If you're looking to open up a profitable lemonade stand, this is the video for you. If you're looking to open up a lemonade stand that loses money...you probably don't need our help.
|Elementary and Middle School||5th Grade|
But say you do notice the different prices…why are they different? [Jelly is scanned at a till]
Where do these prices come from?
It's not just someone in the backroom throwing darts at a dartboard.
There are lots of things that affect the prices of goods and services, even if the dart thing [Darts being thrown at a dartboard with prices on them]
would be easier and a bit more fun.
So let's say you're starting a lemonade stand.
You've got your stand set up, a fresh batch is in the pitcher, and you're ready to make [Kid walking to his lemonade stand]
…Ooh…one issue….you haven't set a price.
How much are you going to charge for each cup of lemonade? [Price sign has a question mark on it]
Sure, you could use the pay-what-you-can model, but you might end up with a lot of clients
who mysteriously can't pay anything more than a twig and a rock.
And while a twig for a pitcher of lemonade is a pretty good bargain, it doesn't do you [Kid tries to pay with a stick in a shop]
One important thing to think about when setting a price is how much it costs to make the product.
Whatever the cost of the product happens to be, you should be charging a bit more, so
that you're actually making some money.
After all, it's a business, not a lemonade-based charity.
If we think about our lemonade stand, it might turn out that once we pay for sugar and lemons… [Ingredients for lemonade]
…an entire pitcher costs us two dollars to make.
And if we can get eight cups of lemonade from each pitcher, that means our cost per cup
is $2 divided by eight, or 25¢. [Cups of lemonade laid out]
Quarters might be nice and shiny, but if we only charge 25¢ per cup, we're going to end
up with a grand total of zero dollars profit.
So if you opened this stand for more than just the love of making lemonade, you'll want [Love hearts coming from boy at a non-profit lemonade stand]
to charge more than 25¢ per cup.
May we suggest one million dollars per cup? [People walk up to the stand]
Which leads us to our next point…
Another important thing to think about when setting a price is what a fair price would [Customers walk away]
If we're selling lemonade, we don't just want our price to cover costs.
We also want it to be something that people on our block could afford.
So it might not be the best idea to set our price at $1,000,000 a cup. [Kid looks thoughtful]
Unless everyone on your block happens to be a billionaire. [Oprah and Bill Gates at the lemonade stand]
Finally, it's also worth thinking about your target goals.
Let's say you set up this lemonade stand so that you could buy a pair of roller skates
that cost $75.
If you charge $1 per cup, you'll be making 75¢ profit per cup…
…so once you sell one hundred cups, you and your precious roller skates can start
your life together.
However, if you charge 26¢ per cup, you'll only be making 1¢ profit per cup… [Workings written in a notebook]
…which means you'll have to sell 7,500 cups to get those skates.
And by the time you'd finally get those skates, you'd probably be a little more worried about [Old man rollerskating]
retirement… [Old man falls over]