Skip to main content
FLC
Start Learning

Lesson plan · Entrepreneurship · Lesson 5

Revenue Models and Costs

Fixed vs. variable costs, and finding your break-even point.

  • 45 minutes
  • Grades 9–12
  • Beginner
  • Activity: pairs
Present slidesWorksheet + keyStudent lesson

Objectives

Students will be able to:

  • Distinguish fixed from variable costs
  • Calculate contribution per unit
  • Calculate the break-even point

Materials

Key vocabulary

Contribution per unit
Price − variable cost per unit. It's how much each sale contributes toward covering fixed costs, and then toward profit.
Break-even point
The number of sales needed to cover fixed costs: fixed costs ÷ contribution per unit. Below it, you lose money; above it, you profit.

45-minute agenda

  1. 0–5 min

    Warm-up

    Post: “A food truck pays $1,500 a month for its parking spot no matter what. Is that fixed or variable? What about burger buns?”

    Teacher note: Parking is fixed; buns are variable — you buy more as you sell more.

  2. 5–12 min

    Direct instruction

    Present the lesson slides. Make sure students leave with these points:

    • Fixed costs stay put; variable costs grow with sales.
    • Contribution = price − variable cost.
    • Break-even = fixed costs ÷ contribution.
    • Recurring revenue makes planning easier.

    Use the “See it” slide (Marcus's month at different volumes ($12 price, $5 cost per pair, $300 fixed)) to make the idea visual.

  3. 12–17 min

    Worked example

    Walk through “Marcus finds his break-even” on the slides. Pause before the result and ask students to predict it.

  4. 17–22 min

    Live demo

    Project break-even calculator from the slides or the Break-Even Calculator. Change one input at a time and have students call out what they think will happen.

  5. 22–32 min

    Break-Even Race

    Format: pairs · 10 minutes

    1. A student sells bracelets for $8 each. Each costs $3 to make, and fixed costs are $200 a month.
    2. Pairs calculate contribution per bracelet and the break-even point, then check with the break-even calculator.
    3. Change one thing at a time: raise the price to $10; then instead cut fixed costs to $150.
    4. Pairs decide which change helps more and why.

    What to look for: Contribution $5; break-even 40 bracelets. At $10: 29 bracelets. With $150 fixed costs: 30 bracelets.

  6. 32–37 min

    Check for understanding

    Use the question slides — or run them as a Four Corners game. Answers:

    1. How many sales do you need to break even? — D. 50
    2. Which is a variable cost for a T-shirt business? — A. Blank shirts for each order
    3. Raising your price (with the same costs) lowers your break-even point. — True
  7. 37–42 min

    Discussion

    • Would you rather have high fixed costs and low variable costs, or the reverse? Why?
    • What business could you turn into a subscription?
  8. 42–45 min

    Exit ticket

    Prompt: Write the break-even formula.

    Answer: Break-even units = fixed costs ÷ (price − variable cost per unit).

Differentiation

Common misconception

“If each sale makes a profit, the business is profitable.” Not until sales cover the fixed costs.

Support

Walk through contribution with one bracelet before calculating break-even.

Extension

Graph revenue and total cost for 0–60 bracelets and mark where the lines cross.

Homework or make-up work

Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/entrepreneurship/revenue-and-costs. No account needed; progress saves on their device.