The big ideaA business pays its start-up costs once, then charges more than each sale costs.
How it works
A business makes or sells something people want, again and again. It works like a circle: people want something, the business makes it, people pay, and the business uses some of those coins to make more.
Leo's cart needs start-up costs, paid once before the first sale: a used cart (10 coins), a sign (2 coins) and a jug and ladle (4 coins).
Each cup also has a running cost, because it comes back with every cup: a lemon, sugar and a paper cup, 1 coin in all.
A good price is more than the running cost. A cup sold for 3 coins pays for the next cup and leaves 2 coins over.
🛒cart🪧sign🫙jug and ladle
Start-up costs: paid once.
🍋lemons🧂sugar🥤paper cups
Running costs: back with every cup.Leo's start-up costs, paid once.
Example 1: Adding up the start-up costs
A used cart is 10 coins, a sign is 2 and a jug and ladle are 4.
10 + 2 + 4 = 16 coins before the first cup is sold.
Example 2: What is left in the jar
The jar holds 20 coins and the start-up costs are 16.
20 − 16 = 4 coins stay in the jar.
Example 3: Coins left over from a cup
A cup sells for 3 coins and costs 1 coin to make.
3 − 1 = 2 coins left over.
A price of 1 coin would leave nothing: 1 − 1 = 0.
Example 4: Start-up or running?
The cart is bought once, so it is a start-up cost.
Lemons are needed for every batch, so they are a running cost.
Ask: is it paid once at the start, or again and again?
Words to know
business
Making or selling something people want, again and again.
start-up cost
Paid once, before the very first sale.
running cost
A cost that comes back with every sale, like lemons.
price
What a customer pays: 3 coins for a cup.
Watch out
Start-up costs are paid once. Leo never paid for the cart again.
Running costs come back with every cup.
A price that only covers the next cup leaves nothing over.
Starting a business is not free: the start-up costs come before the first sale.
Try it
The cart is 10 coins, the sign 2 and the jug and ladle 4. What are the start-up costs?
Paper cups are used up with every sale. Is that a start-up cost or a running cost?
A cup sells for 3 coins and costs 1 coin to make. How many coins are left over?
The jar holds 20 coins and Leo pays 16. How many are left?
Try at homeWith a grown-up, visit a stall. Ask what the owner bought first, and which costs come back again and again.
For grown-upsIf you can, visit a market stall or small shop together and ask what the owner bought first, and which costs come back again and again. The Juice Cart is made up.
Open these notes on screenScan the code, or go to tutorpip.com.