Depends on what kind of live food it is. I feed live tubifex. A $3 lot lasts about two weeks for me. I keep it in a butter dish with a bit of tank water (just enough to cover them) in the fridge. When I feed it, I just take a glob in my fingers and dump it in, about the same amount as if I were feeding flake. I wouldn't add the water they came in for the same reason I don't add the water my fish come in - you never know what you can be bringing in from LFS water.
Recently, it's been hard to get good live food in my area. I've actually been having better results with frozen equivalents. Quite a bit cheaper, cleaner to store and handle. Only drawback is some of my fish don't get quite as excited about it.