Startup Spend Materials Startup Spend
Lesson 1: Categorizing Business Costs
SLIDE DECK
The $100K Challenge
Imagine you have $100,000 to open a coffee shop.
Espresso Machine? ($15,000)
Rent? ($4,000/mo)
Coffee Beans? ($5/lb)
What do you buy first? What can wait?
Key Discussion Questions
1 Which costs happen only once ?
2 Which costs stay the same every month?
3 Which costs go up when you sell more?
The Three Cost Buckets
1. Startup Costs
One-time expenses to get the doors open.
Example: Security deposit, legal fees, signage, initial equipment.
2. Fixed Costs
Stay the same regardless of sales volume.
Example: Rent, insurance, administrative salaries, internet bill.
3. Variable Costs
Change based on how much you produce/sell.
Example: Raw materials (flour, beans), packaging, shipping fees.
COST CRUSHER
Student Worksheet
Entrepreneur Name
Venture Name
Part 1: Brainstorming the Burn
List 10 items your business needs to survive and grow. Then, check the box that best describes that cost.
Expense Item Startup Fixed Variable □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □
The Critical Question
Why is it important for an entrepreneur to know the difference between Fixed and Variable costs before they start selling?
Revenue Engines Slides Lesson 2
REVENUE
ENGINES
How businesses actually make money (and why some make more than others).
The Battle for the Wallet
Movie Theater
You pay $15 once to see one movie.
Transactional Model
Netflix
You pay $15 every month for unlimited movies.
Subscription Model
Which business is more stable? Which one has higher potential for growth?
The Revenue Menu
Direct Sales
Customers pay a one-time fee for a product or service. Simple and clear.
Freemium
Basic service is free; customers pay for "premium" features. (e.g., Spotify, Fortnite)
Licensing
You charge others to use your intellectual property (logo, software, patents).
Franchising
Allow others to open your business using your brand and systems for a fee.
Picking Your Engine
A revenue model isn't just how you get paid—it defines your relationship with your customer.
High Cost / Rare Purchase?
Direct Sales is often best (e.g., selling a car).
Daily Use / Low Barrier?
Subscription or Freemium creates long-term value.
Pricing Power Worksheet Pricing Power
Lesson 3: Developing Pricing Strategies
WORKSHEET
Student Name
Product Concept
The Pricing Trio
1. Cost-Plus
Take your cost and add a specific profit margin (e.g., $5 cost + 50% = $7.50 price).
2. Competitive
Set your price based on what everyone else is charging for the same thing.
3. Value-Based
Set your price based on how much the customer thinks your product is worth.
Part 1: Margin Mastery
The Profit Formula
Price - Variable Cost = Gross Margin
Product
Gourmet Burger
Retail Price
$14.50
Variable Cost
$6.25
Gross Margin?
Product
Custom Hoodie
Retail Price
$45.00
Variable Cost
$18.50
Gross Margin?
The Strategy Pitch
Choose one of the products above. Which pricing strategy (Cost-Plus, Competitive, or Value-Based) would you use to sell it, and why ? Think about the brand perception.
Pricing Power Answer Key Answer Key
Pricing Power
Teacher Answer Key & Guide • Lesson 3
Pedagogical Purpose
This key provides the solutions and scoring criteria for the Pricing Power Worksheet . Use the discussion questions and misconception highlights to guide students through the strategic nuances of pricing beyond basic arithmetic.
Part 1: Margin Mastery Solutions
Problem 1: Gourmet Burger Retail: $14.50 • Variable: $6.25
\( \text{Price } (\$14.50) - \text{Variable Cost } (\$6.25) \) = $8.25 Margin
Margin Percentage: \( (\$8.25 / \$14.50) \times 100 \approx 56.9\% \). Praise students who take this extra step!
Problem 2: Custom Hoodie Retail: $45.00 • Variable: $18.50
\( \text{Price } (\$45.00) - \text{Variable Cost } (\$18.50) \) = $26.50 Margin
Margin Percentage: \( (\$26.50 / \$45.00) \times 100 \approx 58.9\% \).
Part 2: The Strategy Pitch Rubric
Students select one product and pitch a strategy (Cost-Plus, Competitive, or Value-Based). Accept any of the three approaches if justified logically using the criteria below:
Value-Based Pitch
Gourmet Burger: Student argues it's an "experience" with high-end ingredients. They price it at $18+ because consumers link higher cost with premium status.
Competitive Pitch
Custom Hoodie: Student notes hoodies are common. They suggest pricing exactly at $45 to align with brands like Champion to compete on style, not price.
Cost-Plus Pitch
Either Product: Student argues that securing a strict 50%+ profit margin on every transaction is the safest path to consistently offset business costs.
Money Moves Business Finance • Lesson 3 Page 1 of 2
Pricing Power
Facilitation & Misconceptions • Lesson 3
Common Student Misconceptions
Confusing Gross Margin with Net Profit
Students often think that the $8.25 gross margin from the burger is pure profit they get to keep. Correction: Explain that gross margin only covers materials. From that $8.25, they must also pay rent, utilities, insurance, and payroll.
