---
title: "Costs & Revenue"
description: "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"
canonical: https://lightmysky.com/learn/life-skills/costs-and-revenue-mt_9gpUHWVKMR
source: https://lightmysky.com/learn/life-skills/costs-and-revenue-mt_9gpUHWVKMR.md
retrieved: 2026-10-19
---

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# 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

Subject: Life Skills · Area: Entrepreneurship · Ages 7 to 9
Page: https://lightmysky.com/learn/life-skills/costs-and-revenue-mt_9gpUHWVKMR

## Ready when they can

- 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)

## Lesson: Costs, Revenue, and Profit

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.

*(drawing: The revenue bar is taller than the cost bar. Cost £4, revenue £9, so £5 is left over: a profit.)*

**Example.** 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.

**Tip.** 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.

**Recap.** Revenue minus cost equals profit; when cost is bigger instead, that is a loss.

## Practice

16 questions on this page, each with its working shown.

## Needs first

- [Making Change](https://lightmysky.com/learn/life-skills/making-change-mt_aWOK1npO5s)
- [Buyers & Sellers](https://lightmysky.com/learn/life-skills/buyers-and-sellers-mt_SbEaQnMQoD)

## Opens up

- [Scaling Up](https://lightmysky.com/learn/life-skills/scaling-up-mt_7SsduPB2tP)
- [Pricing So the Numbers Work](https://lightmysky.com/learn/life-skills/pricing-so-the-numbers-work-mt_m4DGdFIm5h)
- [Unit Economics: Does Each Sale Make Money?](https://lightmysky.com/learn/life-skills/unit-economics-does-each-sale-make-money-mt_NUoV6LB-o4)
- [Making a Simple Plan](https://lightmysky.com/learn/life-skills/making-a-simple-plan-mt_phpn6KhCAv)
- [Supply chains](https://lightmysky.com/learn/life-skills/supply-chains-mt_tqgZH11cP5)