If you missed part one of this series, please see our article “How to Use eBay to Teach Entrepreneurship to Children: What is eBay?“.
“Buy low, sell high”…. that is the center of almost any business. You can’t be successful in business without understanding the motive behind buying and selling. This is an important thing to explain to a child when they are getting ready to learn about entrepreneurship. As a business owner, we aren’t just buying things so we can give them away, the purpose it to make money. Therefore, it’s important to understand how to calculate profit so that you don’t encounter a loss.
What is Profit & Loss?
If your child already has an understanding of the value of money, what it’s used for, etc. this will be an easy concept for them to understand. A great way to demonstrate the concept of profit and loss is to have your child to give you $1.00 of their own money. In return, give them $2.00. Explain how they just profited $1.00. Then give the reverse example, they give you $2.00 and you give them 1.00 in return. They now have a loss of $1.00. This is a really simple way to get the point across.
Go Deeper with eBay as an Example
With eBay, there are more things to consider that determine your profit or loss.
- the cost of the item
- eBay fees
- PayPal fees
- shipping supplies
Also, it’s good to remember that your time has value too. Is the item you are looking at going to take a lot of cleaning? Are you going to have to test to see if the item works and do you have to equipment to do so?
All these things need to be added up to decide what to sell an item for so that you come out with a profit in the end.