Ignoring Pricing Psychology
Some students assume the lowest price always wins. Correction: Explain that pricing is a brand communication tool. If a premium burger is priced at $2.00, customers will doubt its safety or quality.
Socratic Guiding Questions
Question 1
"If cotton costs rise, boosting custom hoodie variable cost to $25.00, what happens to gross margin if retail remains $45.00?"
The Zero Point Workshop The Zero Point
Lesson 4: Calculating Break-Even
FINANCE LAB
The Big Question
"How many units do I need to sell before I actually start putting profit into my own pocket?"
The Golden Formula
Break-Even Units
=
Total Fixed Costs
Price - Variable Cost
Pro Tip: (Price - Variable Cost) is also known as your Contribution Margin .
Case Study: The Sneaker Shop
Rent & Salaries (Fixed): $5,000 / month
Cost to Buy Sneaker (Variable): $60 / pair
Sale Price: $110 / pair
Show Your Calculation:
Target Units:
FEASIBILITY CHECK
Just because you calculated a break-even point doesn't mean your business will be successful. You have to ask: Is this number realistic?
Market Size
Are there even enough people in town who want to buy this many units?
Capacity
Do you have the machines/staff to actually make and sell that many?
Pacing
How many months of loss can you survive before you hit that number?
Analysis Reflection
If your Break-Even Point is 500 units per month, but your shop can only hold enough inventory for 200 units, what are three specific changes you could make to the business plan to reach feasibility?
1
2
3
Exit Ticket
"Profit isn't what you make, it's what you keep after everyone else is paid."
Define Break-Even in your own words below:
The Zero Point Answer Key Answer Key
The Zero Point
Teacher Answer Key & Guide • Lesson 4
Lesson Objective
This key provides fully worked equations for The Sneaker Shop Case Study and lists acceptable answers for the Feasibility Check and Exit Ticket.
Case Study Solutions: The Sneaker Shop
Fixed Costs
$5,000 / month
Variable Cost
$60 / pair
Sale Price
$110 / pair
Step 1: Calculate Unit Contribution Margin
\( \text{Contribution Margin} = \text{Price } (\$110) - \text{Variable Cost } (\$60) \) $50.00 / pair
Step 2: Calculate Break-Even Units
\( \text{Break-Even} = \frac{\text{Fixed Costs } (\$5,000)}{\text{Contribution Margin } (\$50)} \) 100 Pairs / month
Part 2: Feasibility Assessment Solutions
Prompt: If Break-Even Point is 500 units, but shop capacity is 200 units, what are three specific changes an entrepreneur can make to the business plan to reach feasibility?
1
Increase the Unit Sale Price: Boosting price expands the contribution margin, which reduces the total number of units required to cover the same fixed costs. (e.g., selling 200 luxury units rather than 500 cheap units).
2
Minimize Monthly Fixed Overhead: Subletting space, renegotiating rent, or replacing fixed monthly software subscriptions with free or variable-rate tools directly pulls down the break-even target.
3
Lower Unit-Level Variable Cost: Negotiating volume discounts on bulk raw materials or sneakers increases the contribution margin per unit, lowering break-even volume.
Money Moves Business Finance • Lesson 4 Page 1 of 2
The Zero Point
Facilitation & Misconceptions • Lesson 4
Common Student Misconceptions
Forgetting That Fixed Costs Keep Ticking
Students often think that if they make 0 sales, they spend $0. Correction: Stress that "fixed" means contractually bound. Rent and utilities must be paid even if 0 sneakers are sold. This is why a business needs emergency cash.
Dividing by Variable Cost Instead of Contribution Margin
A classic math error is dividing Fixed Costs by Variable Cost (e.g., \( \$5,000 / \$60 = 83.3 \) units). Correction: Walk them through why this is wrong. If they sell a sneaker for $110, they first pay $60 to replenish the inventory. Only the leftover $50 can be used to chip away at the $5,000 rent.
Deep-Dive Prompts
Pacing Prompt
"If our Sneaker Shop opens and only sells 80 pairs in its first month, how much total money did we lose?"
Profit Projection Planner Future Forecasts
Lesson 5: Forecasting Financial Performance
PROJECT PLANNER
The 12-Month Projection
Forecasting isn't guessing—it's using assumptions about your business environment. Think about Seasonality (holidays, summer, school year) and Growth (word of mouth, advertising).
Metric M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 REVENUE Units Sold Total Income ($) EXPENSES Fixed Costs Variable Costs Total Outgo ($) NET PROFIT/LOSS
Assumptions & Strategy
Why do your "Units Sold" change in specific months? (e.g., "M12 increases because of holiday shopping.")
The "Valley of Death"
Identify which months show a Loss (negative number). How will you fund the business until it becomes profitable?
The Investor Pitch
You've done the math. Now, you need to convince someone to trust you with their money. Use your data to answer these three critical investor questions:
1. The "Skin in the Game"
What are your total Startup Costs, and what is the single biggest expense you need to launch?
2. The "Safety Net"
