Is your Shopify Store Profitable?
Key Performance Indicators Calculator for Shopify Brands - Calculate MER and ROAS
Understanding Key Metrics
ROAS (Return on Ad Spend): Revenue generated per dollar spent on ads.
MER (Marketing Efficiency Ratio): Total revenue divided by total ad spend.
Conversion Rate: Percentage of website visitors who complete a purchase.
Average Order Value (AOV): Revenue divided by the number of orders.
Ad Cost per Purchase: Total ad spend divided by the number of purchases.
Frequently Asked Questions
What is a good ROAS for Shopify stores?
A ROAS of 4:1 (or $4 revenue for every $1 spent on ads) is generally considered good for Shopify stores. However, this can vary by industry and product price point. Luxury or high-ticket items may be profitable with a lower ROAS, while low-margin products might require a higher ROAS to be profitable.
How do I calculate MER for my Shopify store?
Marketing Efficiency Ratio (MER) is calculated by dividing your total revenue by your total marketing spend. For example, if your store generated $100,000 in revenue with $20,000 in marketing spend, your MER would be 5.0. Higher MER values indicate more efficient marketing spend.
How do I check if my Shopify store is profitable?
To check if your Shopify store is profitable, you need to calculate your total revenue minus all expenses (including product costs, marketing spend, platform fees, shipping, etc.). Use this calculator to analyze key metrics like ROAS and MER to evaluate your marketing efficiency. Also track your profit margin percentage (net profit divided by revenue, multiplied by 100) - aim for at least 20-30% for a healthy eCommerce business.
How do I check if my Facebook ads are efficient?
To check if your Facebook ads are efficient, monitor metrics like ROAS (Return on Ad Spend), CPA (Cost Per Acquisition), CTR (Click-Through Rate), and conversion rate. A ROAS above 3-4x is generally considered efficient for most Shopify stores. Also, compare your Facebook ad metrics against your overall marketing efficiency ratio (MER) to ensure your Facebook campaigns are contributing positively to your overall marketing strategy.