Marine Engineering 105: Why My Boat Costs What It Costs?

Pricing dreams is the no-win gig in yacht design. No matter how hard we try, we never seem to be able to get away from the hard fact that the magic of enjoying a boat only displaces a fraction more than the frustration that comes with pricing that boat.

It’s not rocket science as to why new boats are hard to cost out: The only thing posing more variables when building a yacht, is the owner’s evolving expectations in creating that yacht. Assisting clients in pricing their priorities is tricky.

We have evolved two methods to get at an early approximation for the cost of a new build: One, based on the cost of labor, plus a cost-of-materials factor. And, two, a flat price-per-pound ratio that expresses cost through a boat’s displacement.

Here’s the story on each way to price a new boat:

 

Estimated labor hours plus a materials multiple.

Estimating the hours of labor needed to build a new boat is tricky for the lay boater. Our industry can be flawed in its practice of tracking the cost to build a boat. What information there is, tends to be regional. Our own net labor-hour estimates are derived from our 60 combined years of experience in managing and building hundreds of boats.

Very roughly, all those years boil down to following guidelines for U.S. and European boat production:

  • 30-foot daysailer = 5,000 labor hours.
  • 40-foot weekender = 9,000 to 10,000 labor hours.
  • 50-foot offshore passagemaker = 20,000 to 25,000 labor hours.
  • 60-foot luxury yacht = 40,000 to 50,000 labor hours.

 

From there, we assign a materials-cost multiple, that varies by the length of a boat. Then we add those materials costs to the labor costs for a total estimate. For example:

  • A 30-foot daysailer needs an additional materials cost of 50 percent of the cost of labor.
  • A 40-foot weekender needs an additional materials cost of 65 percent of the cost of labor.
  • A 50-foot passagemaker needs an additional materials cost of 100 percent of the cost of labor.

For anything over 60-feet long, materials will run anywhere from 75 to 150 percent of the cost of labor, depending on the use of exotic materials and advanced technologies.

Simply pick a length, get an hourly cost for labor, work up a multiple for the materials based on length, and then add one to the other. And that’s your round-number estimate. Be sure to confirm these numbers with other builders fluent in the costs in your local market.

We find that labor-plus-materials cost estimates are most useful with projects and teams we know well.

 

Price per pound

Money and the sea share some odd measures: Both can be quantified by weight. We, like most boaters, look at displacement to understand how large a yacht is. But there’s also a direct correlation between size of a boat and the cost of labor per-pound of that boat. Because, regardless of length or mission, a boat’s weight is an excellent measure of its complexity.

We find we can quantify a boat’s cost by how much that boat weighs. Simply get a displacement and a quoted price, divide one by the other. Voila! A robust per-pound cost.

Let’s compare such per-pound costs on live numbers for boats we know, as of mid 2017.

  • Oceanis 55. $520,000 for a 37,250 pound boat, or about $14 per pound.

For low costs per-pound, it’s tough to beat famed French production-builder Beneteau. This mass producer cranks out what we estimate is 3,000 to 5,000 relatively solid, low-cost-to-market yachts each year. This fleet is aimed at the average boater who spends limited time on the water and is happy to turn these craft over after a few years.

The dazzling $14 per pound cost is a testament to efficient molds, powerful volume production processes and the willingness to compromise on optimal performance and finish to lower costs. We usually find it’s not difficult to add functionality and durability to these designs by upgrading techniques and employing higher standards to systems, parts and materials.

But that all comes at a higher cost per-pound.

 

  • Outbound 46: $650,000 for a 28,000 pound boat, or about $23 per pound.

The price-per-pound story jumps when stout, serious materials become a factor. Outbound Yachts is a favorite off-shore builder of ours, located in Taiwan. Outbound sets a benchmark for sensible use of solid build technologies and designs that feature lower-cost, off-shore labor.

To us, $23 per-pound tells an about-right story for an “off-shore”-built boat featuring comparatively low-cost labor.

 

  • Bluewater 56: $ 2,000,000 for a 41,000 pound boat, or about $49 per pound.

Look at what happens when skilled American labor gets mixed with a highly-engineered design that makes no apology in the promise of robust and complete offshore packages. Costs per pound jump dramatically.

Our Bluewater 56 fully reflects the costs of a true world-class cruising vessel built in a high-quality production environment using top-quality materials and labor. The boat is a luxury product designed with an ‘all-business’, no joke approach as a fully capable world cruising vessel. These boats will last for a 100 years. The details and engineering are up to that challenge, a notable difference in the yacht’s specification.

$50 per-pound is about average for this class of hand-crafted bluewater vessel.

 

  • Morris 52 RS: $2,100,000 for a 40,000 pound boat, or about $53 per pound.

To explore the true high-end of semi-custom production yachts, we choose the Chuck Paine-designed Morris Yachts ‘Ocean 52’. The customer can make distinctive choices in this semi-custom yacht that are tailored by-hand from a storied Maine builder. And the price per pound reflects those costs.

 

Keep in mind,  $53 per-pound is a reasonable base price for the Morris Ocean 52, we’ve seen a highly customized version of this design reach $65/lb after all the stops were pulled and every luxury choice was made. Building yachts can exceed prices of $65 per pound for the more complex and highly tailored they become — when extra luxuries and performance targets are requested by yacht owners. On the high end side, or for ULDB craft like luxury multi-hulls, where hi-tech systems, exotic woods, or other criteria requiring high-tech materials like carbon and Nomex, $80 per pound is what gets a whisper in design circles.

Pricing rules evaporate at the true high-end of boating. Here, money can be no object.

 

The Power of Price Per Pound

The power in these ratios lies in quickly comparing boats with different build stories. We know many low-cost production boats remain below $20 per-pound, with the mid-level yachts coming in the $25 – $35 per pound. But, with higher performance, more capability, and higher quality come higher prices, usually falling in the $45 – $65 per-pound range, depending on these variables mentioned above.

If price per-pound figures do not fall in these normal ranges, it’s fair to ask questions: Is a high-end builder selling top-end construction for less than $50 a pound? If so, how? Are adjustments being made to the equipment or structural specification? Are lower quality materials being used and are listed systems/equipment options comparable? Is a production builder advertising for less than $20 per pound? How did they arrive at that price? Where are the lower labor costs and overhead coming from? What are a builders’ production practices? How does the yacht’s fit and finish compare to others? Or, how did the experiences of past customers ultimately pan out?

All good, tough questions that are important for understanding why boats costs what they cost.

Because here’s the heavy logic: Some skilled craft-person somewhere has to pick up and put every pound of boat, in that boat. No matter if that pound is air conditioning, carbon fiber, engines or dazzling wood trim. Human effort is involved. And people cost money, companies have overhead and warranties must be honored. If you have questions about the cost of your projects please contact us. We’re happy to explain costing details further.

This is our simple rule: If costs per-pound are anything more than 10 cents on every dollar out of balance for comparable build classes, it is fair to ask if an apples-to-apples build comparison is being made.

There may be a nightmare looming in the price of your dreams.