Join Date: Feb 2000
Location: Annapolis, Md
Thanked 235 Times in 186 Posts
Rep Power: 10
Markup on boats
My mother was a boat importer, distributer and broker but she left the industry roughly 10 years ago. Things may have changed since then. In her day there were several types of dealers. The lowest level dealers were obligated to do a certain amount of marketing, and order a minimum number of boats a year. The mark-up over direct expenses and projected overhead costs (marketing, office space and administrative costs) was 10% of the salesprice. The Dealer also had very big mark-ups on dealer installed options (something in the neighborhood of 30-50% depending on the option).
Stocking dealers (dealers who ''floor planned a boat'' were entitled to an additional 5% of the profit, which took them to somewhere in the neighborhood of 15% profit plus they got other incentives. They also had other costs such as splitting the costs of being at boat shows which was the second-largest overhead cost coming right after the cost of research, design, developmentand tooling costs.
The Distributer/importer had roughly 15% to 25% in profit but this also had to cover a lot of overhead such as flying over for inspections, development costs, operating and office marketing costs, the costs of letters of credit and other incidental expenses. While this sounds like a lot of profit, the annual profit for the importer distributer when comparing gross sales to all costs typically was well less than 15%, which is a tiny margin for the risks involved. Most dealers of that era that I had known operated on a similarly tight margin somewhere less than 5%-7% after commissions.
From what I gather of the industry today, since the Afganistan-Iraq wars and the last couple hurricane intensive years has taken a lot of potential boat building labor out of the workforce, labor has gotten very expensive compared to years ago. Similarly all materials, but especially petrochemical and energy dependant materials, have really spiked up as well. Lastly people have come to expect a lot more sophistication out of their boats. Basic ''value oriented models, like Hunter and Beneteau now come stock with vinylester resin barrier laminates below the waterline and kevlar laminate in impact zones. Boats that will never see European waters are still designed around the EU standards and go through the rather expensive certification process because American buyers seem to expect that. Even small and basic boats seem to come equipped standard with self tailing winches, sophisticated electronics, complex furling systems, refrigeration, wheel steering, diesel engines with high output alternators, multiple battery banks, and other fairly expensive details. All of this adds up rather quickly to make boats a lot more expensive than they were even a decade ago.