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Oct 13, 2025 by vinooalluri.com 137 views

Dernea Gardening's Profitable Wheelbarrows: A Case Study of Pricing and Commission Strategies

Dernea Gardening, a leading gardening equipment supplier, has been selling wheelbarrows to customers across the country. With a production cost of $\$ 6.94$ per wheelbarrow and a selling price of $\$ 42.50$ , the company is looking to maximize its profits. To achieve this goal, Dernea Gardening employs two salespeople, each earning a different commission per wheelbarrow sold. In this article, we will delve into the pricing and commission strategies employed by Dernea Gardening and explore the implications of these strategies on the company's profitability.

Dernea Gardening's pricing strategy is centered around the concept of markup pricing. The company calculates the markup by subtracting the production cost from the selling price. In this case, the markup is $\$ 42.50 - \$ 6.94 = \$ 35.56$ . This means that for every wheelbarrow sold, Dernea Gardening earns a profit of $\$ 35.56$ .

Dernea Gardening's commission strategy is designed to incentivize salespeople to sell more wheelbarrows. The company offers a commission of $\$ 10$ per wheelbarrow sold to the first salesperson and a commission of $\$ 15$ per wheelbarrow sold to the second salesperson. This means that the first salesperson earns a commission of $\$ 10$ for every wheelbarrow sold, while the second salesperson earns a commission of $\$ 15$ .

To determine the break-even point, we need to calculate the total revenue required to cover the production costs and commissions. Let's assume that the company sells x wheelbarrows.

The total revenue is given by:

\text{Total Revenue} = (\$ 42.50) \times x

The total cost is given by:

\text{Total Cost} = (\$ 6.94) \times x + (\$ 10) \times x + (\$ 15) \times x

The break-even point is reached when the total revenue equals the total cost:

\text{Total Revenue} = \text{Total Cost}

Simplifying the equation, we get:

(\$ 42.50) \times x = (\$ 6.94) \times x + (\$ 10) \times x + (\$ 15) \times x

Solving for x, we get:

x = \frac{\$ 6.94 + \$ 10 + \$ 15}{\$ 42.50 - \$ 6.94}

x = \frac{\$ 31.94}{\$ 35.56}

x = 0.9

This means that Dernea Gardening needs to sell at least 0.9 wheelbarrows to break even.

To maximize profits, Dernea Gardening needs to sell more wheelbarrows than the break-even point. Let's assume that the company sells x wheelbarrows, where x > 0.9.

The total revenue is given by:

\text{Total Revenue} = (\$ 42.50) \times x

The total cost is given by:

\text{Total Cost} = (\$ 6.94) \times x + (\$ 10) \times x + (\$ 15) \times x

The profit is given by:

\text{Profit} = \text{Total Revenue} - \text{Total Cost}

Simplifying the equation, we get:

\text{Profit} = (\$ 42.50) \times x - (\$ 6.94) \times x - (\$ 10) \times x - (\$ 15) \times x

\text{Profit} = (\$ 35.56) \times x - (\$ 31.94) \times x

\text{Profit} = (\$ 3.62) \times x

This means that for every wheelbarrow sold, Dernea Gardening earns a profit of $\$ 3.62$ .

In conclusion, Dernea Gardening's pricing and commission strategies are designed to maximize profits. The company's markup pricing strategy ensures that it earns a profit of $\$ 35.56$ per wheelbarrow sold. The commission strategy incentivizes salespeople to sell more wheelbarrows, resulting in higher profits. By selling more than the break-even point, Dernea Gardening can maximize its profits and achieve its business goals.

Based on the analysis, we recommend the following:

Increase the selling price: Dernea Gardening can increase the selling price of wheelbarrows to $\$ 45$ or more to increase its profit margin.
Adjust the commission structure: The company can adjust the commission structure to incentivize salespeople to sell more wheelbarrows. For example, the first salesperson can earn a commission of $\$ 12$ per wheelbarrow sold, while the second salesperson can earn a commission of $\$ 18$ .
Improve production efficiency: Dernea Gardening can improve its production efficiency to reduce the production cost of wheelbarrows. This can result in higher profits and increased competitiveness in the market.

By implementing these recommendations, Dernea Gardening can further maximize its profits and achieve its business goals.
Dernea Gardening's Wheelbarrows: A Q&A Guide

Dernea Gardening's wheelbarrows have been a popular choice among gardening enthusiasts and professionals alike. With a production cost of $\$ 6.94$ and a selling price of $\$ 42.50$ , the company has managed to create a profitable business model. In this article, we will answer some of the most frequently asked questions about Dernea Gardening's wheelbarrows.

A: The profit margin of Dernea Gardening's wheelbarrows is $\$ 35.56$ , which is calculated by subtracting the production cost from the selling price.

A: The first salesperson earns a commission of $\$ 10$ per wheelbarrow sold, while the second salesperson earns a commission of $\$ 15$ per wheelbarrow sold.

A: The break-even point for Dernea Gardening's wheelbarrows is 0.9 wheelbarrows, which means that the company needs to sell at least 0.9 wheelbarrows to break even.

A: Dernea Gardening can maximize its profits by selling more wheelbarrows than the break-even point. By selling more than 0.9 wheelbarrows, the company can increase its profits and achieve its business goals.

A: Yes, Dernea Gardening can increase its profit margin by increasing the selling price of wheelbarrows. By increasing the selling price to $\$ 45$ or more, the company can increase its profit margin and achieve higher profits.

A: Dernea Gardening can improve its production efficiency by reducing the production cost of wheelbarrows. This can be achieved by implementing cost-saving measures, such as reducing labor costs or improving manufacturing processes.

A: The benefits of Dernea Gardening's commission structure include:

Incentivizing salespeople to sell more wheelbarrows
Increasing sales revenue
Improving customer satisfaction
Enhancing the company's reputation

A: Yes, Dernea Gardening can adjust its commission structure to incentivize salespeople to sell more wheelbarrows. For example, the company can increase the commission rate for the first salesperson or introduce a new commission structure that rewards salespeople for meeting sales targets.

In conclusion, Dernea Gardening's wheelbarrows have been a successful product for the company. By understanding the pricing and commission strategies employed by Dernea Gardening, customers can make informed purchasing decisions and businesses can learn from the company's success. We hope that this Q&A guide has provided valuable insights into Dernea Gardening's wheelbarrows and has helped to answer some of the most frequently asked questions about the product.