 |
| Cost per order | €8,000.00 ÷ 200 orders | €40.00 |
| nCAC | €8,000.00 ÷ 125 new customers | €64.00 |
| Average order value | €50,000.00 ÷ 200 orders | €250.00 |
| First-order profit | €250.00 × 40% | €100.00 |
| First-order profit minus nCAC | €100.00 − €64.00 | €36.00 |
| Marketing ROI | (€50,000.00 × 40% − €10,000.00) ÷ €10,000.00 | 100% |
Every €1.00 of marketing brought €5.00 of revenue. A new customer cost €64.00 in ads and a first order earns €100.00 of profit, so €36.00 is left after winning the customer. After product costs, the €10,000.00 of marketing earned €10,000.00 on top of its own cost: a marketing ROI of 100%.
What each number means
Six numbers, and the decision each one informs.
Blended ROAS
Total revenue ÷ ad spend. Read it next to the ROAS your ad platform reports. Decision: whether ad spend is keeping pace with revenue.
Cost per order
Ad spend ÷ orders, new and returning together. Decision: whether an average order earns more than its ads cost.
nCAC
Ad spend ÷ new customers: what winning one new customer costs in ads. Decision: how much a new customer may cost before acquisition stops paying.
First-order profit minus nCAC
Average order value × margin, minus nCAC. Positive means a new customer pays for itself on the first order. Decision: how much repeat buying a push for new customers relies on.
Marketing ROI
(Revenue excl. VAT × margin − marketing spend) ÷ marketing spend. 0% is break-even. Decision: whether to increase or lower the marketing budget.
This calculator works on account totals. Product Metrics shows nCAC per product and as an average.
Limits
What MER cannot tell you, and what to read next to it.
Which channel works
MER blends every channel. Use channel and campaign ROAS to decide where to increase or lower priority.
Which products earn their spend
An account-wide ratio hides products that lose money. Margins differ per product, and so does the return that pays for them.
New or returning
A healthy MER can come from repeat buyers while new customers dry up. Read it together with nCAC.
How accurate the inputs are
Product Metrics is not an attribution tool. Every number here depends on the orders and new customers your shop and ad platform recorded.
MER and nCAC questions, answered.
What is a good MER?
There is no universal number: it depends on your margin. Marketing pays for itself when MER reaches 1 ÷ your contribution margin, with revenue excl. VAT. That is a MER of 2.5 at a 40% margin and 4 at 25%. A good MER is above that line by enough to cover fixed costs and the profit you want to keep: at a 40% margin, a MER of 5 spends 20% of revenue on marketing and leaves 20% before fixed costs.
What is the difference between MER and ROAS?
ROAS divides the revenue an ad platform credits to its ads by the ad spend. MER divides all revenue by all marketing spend, whatever drove it. In the example, blended ROAS (total revenue ÷ ad spend) is 6.25 and MER is 5, because MER also counts the €2,000.00 of marketing that is not ad spend.
How do you calculate nCAC?
Divide ad spend by new customers: €8,000.00 ÷ 125 = €64.00. Count only customers who had not bought before. Then compare it with the profit on a first order: with an average order of €250.00 and a 40% margin that is €100.00, so €36.00 is left after nCAC.
Is marketing ROI the same as ROAS?
No. ROAS is revenue ÷ ad spend and leaves product cost out. Marketing ROI is profit after product cost ÷ marketing spend. The same MER of 5 is a marketing ROI of 100% at a 40% margin and 0% at a 20% margin.
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