Day 7
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Review
Costs
Do you need some money to build a business and market to customers?
Yes, the money needed to start and run a business is called COSTS.
For example, it costs money for a farmer to sell carrots to customers.
– It costs money to buy the land to grow carrots.
– It costs money to buy the carrot seeds.
– It costs money to water the carrots.
– It costs money to pay people to harvest the carrots.
– It costs money to clean the carrots.
– It costs money to transport the carrots from the farm to a store.
What are some ways we can reduce business costs?
-Buy materials on sale or in bulk.
Response
Do you need money to start and run a business? Why?
What are some ways you can reduce business costs?
Build Instructions
On the next slide, you will be listing the costs of your business idea.
Write down all of your business costs.
For example, Dwight would write down the information below for his cost analysis.
Costs:
- 13 inch MacBook Pro – $1,299.00
- iPhone 14 Pro – $999.00
- T-Mobile Magenta Plan – $70.00/month
- Nissan Leaf Lease – $425.00/month
- Car Insurance – $99.00/month
- Electric Charging – $40.00/month
- Office Supplies (ex. notebook) – $15.00/month
- Business Cards – $9.99
- Social Media Advertising – $100.00/month
Business Name: Launch Group
Logo:
Marketing:
- Direct messaging and paid advertisements on social media platforms.
- Attend Meetup entrepreneurship events and hand out business cards.
Target Market:
- Age: Young Adults, Adults
- Location: Orange County, California
- Interests: Entrepreneurship; Technology; Innovation; Stock Market
- Lifestyle: Ambitious individuals who have a busy schedule which revolves around activities/tasks for their business. They take limited vacation time and frequently attend networking events.
Industry: Mentorship
Product / Service: Service
Values: In-Person, Flexibility
Description: My business idea is to provide mentoring to startups.
Please have your child write down all their answers on paper.
The purpose of this builder is to be a guide to their idea.
Business Builder
What are your business costs?
___________________________
Provide details on the costs you selected.
Pitch Instructions
Present your costs to the class.
Write down questions to ask your classmates.
Remember to be respectful during each pitch.
How does a business pay for its costs?
A business can’t survive if it sells a product or service yet loses money during this process because it cannot pay for its costs.
How does a business pay for its costs?
A business pays for its costs by setting the right price to buy the product or service.
What is price?
Price is the amount of money a customer must pay for a product or service. Every business sets its own prices.
– The price for a sandwich is $5.00.
– The price of a video game is $60.00.
– The price for a car might be $27,000.00.
– The price for a house might be $1,000,000.
A business must make sure that the price is higher than the cost per product or service. Otherwise, the business will lose money and have to close down.
For example, if it costs you $5.00 to make 5 cups of lemonade at your lemonade stand, you want to make sure that the price of each cup is at least $1.00.
Pricing Strategies
There are many different pricing strategies that a business can use to encourage customers to buy its products or services.
- Packages / Bundles
– Sometimes when you purchase a video game console, there are a couple of video games included in the box. - Buy one, get one free (BOGO)
– When you’re at a store, you might see a sign that says “Buy one, get one free” or “Buy one, get one 50% off”. - Prices ending with .99 cents
– Products appear less expensive (e.g. $19.99). - Yearly Price ($10 a month)
– Lead with the monthly price but require a customer to pay for a full year (e.g. $10 a month / $120 year).
Response
How does a business pay for its costs?
What are some different pricing strategies?
Build Instructions
On the next slide, you will be listing the price and pricing strategies of your product or service.
For example, Dwight would write down the information below for his pricing strategy.
Price:
- $200.00 for 2 / 1 hr mentoring sessions a month.
- $350.00 for 4 / 1 hr mentoring sessions a month
- $400.00 for 6 / 1 hr mentoring sessions a month.
Pricing Strategy:
- Receive $100.00 if you refer a friend and they sign up.
Costs:
- 13 inch MacBook Pro – $1,299.00
- iPhone 14 Pro – $999.00
- T-Mobile Magenta Plan – $70.00/month
- Nissan Leaf Lease – $425.00/month
- Car Insurance – $99.00/month
- Electric Charging – $40.00/month
- Office Supplies (ex. notebook) – $15.00/month
- Business Cards – $9.99
- Social Media Advertising – $100.00/month
Business Name: Launch Group
Logo:
Marketing:
- Direct messaging and paid advertisements on social media platforms.
- Attend Meetup entrepreneurship events and hand out business cards.
