The E-commerce Guide to ROAS, MER, CPA and Profit

Start at the top: ROAS is revenue over spend for one campaign. Blended ROAS (a.k.a. MER) is total revenue over total spend across every channel — the honest, lower number. Break-even ROAS is where a campaign covers its costs (1 ÷ contribution margin). CPA is cost per order; break-even CPA is the most you can pay before an order loses money. Profit is what's left.

Each answers a different question, but they all ladder down to the same one: are you spending below break-even, or above it?

Meta, Google, TikTok and Amazon each claim credit for overlapping conversions, so summing their ROAS double-counts sales. A dashboard full of 5× ROAS numbers can hide a blended 2×. Trust blended ROAS / MER for the spend decision, and use per-platform ROAS only to compare campaigns within a channel.

A revenue ROAS target (‘hit 3×’) ignores margin — and a 3× ROAS loses money at a 25% margin. Anchor every target to your break-even ROAS, which comes straight from contribution margin. Above break-even you profit; below it you don't, no matter how good the platform's number looks.

Your contribution before ads is the ceiling on what you can spend and still break even. Work backwards: contribution margin sets break-even ROAS and break-even CPA; those set how aggressively you can bid. Scaling spend only makes sense while your blended ROAS stays above break-even.

Four numbers tell you if yesterday's spend worked: blended ROAS / MER (trend), spend as a share of revenue (rising is a warning), CPA vs break-even CPA, and profit per order. If MER is above break-even and steady, keep going; if it's sliding, find the campaign dragging it before you add budget.