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)
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.
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. Answers:
- What's its daily revenue? — B. $600
- Which is a fixed cost for a coffee cart? — C. The monthly permit fee
- A company with $10 million in revenue must be profitable. — False
- 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?
Answer: Revenue is all the money from sales. Profit is what's left after subtracting every expense.
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.