Expensive Lemonade

Let’s say you run a lemonade stand where you usually sell a cup for $1.

A grandparent pays you a year in advance for one lemonade per week, whether or not they turn up, at 80c each. You get a check for $41.60 - you’re happy.

There’s a drought and you’re the only drinks seller in the area. You sell for $5/cup that week. Some people grumble that it’s expensive but buy it anyway. When your grandparent turns up, they’re still getting their cup for the 80c they already paid.

After the drought ends, your HOA says that selling at $5 was unfair so you must reprice to $2 - you have to give $3 back to everybody you sold at $5 to. If someone knew you sold 100 cups that week, they could say $300 would be returned to customers. Imagine the headlines in the neighborhood newspaper - “lemonade stand must fix $300 pricing error!” How embarrassing.

But, $300 won’t be returned. Your grandparent bought at 80c - there’s nothing to return to them. If you had lots of those deals, the total returned might be far, far less than $300.