The Lost-and-Found Label Venture
Maya, a seventh grader, notices that the school lost-and-found collected 46 water bottles in one month, and most are unlabeled. She wants to sell waterproof custom name labels that stick to bottles and lunch boxes. A pack of 100 blank waterproof labels costs $12, and a friend with a cutting machine will cut names for $0.10 per label. Maya has $35 saved. She can sell at the school store during lunch, but the store takes 20% of sales. She thinks she can charge $1 per label, or three for $2.50. Her art teacher says she must get permission from the assistant principal and cannot use the school logo. Maya has three weeks before the school fair and two tests next week. She is excited but has not asked students whether they would buy labels or what they would pay.
1. List the three riskiest assumptions in Maya's plan and explain which one she should test first. Defend your order with reasoning about cost, time, and evidence.
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The riskiest assumptions are: (1) students will pay for labels rather than use free tape or a marker; (2) $1 or three for $2.50 is acceptable; (3) the assistant principal will approve and the store's 20% cut still leaves a margin. Test demand first. Permission can be checked in parallel because it is a yes/no answer that does not require spending money, and the costs are already known. If Maya buys 100 labels before testing demand, she risks $12 plus cutting time on a product nobody wants. A demand test also gives price evidence. The order should be: ask permission and run a preorder test in week one, then buy inventory only if preorders reach the threshold. This order protects her $35 and her two test weeks.
2. Design a one-week test that uses no more than $10 and two hours, and name the evidence that would make Maya continue or stop.
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Use paper mockups and a preorder sheet, not real labels. Print 20 paper name tags for $2, stand near the lost-and-found at lunch for two hours, and ask 30 students: 'Would you preorder one for $1 or three for $2.50?' Record yes/no and chosen price; collect names only for yes. Spend nothing on cutting yet. Continue if at least 12 of 30 preorder (40%) and at least five choose the three-pack. Stop if fewer than 8 preorders or if most say they would only pay $0.50. This test measures real commitment, not politeness. It also reveals whether the three-pack or single label is more popular. If the assistant principal has not approved by then, treat that as a stop condition. This is a minimum viable test because it is cheap, fast, and directly tests the riskiest assumption.
3. Using her costs, calculate Maya's contribution per label at each price, then give a go/no-go recommendation with conditions.
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Unit cost is $0.12 for a blank label plus $0.10 cutting = $0.22. At $1, the store takes $0.20, so contribution is $1 - $0.20 - $0.22 = $0.58. At three for $2.50, revenue per pack is $2.50, fee $0.50, cost $0.66, contribution $1.34 per pack ($0.45 per label). The three-pack is less profitable per label but raises the average sale. A conditional go: require approval, at least 12 preorders, and a plan to buy only 50 labels first. If 12 single sales occur, contribution is $6.96; if four three-packs sell, contribution is $5.36. Those amounts are small, so Maya should treat this as a learning project, not a big profit plan. If preorders are below 12, no-go; if approval is denied, no-go.