It depends...
First how long you plan to stay at the tier... For example a tier 2 or 3 player "run" through the tier and thus there is no need to spend too many gold to his mercs since soon he will have access to better ones.
But if you are tier 4 or tier 5 you can/should equip well your mercs, since you will stay for a long time (aka many battles) and they will need armor & damage to win some hard battles. After all these battles you will certainly have the feeling that they paid off their equipment. And at this tier when the entire team dies will cost 45-60k gold for healers and not to mention your equipment repair cost... (Note: mercs equipment don't lose durability). So you don't want them to die.
The second you have to look it's the use of the mercs. If you want a damager you should invest time to find him proper equipment adding dexterity and strength bonuses. But if you want "meat tank" a merc with taunt heavy shield, good armor and block bonuses is perfect. In general buy equipment helping the role you think your merc plays at the battle. Sometimes it's preferable a legendary helmet with bonus there you want than a helmet with less bonus at wanted attribute and other (useless) bonuses.
For example me:
I have hired total 21 mercs and i am tier 5 player. At the first tiers i wasn't spent much to their equipment coz i was trying "party formations" and changed them often. But at tier 4 and 5 i choose 5 (per tier) and i didn't changed them. Then i equipped them the best i could. At tier 4 they where with legendary armors and epic weapons my damagers and with epic armors and legendary weapons my defenders. At tier 5 i spend more money and i bought many sets... All my team is equipped with sets. It was an relative expensive choice for the bonuses i got... At the tier 6 i am planning to change at full epic build... even if it take some time to find and equip the proper mercs... (Note: no merc under x8 level)
