Pizza being topped.
Financial Literacy

Where the Price Comes From: Let's Play Restaurant

Where does the price of goods actually come from? And what's the best way to explain it to your children? One idea: Play restaurant with your child. Bake a pizza together and calculate the sale price step-by-step. Here's a guide for it.

Step One: Shopping

To bake a pizza, you need ingredients. While shopping, your child can already influence the price of materials and later, the selling price. Do they get the expensive brand name flour or the cheaper generic product?
Your child may already be wondering here which products they would like to buy and how much money they want to spend on them.

Tip: Use this opportunity to only buy the ingredients for the pizza and nothing else. Your child will get a rough idea of the costs at the cash register. On the way home, you can discuss whether your child expected this price.

Step Two: Prepare Dough

Before you calculate the price of the individual ingredients, let's start baking the pizza. Download our pizza recipe and get started on it together. First, knead the dough and let it sit. It takes some time. You can use this time to calculate the costs of the pizza together.

Step Three: Calculate Price

Surely, your child noticed that for a single pizza, you don't need the entire package of flour, nor do you need the entire bottle of olive oil. Break down the cost of the package into the necessary quantity so that you can calculate the price per pizza.
For now, this is probably a very abstract concept for your child and they probably lack the mathematical knowledge needed to calculate the price. You can help:

  1. Look at the shopping list again.
  2. Go through each and every ingredient and consider how much of each one you need for your pizza. A general estimate is good enough; it doesn't have to be exact.
  3. Now figure out the price: You used half a bag of flour? Then enter half of the package price in the "Price per pizza" column. It's not as easy for some ingredients like olive oil. You can find a sample calculation in the info box.

Your child will notice: Some prices are very low. But with as many pizzas as a pizzeria sells every day, even small quantities count.
Then, add up all items in the "Price per pizza" column. Now you know how much your pizza cost when shopping.

Step Four: Bake the Pizza

After the complex price calculation, it's time to get back to the pizza: Take your pizza dough, roll it out, and put toppings on the pizza together. The pizza recipe will help you with this step.

Child reaches for pizza

Step Five: Calculate Selling Price

Use the baking time to clarify the difference between the purchase price and selling price with your child. Ask your child: Why does a pizzeria sell their pizza for more than the price calculated? Maybe your child has some initial ideas. Encourage them to think about the following points:

  • Equipment:
    In order to be able to bake the pizza, you need more than just the ingredients: an oven, pans, a baking sheet, water, electricity, and much more are needed. The pizzeria owner must heat and light the dining area among other things, for example. All of these costs are incorporated into the pizza.
  • Personnel:
    The owner needs people to bake pizza, serve food, wash dishes, clean up, and do other tasks. The owner has to pay everyone.
  • Profit:
    Make sure your child understands that if the owner has thought about and factored in all of the costs mentioned, they know how to price their pizza so they don't have any loss. But the owner also has to use the revenue to pay rent for their own home and finance their vacations, for example. Perhaps they would also like to go out to eat sometimes. In order to be able to afford that, they have to take in more money with the pizza than they previously spent. Then the owner makes a profit.
    At this point, you can remind your child of the similarity to saving: If you spend less than you take in, you'll have money left over. In business, that's a profit; for your child, it's the savings.
Tip: Your child can estimate the costs for equipment, personnel, and profit – it's not important for the numbers to be based in reality. They can then make a pricing sign and suggest the price at which the pizza would be sold in their own pizzeria. Finally, you can discuss it together.

Step Six: Eat!

You probably really need a slice of pizza after all those calculations. While eating, you can consider together whether it's worth it to go to a pizzeria or if it's better to make a pizza yourself. Bon appétit!