Lifetime value and the CAC:LTV ratio
Lifetime value is what an average client spends with you over the life of the relationship — the number that tells you whether a CAC is expensive or a bargain. Healthy sits between 1:3 and 1:5. Below 1:3 you are likely losing money on that client or service line; above 1:5 you are under-spending — a money-printing machine you have not fed. And remember there are two words in loss leader: the loss and the leader. Lose money up front only if the follow-on actually comes.