Summer Fun: The Economics of the Lemonade Stand

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Part 2: Strategies

Why should you charge 10 cents for a glass of your lemonade? Because people will pay it. You could discover this through trial and error, or you could hear it from someone you know. No matter where you hear it, you understand that some prices are too high.

Why are they too high?

  • First of all, that's a small glass you're selling. Most people would say it probably isn't worth 50 cents.
  • Secondly, you have to know your audience. The people who buy your lemonade are likely to be kids just like you or people who have or like kids. A kid like you will probably not want to spend 50 cents on lemonade, no matter how good you say it is. This probably holds true for most adults as well. Knowing your audience will get you a long way toward understanding how much that audience will pay for something you are selling.

You also need to consider where you set up your lemonade stand. If you live on a dead-end street where not many people walk regularly, your chances of selling much lemonade are slim. However, if you set up shop in front of a busy grocery store, then you'll probably have no trouble selling all the lemonade you make.

It seems easy to set up a lemonade stand. Throw some lemonade in a pitcher, get some glasses, make a sign, and you're there. But if you want to make some money to buy that book or that video game or see that new cool movie, remember to think through the economics of your little business. You'll be much happier, and you'll probably have more money.

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