Lesson plan · Understanding Businesses · Lesson 1
How Businesses Make Money
Revenue, expenses, and the basic equation behind every company.
- 45 minutes
- Grades 9–12
- Intermediate
- Activity: pairs
Objectives
Students will be able to:
- Apply Profit = Revenue − Expenses
- Calculate revenue as price × quantity
- Distinguish fixed costs from variable costs
Materials
- Slide deck and a projector
- Worksheet (one per student)
- Profit Margin Calculator (projected, or on student devices)
- Exit ticket slips (bottom of the worksheet)
Standards
- National Standards for Personal Financial Education (2021)
- Builds business and economics understanding beyond the six topic areas.
- Texas TEKS §113.76 Personal Financial Literacy and Economics
- (1) The student understands the fundamental concepts of economics.
Topic-level alignment by FLC. How we map standards
Key vocabulary
- Revenue
- The money a business brings in from selling its products or services. For many businesses, revenue = price × quantity sold.
- Expenses
- What it costs to run the business: ingredients, wages, rent, marketing, equipment, and more.
Background reading
The official sources this lesson is based on.
45-minute agenda
0–5 min
Warm-up
Post: “A coffee cart sells 200 coffees at $4 each. Did it make $800 in profit? What's missing?”
Teacher note: $800 is revenue. Profit subtracts the cost of cups, coffee, milk, the cart, permits, and more.
5–12 min
Direct instruction
Present the lesson slides. Make sure students leave with these points:
- Profit = Revenue − Expenses.
- Revenue = price × quantity (for most simple businesses).
- Variable costs rise with sales; fixed costs don't.
- Revenue isn't profit.
Use the “See it” slide (Where a sales dollar goes) to make the idea visual.
12–17 min
Worked example
Walk through “Maya's coffee cart” on the slides. Pause before the result and ask students to predict it.
17–22 min
Live demo
Project run the coffee cart from the slides or the Profit Margin Calculator. Change one input at a time and have students call out what they think will happen.
22–32 min
Run the Cart
Format: pairs · 10 minutes
- A coffee cart charges $4.50 a cup. Each cup costs $1.20 to make (variable cost). The cart lease and permit cost $600 a month (fixed cost).
- Pairs calculate revenue, total costs, and profit for a month of 300, 600, and 900 cups.
- Pairs explain why profit grows faster than sales.
What to look for: 300 cups: revenue $1,350, costs $960, profit $390; 600 cups: revenue $2,700, costs $1,320, profit $1,380; 900 cups: revenue $4,050, costs $1,680, profit $2,370. Fixed costs stay at $600, so each extra cup adds $3.30 of profit.
32–37 min
Check for understanding
Use the question slides — or run them as a Four Corners game. Questions:
- What's its daily revenue?
- Which is a fixed cost for a coffee cart?
- A company with $10 million in revenue must be profitable.
37–42 min
Discussion
- Pick a business near you. What are its biggest fixed and variable costs?
- Why might a company choose to grow revenue quickly even while losing money?
42–45 min
Exit ticket
Prompt: Why isn't revenue the same as profit?
Differentiation
Common misconception
“A business that sells a lot must be making a lot.” High sales with high costs can still mean little or no profit.
Support
Give pairs a three-row table with the formulas written in the column headers.
Extension
Find how many cups the cart must sell each month just to cover its $600 of fixed costs. (182 cups: $600 ÷ $3.30, rounded up.)
Homework or make-up work
Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/understanding-businesses/how-businesses-make-money. No account needed; progress saves on their device.