🔢 MathGrade 6Lesson 34
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Design a Mini-Business with Pricing

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What you will learn

  • 1Calculate the unit cost and selling price of a product using markup
  • 2Compute profit per item and total profit from sales data
  • 3Determine the break-even point where revenue equals total cost
  • 4Compare pricing strategies using profit margin as a percentage
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Mini Lesson

Imagine you are starting a tiny lemonade stand, sticker shop, or bracelet business. Before you sell anything, you have to decide on a price. Charge too little and you lose money on every cup. Charge too much and nobody buys. In this lesson you will use the math behind real businesses — cost, markup, profit, break-even, and profit margin — to set smart prices and predict whether your mini-business will actually make money.

Cost, Markup, and Selling Price

  • Cost is the money you spend to make ONE item (lemons, sugar, cup, label).
  • Markup is the extra amount you add on top of the cost — that is your profit per item.
  • Selling Price = Cost + Markup. This is what the customer pays.
  • Markup percent = (markup / cost) x 100. A $4 cost with a $2 markup is a 50% markup.
  • Example: a bracelet costs $3 to make. With a 100% markup, the selling price is $3 + $3 = $6.

Profit per Item and Total Profit

  • Profit per item = Selling Price - Cost. It is the same thing as the markup.
  • Total Profit = Profit per item x Number of items sold.
  • Example: each bracelet costs $3, sells for $6. Profit per item = $3. Sell 20 bracelets -> Total profit = $3 x 20 = $60.
  • Always subtract any FIXED costs (booth fee, sign, supplies you buy once) from total profit.

Break-Even Point

  • Break-even is the point where you stop losing money and start making it.
  • It happens when Total Revenue equals Total Cost.
  • Total Revenue = Selling Price x Units sold.
  • Total Cost = Fixed Cost + (Cost per item x Units sold).
  • Formula: Break-even units = Fixed Cost / (Selling Price - Cost per item).
  • Example: $60 fixed cost, $4 cost per item, $6 selling price. Break-even = 60 / (6 - 4) = 30 units.
  • Below 30 units: LOSS. Exactly 30 units: zero profit. Above 30 units: PROFIT.

Profit Margin (as a Percentage)

  • Profit margin tells you what FRACTION of each dollar of sales is profit.
  • Formula: Profit margin = (profit / selling price) x 100%.
  • Example: $6 selling price, $2 profit per item -> Margin = 2 / 6 ~ 33%.
  • Two stores can have the same profit per item but very different margins. The bigger margin keeps more of every dollar.
  • Margin is the best way to compare two pricing strategies side by side.

Unit Price for Customers

  • Unit price = total price / number of units. It tells the customer the cost of ONE thing.
  • Example: a 4-pack of cookies for $5.00 has a unit price of $5.00 / 4 = $1.25 each.
  • Smart shoppers compare unit prices to find the best deal.
  • As a seller, displaying a unit price helps customers trust your prices.

Words to know

cost

The money spent to produce one item (materials, labor, packaging).

markup

The amount added to the cost to set the selling price; your profit per item.

selling price

The amount the customer pays for one item; cost plus markup.

profit

Money left over after subtracting cost from revenue.

break-even

The point at which total revenue equals total cost; no profit, no loss.

profit margin

Profit as a percent of the selling price; (profit / price) x 100%.

unit price

The price for one unit; total price divided by number of units.

fixed cost

A cost that stays the same no matter how many items you sell (booth fee, equipment).

Cost to Markup to Selling PriceThree boxes — Cost $4, Markup $2 (50%), and Price $6 — show how a selling price is built from cost plus markup; a callout notes the profit margin is roughly 33% and the formula card reads Selling Price = Cost + Markup.Cost -> Markup -> Selling PriceBuild the price one piece at a time.COST$4.00what it costs you+MARKUP$2.0050% of cost=PRICE$6.00what you chargeProfit margin = profit / price = 2 / 6 ~ 33%Selling Price = Cost + MarkupHigher markup = bigger profit per item, but maybe fewer sales.
Stack cost and markup to build the selling price.
Profit and Break-Even ChartA line chart of dollars versus units sold; the red Cost line and green Revenue line meet at the break-even point of 30 units and $180. The LOSS zone is below the break-even line; PROFIT is above.Profit and Break-EvenRevenue meets Cost at the break-even point.$0$100$200$30001020304050DollarsUnits soldCostRevenueBreak-even30 units, $180LOSSPROFITSell more than 30 units to start earning profit.
The break-even point sits where Cost meets Revenue.
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Tip: write down THREE numbers before you set a price — your cost per item, your fixed costs, and the price you think customers will pay. Then check that your break-even point is realistic. If you have to sell 1,000 cups of lemonade in one afternoon to break even, your price is too low.

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