P01 · Lesson 2 of 2 · 10 min · 4 hands-on tasks
Revenue, Costs and Profit
The three numbers every business lives by, and the margin that tells you how healthy each sale is.
🎬 Situation
Maya's cart has been open a week. Customers love it. But when she checks her bank app, she can't tell if she's actually making money, or just staying busy.
Let's give her the three numbers every business owner needs.
🎮 Play
This is Maya's cart on a typical day. Move the sliders and watch the bars.
Profitable. Try a slow day (fewer lattes): when does the profit vanish?
🏷️ Name it
Three numbers run every business:
| Number | Formula | Maya's day |
|---|---|---|
| Revenue | price × quantity sold | $3.50 × 150 = $525 |
| Costs | everything you spend to make and sell | $180 ingredients + $120 rent = $300 |
| Profit | revenue − costs | $525 − $300 = $225 |
And one ratio that tells you how healthy each sale is:
Profit margin = profit ÷ revenue
Maya's margin is $225 ÷ $525 ≈ 43%: she keeps about 43¢ of every dollar.
🖍️ Like you're five: you sell 10 cookies for $1 each, so you got $10 (revenue). The flour and sugar cost $4 (costs). You keep $6 (profit). For every dollar, you kept 60¢ (margin).
Real life: margins vary hugely between industries. Supermarkets often keep only a few cents per dollar of sales and win on enormous volume, while software companies can keep far more because one extra copy costs almost nothing to make. Neither is "better": they're different machines.
You'll notice Maya's profit drops fast on a slow day, because the rent stays the same no matter how many lattes she sells. That idea is so important it gets the next lesson.
🔨 Do it: 4 tasks
0 / 4 doneTask 1 of 4 · Revenue
Maya sells 150 lattes a day at $3.50 each. What is her daily revenue?
Task 2 of 4 · Costs
Each latte costs $1.20 in coffee, milk and a cup. The spot at the station costs $120 a day. What are her total costs for a 150-latte day?
Task 3 of 4 · Profit
With revenue of $525 and costs of $300, what is Maya's daily profit?
Task 4 of 4 · Profit margin
What is her profit margin: the share of revenue she keeps as profit? Round to one decimal.
🧩 Case: The milk price jumps
⭐ VIPMaya's milk supplier raises prices. Each latte now costs $1.50 to make instead of $1.20. She sells 150 lattes a day at $3.50 and pays $120 a day for her spot. Her profit just fell from $225 to $180 a day.
What do you do?
What would you do? VIP members make the call, see what happens next, and get the expert debrief.
🔁 Remember it
Revenue is...
A shop has $10,000 revenue and $8,000 costs. Its profit margin is...
Why do managers watch margin, not just profit?
Profit = revenue − costs. Profit margin = profit ÷ revenue tells you how many cents you keep from every dollar of sales.
📅 Use it Monday
Find the price and rough cost of one thing your team or company sells. Work out the margin. Then ask: if our costs went up 10% tomorrow, which of the three levers (price, cost, volume) would we pull first?
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