Running a Lemonade Stand
A business sells something people want. A lemonade stand sells cold drinks on hot days.
Cost is what you pay for lemons, sugar and cups. Price is what customers pay you.
Profit is what's left: Price money minus Cost money. If profit is positive, your business is working!
People usually want more cold lemonade on a hot, sunny day than on a cold, rainy day. You will usually sell more lemonade when it is hot and sunny.
If you spend more money than you get from sales, you have a loss. If you spend $4 and get $3 from sales, your profit is $3 minus $4, or negative $1. That means you lost $1.
You, imagine you want to sell drawings you make. The money you spend on paper and crayons is your cost, and the money a friend pays for your art is the price.
Learning objective
Count every batch cost and explain unsold drinks.
Understand the mechanism
A stand needs lemons, sugar and cups before it sells drinks. Money from sales is revenue. What remains after costs is profit.
Making more does not guarantee selling more. If nobody buys the last cups, you still paid to make them. Weather and price affect customers' choices.
Put it to work
Start with a small safe test and count supplies. At a real stand, a grown-up handles permissions, food safety and customer contact. In the game, try a small batch on a rainy day and compare it with a sunny day.
Worked example
- 1
Make ten cups at $0.25 each: costs are $2.50.
- 2
Sell six at $1: revenue is $6. Four cups remain unsold.
- 3
Profit is $6 − $2.50 = $3.50, not $6.
Profit pays for all the cups you made, even ones nobody bought.
Your practice lab
Make eight cups for $2 total. Sell five at $1. What is profit and how many cups remain?
Personal scratchpad · not graded or saved
Maya's Smart Start
Maya wanted to sell lemonade. She asked her mom for help and they spent $5 on supplies to make 20 cups. They decided to set the price at $1 for each cup.
It was a super sunny day and Maya sold 15 cups! She collected $15. She had 5 cups left over, but she remembered the lesson: she still had to account for the cost to make every single cup.
Maya calculated her profit: $15 in sales money minus her total $5 cost. She made a $10 profit! She was excited to know her real profit so she could plan for her next sales day.
By counting all her costs first, not just the cost of what she sold, Maya knew exactly how much profit she really made.
Illustrative example — names and figures are composites for teaching.
Think of a simple business you could start, like selling cookies or bracelets. What would be your costs (things you need to buy)? What price would you charge for one item?
Example: Business Idea: Selling painted rocks. My costs would be for paint ($5) and brushes ($2). My total cost is $7. I would find rocks for free. I would set my price at $1 for each painted rock.
Go deeper — outside resources
- MyMoney.gov — learning hub · MyMoney.gov
- Starting a Business for Kids · USA.gov
- PBS Kids — learning hub · PBS Kids
Key ideas
- Cost = what you spend
- Price = what customers pay
- Profit = price money − cost money
Try it: Play the Lemonade Stand game in the Academy and try to earn $20 profit.
Quick check
1. You spend $3 and sell $10 of lemonade. What is your profit?
2. Which day sells more lemonade?
3. What do we call the money you spend on lemons and sugar for your stand?
4. You spend $4 to make lemonade. You only sell $3 worth. What is your profit?
5. If you make 20 cups of lemonade but only sell 5, what happens to the cost of the other 15 cups?
6. Leo wants to start a lemonade stand. What is a good first step?