MER vs ROAS for a small UK Shopify shop, with VAT in the sums

ROAS is the revenue one ad platform credits to its own ads, divided by what you spent on that platform. MER, the marketing efficiency ratio, is your shop's revenue divided by everything you spent on marketing, so a small shop should run the business on MER and use ROAS to compare ads inside one platform.

The guides that rank for MER vs ROAS are mostly written in dollars and rarely mention sales tax. A UK shop has two more decisions to make before either number means anything: which Shopify sales figure goes on top of the ratio, and what to do about VAT.

MER vs ROAS: the two formulas

• ROAS equals the revenue a platform attributes to its ads, divided by your spend on that platform.
• MER equals your shop's revenue for a period, divided by your total marketing spend for the same period.

The two disagree because each platform counts sales inside its own attribution window. On Meta, the default setting for conversion ad sets is 7-day click-through, 1-day engage-through and 1-day view-through, according to Jon Loomer's March 2026 guide to Meta attribution. Klaviyo's default window is 5 days for email and SMS, and it counts a conversion when someone opened or clicked the message (Klaviyo Help Center).

One order can sit inside several of those windows at once. Meta, Google and your email platform can all claim it, while your shop counted it once. Add up every platform's revenue and you get a figure larger than your takings. MER starts from the shop, so overlapping claims cannot inflate it. We covered the wider 2026 attribution changes in the 2026 attribution reset.

Which Shopify figure goes on top

Shopify's sales reports use three figures that are easy to mix up (Shopify Help Center, sales reports):

• Gross sales: product price times quantity, before taxes, shipping, discounts and sales reversals.
• Net sales: gross sales minus discounts and sales reversals.
• Total sales: net sales plus taxes, duties, shipping charges and fees.

Use net sales for MER. Total sales includes the VAT you collect for HMRC and the postage customers paid you to pass on to the carrier, and your marketing earned neither of those.

The VAT trap, in numbers

The standard VAT rate is 20% (GOV.UK VAT rates). Take a VAT-registered body-jewellery shop with a month of £10,000 net sales, £2,000 of VAT and £400 of shipping charges, so £12,400 of total sales. It spent £2,000 on ads that month.

• MER on net sales: £10,000 divided by £2,000 is 5.0.
• MER on total sales: £12,400 divided by £2,000 is 6.2.

The gap of 1.2 is tax and postage. If you set a target on one figure and track it on the other, you can hit the target without selling one extra item. Check which order value your ad platforms receive from the shop as well. If a platform is sent the order total with VAT and shipping, its ROAS is inflated in the same way.

What counts as total marketing spend

Be generous on the bottom of the ratio, or MER will flatter you. Include:

• Every ad platform you pay, such as Meta, Google, TikTok and Amazon Ads.
• Monthly fees for your email and SMS tools.
• Influencer fees, gifted stock at cost, and affiliate commission.
• Freelancer or agency fees for marketing work.

If you also sell on Amazon, decide where Amazon belongs before you start. Amazon orders usually sit in Seller Central, outside your Shopify net sales, so putting Amazon Ads spend under Shopify revenue makes your MER look worse than it is. Either add Amazon sales to the top and Amazon Ads to the bottom, or keep a separate Amazon ratio and leave both out of the shop figure. Mixing in one side without the other is an easy way to end up with an MER that means nothing.

Leave discount codes out of spend. Shopify has already taken discounts off net sales, so adding them to spend would count them twice. If you reclaim the VAT on these invoices, use the amounts before VAT, so neither side of the ratio includes tax.

Find your breakeven MER from your margin

An MER that makes one shop money can lose money for another, because the right level depends on margin. Work out your contribution margin before marketing: net sales minus product cost, payment fees, and the packaging and postage you pay, all divided by net sales. Breakeven MER is 1 divided by that margin.

Back to the example shop. £10,000 of net sales, less £3,000 of product cost, £250 of payment fees and £650 of packaging and postage, leaves £6,100, a 61% contribution margin. Breakeven MER is 1 divided by 0.61, about 1.64. Below that, each £1 of marketing brings in less contribution than it costs.

At an MER of 5.0, each £1 of marketing brought in £5 of net sales and about £3.05 of contribution, so the £2,000 of ads left £4,100 towards rent, wages and profit. If fixed costs run at £2,500 a month, the month made £1,600. Breakeven only covers the marketing itself, so set your working target well above it.

How to use each number week to week

• Track MER daily or weekly against the same period last month or last year, always using net sales and full spend.
• Use ROAS inside one platform, to compare campaigns or ad sets that share the same attribution setting.
• Never add ROAS figures from different platforms together, and do not compare Meta's ROAS with Google's as if they counted sales the same way.
• When MER falls, check net sales first and spend second, before you blame any single channel.

A falling MER with steady spend means the shop sold less. A falling MER with rising spend means sales did not grow as fast as spend, and the platform whose spend grew fastest is the first place to look.

Read both sides every morning

BriefSieve puts the two sides of the ratio in one place. Its Ads section shows spend, ROAS and reach across Meta, Google and TikTok, and its Sales section shows orders, revenue and trends pulled from your storefront. Each morning the AI Guru writes a plain-English brief of what changed. Code computes every figure, and the Guru explains them, cites the sync each came from and is never allowed to do the arithmetic.

Plans start at £29 a month excluding VAT, and the 15-day trial covers two integrations with no card needed. Connect Shopify and your biggest ad account, the two sources this ratio needs, and start the BriefSieve free trial at mypa.services, where the app appears as VirtualPA. For the rest of a ten-minute morning read, see our guide to a marketing dashboard for small business.