Target Market:
- Age: Young Adults, Adults
- Location: Orange County, California
- Interests: Entrepreneurship; Technology; Innovation; Stock Market
- Lifestyle: Ambitious individuals who have a busy schedule which revolves around activities/tasks for their business. They take limited vacation time and frequently attend networking events.
Industry: Mentorship
Product / Service: Service
Values: In-Person, Flexibility
Description: My business idea is to provide mentoring to startups.
Please have your child write down all their answers on paper.
The purpose of this builder is to be a guide to their idea.
Business Builder
What is the price of your product or service?
___________________________
What is your pricing strategy?
___________________________
Provide details on the pricing strategy you selected.
Pitch Instructions
Present your price to the class.
Write down questions to ask your classmates.
Remember to be respectful during each pitch.
Calculate Profit
Remember the lemonade stand example?
It costs $5.00 to make 5 cups of lemonade.
= $5.00
What if you charge more than $1.00 a cup for lemonade?
Let’s say you sold the cup for $1.50.
What do you call the extra $0.50 that you make on each cup after you have covered your $1.00 in costs?
The extra money is called PROFIT.
All entrepreneurs strive to make a profit. With the money from profit, entrepreneurs can choose to save it for future business costs and/or keep some of it for themselves.
Response
What is profit?
Build Instructions
On the next slide, you will be completing your profit goals.
For example, Dwight would write down the information below for his profit goals.
Profit:
- How much profit do you want to make each time you sell your product or service?
_______$75_________ (desired profit per product/service)
- How much profit would you like to make from your business each year?
_______$75,000_________ (desired yearly profit)
- How many products or services do you need to sell each year to make your yearly profit?
(desired yearly profit) / (desired profit per product/service) = ___________1,000________________ (# sold per year)
- How many products or services do you need to sell each month to make your yearly profit?
(# sold per year) / 12 (months in a year) = _____________83.3_______________ (# sold per month)
- How many products or services do you need to sell each week to make your yearly profit?
(# sold per year) / 52 (weeks in a year)= _____________20.75_______________ (# sold per week)
Price:
- $200.00 for 2 / 1 hr mentoring sessions a month.
- $350.00 for 4 / 1 hr mentoring sessions a month
- $400.00 for 6 / 1 hr mentoring sessions a month.
Pricing Strategy:
- Receive $100.00 if you refer a friend and they sign up.
Costs:
- 13 inch MacBook Pro – $1,299.00
- iPhone 14 Pro – $999.00
- T-Mobile Magenta Plan – $70.00/month
- Nissan Leaf Lease – $425.00/month
- Car Insurance – $99.00/month
- Electric Charging – $40.00/month
- Office Supplies (ex. notebook) – $15.00/month
- Business Cards – $9.99
- Social Media Advertising – $100.00/month
Business Name: Launch Group
Logo:
Marketing:
- Direct messaging and paid advertisements on social media platforms.
- Attend Meetup entrepreneurship events and hand out business cards.
Target Market:
- Age: Young Adults, Adults
- Location: Orange County, California
- Interests: Entrepreneurship; Technology; Innovation; Stock Market
- Lifestyle: Ambitious individuals who have a busy schedule which revolves around activities/tasks for their business. They take limited vacation time and frequently attend networking events.
Industry: Mentorship
Product / Service: Service
Values: In-Person, Flexibility
Description: My business idea is to provide mentoring to startups.
Please have your child write down all their answers on paper.
The purpose of this builder is to be a guide to their idea.
Business Builder
___________________________
___________________________
___________________________
___________________________
___________________________
Pitch Instructions
Present your profit to the class.
Write down questions to ask your classmates.
Remember to be respectful during each pitch.
What are some examples of costs? (Multiple correct answers)
- Marketing
- Office Rent
- Printing
- Service Materials
Why is it difficult if your costs include perishable foods?
If you don’t sell quickly, you will not be able to recover your costs since the food will spoil.
Why does it help to have a business idea that requires minimal costs?
You have less risk since you don’t have to spend a lot of money to start the business.
Setting a low price could devalue your product in the eyes of customers. (True or False)
False
You don’t want to set your price below your cost per product or service because you will lose money. (True or False)
True
Day 7 Homework
(Complete your homework assignment on paper)
Calculate the following profit exercises.
Example:
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$119.60 price
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– $15.10 cost
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$104.50 PROFIT
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x 200 SOLD
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$20,900 total profit
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