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Overcharging – Lemonade Stand

My brother and I opened a lemonade stand and charge $1 a cup. This is actually about three times what each cup actually costs us to make. Is that allowed?

The Aish Rabbi Replies:

Good luck on your business!

Now regarding the price, there is one main rule to keep in mind. The Mishna (Baba Metziah 4:3) teaches us that we may not overcharge by 1/6th (~16.67%) or more. (Similarly, a buyer cannot offer a price to an unknowing seller which is 1/6th or more below the going rate.) However, the 1/6th is not counted from the base cost to the seller but from the typical retail price of the item. It is of course acceptable for a merchant to make a profit on his sales. The concern is rather in taking a greater profit than typical, taking advantage of unsuspecting purchasers.

Based on this, what would be problematic for you is not selling at 1/6th more than your own cost, but at 1/6th more than the going rate – what people typically charge for a product like this. When it comes to lemonade, there seems to be a wide range of prices charged, depending on if you’re using freshly-squeezed lemons or working from a mix, the size of the cup, the typical clientele, the weather, etc. But $1 for a cup seems completely reasonable in almost all situations.

(Sources: Mishna Baba Metziah 4:3-4, Shulchan Aruch C.M. 227:2,27.)

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