LEMONADE STAND LEMONADE STAND
Budget & Finance
The first consideration they had to make was how were they going to purchase the initial equipment they needed to start. After pooling all their money together they had $15. To find out if this would be enough they began to list out everything they would need to purchase. The exact list can be found in the Purchase Equipment section.
They figured out that the initial equipment and inventory came to $70 and were immediately discouraged that they couldn't start. I let them know that their mom and I would loan them all the initial money by purchasing these items for them. The terms for repayment would be that the first $70 they made would go to their parents for payment. This was hard for them to grasp as they would work quite awhile and not see any money. In actuality, we only collected about half of that money but the lesson was still learned.
We then briefly discussed how they needed to keep a certain amount of cash in their little box to purchase new supplies as needed.
The most fun they had out of this whole phase was deciding on how to price their product. They discussed things like how wealthy the community is and what they would be willing to pay. They also decided that they would raise prices on really hot days since they could get away with it as the demand would be higher.
They discovered that it is extremely difficult to set their price without knowing what their cost for one cup of lemonade would be. They couldn't determine their cost until they knew their recipe as this determined materials needed. Once they had the recipe they figured out how much materials to make one pitcher then how many 16 ounce cups from the pitcher. They finally worked the math down to ten cents per cup. So they set their regular price at $0.50 per cup and $1.00 on hot days. They felt that this gave them a fair profit for their work.