Therefore, a higher MER is expected — anything around 5.0 or above is considered good. That means ad spend equals 20 percent or less of total revenue. MER is also easy to calculate for different e-commerce periods — revenue generated in the last three months, last six months, etc.
Generally, for ecommerce and consumer products businesses selling online, a good gross margin falls between 40 to 80%. This range depends on your manufacturing costs, product type, and business model. At a minimum, aim for a 40% gross margin.
Generally, you want to aim for a MER that's higher than 1, which demonstrates that the revenue generated from marketing activities is greater than the cost of those activities.
Marketing efficiency ratio measures the overall performance of your digital marketing efforts: Total revenue divided by total spend. Also known as marketing efficiency rating, media efficiency ratio, blended ROAS, or “ecosystem” ROAS, MER is a North Star metric.
In Canada, a good MER for an exchange traded fund (ETF) is usually around 0.25% to 0.75%. A MER above 1.5% is usually considered high, and some MERs are higher than 3%.
The average ecommerce return rates hovers around 20-30% There are predictable and common reasons for returns, such as: sizing issues, wrong gifts, purchase of multiple products with an intent to return some/all, or a failure to set correct customer expectations.
In summary, if you're paying for an actively managed fund at a bank branch where you receive support from a financial advisor or planner, you can expect to pay an MER of 1.8% or more. If you open a brokerage account and invest directly in a passively managed ETF, you can expect to pay an MER of roughly 0.25%.
First thing's first: there is no such thing as a universally “good” MER. Although it's common to see a 3x MER referenced as “good” (likely a carryover of the 3x benchmark for LTV to CAC Ratio), a good MER is entirely dependent on your business size, what you're selling, your strategy, and your profitability goals.
Key Differences: While MER offers a broad perspective on marketing effectiveness, ROAS provides a more granular analysis of individual campaign performance. MER supports long-term planning and strategic adjustments, whereas ROAS aids in refining specific campaigns.
According to Shopify, the average e-commerce profit margin is 10%. A high profit margin would be around 20%, while 5% is usually considered low. Of course, the average profit margin can also differ greatly based on your industry and business model, including your: Niche.
A Good Gross Profit Margin is around 30 – 35% on average, but varies widely by industry.
Typically, most resellers aim for a 50% margin, which means that they want to make a 50% profit on each item they sell. For example, suppose you find a product that you can buy for $10. If you want to make a 50% profit on that product, you would add your costs and then multiply the total by 1.5.
mer = Total sales revenue (over Specific time) / Total MARKETING spend (over the same period, across all channels)
Investors should look for a high ratio. The Earnings Yield ratio of 4% or higher is considered good.
As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin. But a one-size-fits-all approach isn't the best way to set goals for your business profitability. First, some companies are inherently high-margin or low-margin ventures.
The total percentage of the MER may depend on factors such as the size and success of the fund. The fee typically falls somewhere between 0.5% and 2% of the invested assets. The figure is taken from the final total of each fund's assets under management (AUM).
Marketing Efficiency Ratio (MER) is calculated by taking total revenue derived from marketing, and dividing it by your total marketing spend over any given time frame. It is the same thing as eROAS in the 3 ROAS to Rule Them All.
Quick Guide: Understanding E-commerce MER KPI
MER: Marketing Efficiency Ratio. Formula: Total Revenue / Total Marketing Spend. Good MER: 5.0 or above, indicating ad spend is 20% or less of total revenue. Purpose: Measures overall performance of digital marketing efforts across all channels.
Understanding Management Fees
Management fees can also cover expenses involved with managing a portfolio, such as fund operations and administrative costs. The management fee varies but usually ranges anywhere from 0.20% to 2.00%, depending on factors such as management style and size of the investment.
A DSCR of at least 2.00 is typically considered to be very strong even though there's no industry standard. It shows that a company can cover two times its debt. Many lenders will set minimum DSCR requirements of 1.2 to 1.25.
Typically, the average P/E ratio is around 20 to 25. Anything below that would be considered a good price-to-earnings ratio, whereas anything above that would be a worse P/E ratio. But it doesn't stop there, as different industries can have different average P/E ratios.
However, a good ROI for ecommerce is generally considered to be at least 5:1 or 500%. In other words, for every dollar invested in your ecommerce activities, you should aim to generate at least $5 in revenue. It's important to note that what constitutes a “good” ROI can differ among businesses.
While it is good to know the average bounce rate in your industry, it's arguably more important to ask, “What is a good bounce rate for ecommerce?” While the precise answer to that question will vary depending on your niche, a rate between 20% and 45% is generally considered to be a good benchmark range for ecommerce.
Although benchmarks vary from company to company, most ecommerce businesses have 25-30% percent returning customers. This is backed up by Alex Schultz, VP of Growth at Facebook who says, “If you can get 20-30% of customers coming back every month and making a purchase from your store, you should do pretty well”.