The formulas are fine. Its the equipment bug that is killing things.
Right now the game is all about numbers. Everybody equips as many peasants as they possibly can and usually whoever has the most peasants wins.
Fix it so that you don't lose equipment you are wearing at the end of the battle and we will see smaller forces of heavily armed troops carve up even substantially larger lightly armed caravans. Personally I would also like to see the winner recover around 10% - 20% of the equipment lost in a battle as well, with the option to drop whatever you don't want. Not everything is going to be unusable just because someone died in it and this way bandits will be able to maximize their gear after every fight, discarding the lower value equipment.
On top of this I would like to see every troop able to carry 1 item of goods each without it being in a crate (just like weapons). So each troop can carry armour, 2 weapons and 1 item of goods. This will enable better hit and run tactics with excess goods being dropped in favour of smaller but safer profits. This will require the ability to drop a certain number of goods instead of just all of them
Next, there needs to be a "no quarter" button for every character. If this button is ticked then it forces a battle no matter what, however the default setting for this will be to have the button unticked in which case the defender will be able to simply surrender instead of fighting the battle. If the defender chooses to use this option, then the battle will be removed from the main battle list and the defender will give 50% of whatever they are carrying (inc gold but not icluding troops) to the attacker, before being randomly transported as normal across the map. Both the defender and attacker will not be able to move again until the schedueled battle time however to avoid exploits. Doing this should cut out a few of the more pointless fights we are seeing. If you choose to fight and lose then you should lose everything which will encourage people to go for the surrender if offered.
Finally, gold and xp for mercs really does need fixing