# Paying for growth *Track payback, not lifetime value.* --- Your SaaS business is growing 40%. The board wants to see unit economics, so you build the slide. £15,000 ACV. Gross margin of 80% - that's £12,000 of gross profit per customer per year. Your average customer stays about three years. Lifetime value: £36,000. You spent £500k on marketing last year and won a hundred new customers. Acquisition cost: £5,000. £36,000 divided by £5,000. LTV:CAC of just over 7:1. The benchmark is 3:1. You're more than double it. The recommendation writes itself...doesn't it? --- £5,000 is the marketing budget divided by new customers. It's the number marketing reports because it's the number marketing controls. It doesn't include the two account executives who closed the deals — £160k between them. Or the SDR who booked half the meetings — £40k. Or the CRM, the sales tools and the sales enablement and operations teams. Total sales and marketing cost: £1.2m. Same hundred customers. Fully loaded acquisition cost: £12,000. LTV:CAC drops from 7:1 to 3:1. Right at the benchmark. Still green, just. --- Now lifetime value. Three years is the average across your customer base. But your company is four years old. Your earliest customers may not be representative of your most recent wins. Increasingly leads are coming through outbound campaigns and partner referrals, closed with discounts to get over the line. Different acquisition, different fit, different behaviour. Recent cohorts are tracking toward a two-year average life, not three. LTV for the customers you're actually acquiring now: £15,000 × 80% × 2 = £24,000. LTV:CAC: 2:1. --- Now the margin. 80% is gross margin — what the product costs to build and host. It doesn't include what each customer costs to serve. Three people in customer success, sixty days of implementation support per new account, platform costs that scale with the base — all real, all variable, none of it inside gross margin. Contribution margin — everything that varies with each customer, not just what accounting files under cost of goods — is closer to 55%. LTV: £15,000 × 55% × 2 = £16,500. LTV:CAC: 1.4:1. The slide said 7. --- But even before those corrections, the metric was answering the wrong question. LTV:CAC tells you whether a customer will eventually be worth more than they cost. Value collected over years, weighed against a cost paid today. It says nothing about when the cash arrives. Payback does. £15,000 × 55% ÷ 12: about £690 of contribution per customer per month. Acquisition cost: £12,000. £12,000 divided by £690. Eighteen months before that customer pays for themselves. You signed a hundred customers this year. That's £1.2m committed. Growing 40% means another hundred and twenty next year — another £1.4m. The first batch haven't broken even yet. The metric said invest. The bank account says you need a credit facility to fund it. --- But there's a catch. Inbound - content, referrals, word of mouth. Acquisition cost: £4,000. Payback: six months. These customers fund themselves. Outbound - SDR-sourced, conference-generated, partner-referred. Acquisition cost: £20,000. Payback: twenty-nine months. A coin flip whether the customer is still around when you break even. You have one channel that's self-funding and another that consumes capital for two and a half years. LTV:CAC tells you if the economics work in theory. Payback tells you if you survive long enough to find out. ---