Costs & Revenue
It costs money to make things (costs/expenses); you earn money by selling them (revenue); if revenue is more than costs, that's profit; if costs are more, that's a loss
What a learner can do afterwards
- Explain what costs, revenue, and profit mean using a simple example
- Calculate profit from a given scenario (e.g. spent £3 on ingredients, sold cakes for £8, profit = £5)
- Explain what happens if costs are higher than revenue (you make a loss)
1 · Read
When you make things to sell, you spend money first to get ready. That spending is called a cost. Maybe you buy lemons, sugar, or paper cups. When someone buys what you made, the money you get back is called revenue.
Sam runs a lemonade stand. He spends £2 on lemons and sugar. That is his cost. He sells cups of lemonade all afternoon and takes in £7. That is his revenue. Profit is revenue minus cost: £7 minus £2 is £5. Sam gets to keep £5.
Sometimes cost is bigger than revenue. If Sam had spent £7 on lemons and sugar but only sold £2 worth of lemonade, he would lose £5 instead of earning it. That is called a loss.
Revenue minus cost equals profit; when cost is bigger instead, that is a loss.
2 · Watch
Take it off screen
Where it sits
Where this leads
Jobs that lean on this skill. Follow one to see everything it is built on.
16 questions wait behind this lesson, each with its answer explained. Every answer feeds the sky: stars light as they are learned, and dim when it is time to come back.