Lindas Lemonade sells gourmet lemonade, and Linda desires to use target return pricing to inform her pricing strategy for this lemonade as she expands the venture into new geographic markets. The total cost of building a new lemonade stand in a new market is $500.

Based on previous experience, Linda expects to sell 2,000 servings of lemonade per month. To make a single cup of lemonade, her costs are $0.25, which covers the cup, ice, water, lemons, sugar, and Lindas secret ingredient. For each location she opens, she hires 3 employees @ $4,000 per month (each), and she invests $1,000 in advertising expenses. Lindas goal is to recover her upfront investment and generate a profit of $1,000 in the first month a new stand opens.

What should Lindas pricing per serving of lemonade be to recover her investment and achieve her target profit in Month 1?