If a customer is worth £180 and costs £60 to acquire, growth is an investment. Reverse those and growth is how you go bust faster.
What one customer is worth versus what one costs to get. If the first is bigger, spending more is investing; if not, growth just burns money faster.
It's the number that decides whether more marketing is a good idea, and the blended average hides the channels where it isn't.
Unit economics reduce the business to one customer. Lifetime value is the gross profit that customer will generate before they leave; customer acquisition cost is the fully-loaded spend to get them. The ratio tells you whether spending more on acquisition creates or destroys value, and the payback period — how many months until the customer has repaid their acquisition cost — tells you whether you can afford to wait, which is often the more binding constraint because it is about cash rather than eventual profit.
LTV is expected gross profit per customer over their lifetime; CAC is the fully-loaded cost to acquire one. LTV/CAC above roughly 3 with payback under about 12 months is the conventional healthy zone. Both are estimates whose assumptions dominate: use gross margin not revenue, include all acquisition costs, and compute them per channel and per cohort, because the blended average hides everything.
SaaS Metrics Explained: MRR, ARR, Churn, LTV & CAC | Product Management for Beginners — CodeLucky, 5:05