Chartering a superyacht, what to do with the price.

[Super-Yacht]

So we bought a superyacht for commercial purposes and are now offering it through the various charter brokers to the market. But where we want to go down with our weekly rate (almost half the price of others), they all seem to want to keep it up at 50k a week or so. Is this all a commission game or are there other reasons you can come up with that we're not seeing?

Thanks already for any information!

Roger van Gerwen

[Sailmonkey]

You're way out of my experience and price point for charter!!!!

[Super-Yacht]

Lol, but we "only" want to charge 25 k/week :-)

I know, these amounts sound bizarre but that's what the market is at. Also a reason for us to get into this market obviously. But being a price breaker isn't appreciated it seems, hence my question.......

[azsailor12]

It's not a price sensitive market, so the brokers want everyone to maintain the high prices.

[Super-Yacht]

Yes, that's exactly the feel I'm getting. Customers come in 2nd place right.....

[skipmac]

My guess.

First, anyone that is in that price bracket is probably not that interested in finding a discount charter. If you have that kind of money to shell out on a lark then whether it's $25K or $50K for a week is probably a minor consideration.

And agree with the other comments about the brokers wanting to keep the price high in the market. Their commission for booking a $50K charter is of course double the commission for a $25K charter.

[Sailmonkey]

I'm with the other poster here......

The crowd who will be looking to charter for 50K a week won't blink an eye at the price, but my guess would be that by dropping the price it looses some of the exclusivity that makes it attractive in the first place. I have a feeling that the brokers know how to market to their segment and wont' drop the price unless the exclusivity can follow the price drop.

[Bash]

Is the OP for real?

With a crew of 10, the annual operating budget of a superyacht will come in at around $2,000,000 per year. That comes out to $38,000 per week. If you charter at $25,000 per week, you'll basically be subsidizing your clients.

If the OP is real, I'm sure the brokers will be able to help him with the math.

[MarkJ]

Originally Posted by Bash

If the OP is real, I'm sure the brokers will be able to help him with the math.

bash,
charter boats don't make a profit they just offset costs.
Some flags only allow 80 days chartering per year anyway.

And of course every price level is price sensitive. Offer good value at $50k and you will sell something easier than bad value at $50k.

If rich people were fools they wouldn't be rich.

[Super-Yacht]

Ah, the OP is for real haha, feel free to google me and you'll find me. But we will have a crew of max. 5 and you can believe me that we have done the math. (but thanks for thinking with us :-))

We know that we won't be operating with huge margins, but the idea is to get more yachts and divide part of the operational cost amongst them. Also, we want to use this year as a learning process and don't mind to put some money into that.

What I don't really get feelingwise and where everyone is pointing at, is that I do see a huge difference in 25k or 50k. If you have a group of 10 who want to charter a yacht, it's 2,5k for the week each, not so different from "normal luxury cruises" is it?

I guess it's more the fact of the commission, that point I do see.

Thanks everyone!
Roger

[David_Old_Jersey]

Apart from the reasons quoted (higher commissions and presenting a premium product) maybe they are quoting you at $50k a week to get you to sign up with them? and then afterwards will bring you the news that you were right!, except commission paid on the agreed / standard price not the discounted price needed. Or they could be seeking to lock you into a contract to prevent the boat competing against others in the marketplace........but I am a touch untrusting!

I must confess am a tad surprised you hadn't nailed this down before buying and locating her (and have a broker(s?) lined up / already working with you). But to be fair, I have never bought a superyacht!

Dear Santa............

[Super-Yacht]

David,

It is already out there at the higher rate with the brokers and a CA but we are now suggesting to them to put it out much lower to see if we will get more weeks filled (see my original post, guess I wasn't clear there). So yes, we did think before buying, we're just in the middle of trying new stuff to see what happens :-).

Also because nr. 2 is on its way we might want to try another approach with that one to spread our risks. I'm currently in the middle of all these talks and it just surprised me that no one seems to be happy with a lower price so I thought to pop the question here.

I guess price breaking is not done (yet?) in this market....

[HappyMdRSailor]

The last time I was chartering a super yacht.... I woke up and found myself peeing in the sink instead of the gold plated head....

[Super-Yacht]

Originally Posted by HappyMdRSailor

The last time I was chartering a super yacht.... I woke up and found myself peeing in the sink instead of the gold plated head....

The last time I was chartering a super yacht.... I woke up and found myself peeing in the sink instead of the gold plated head....

Looolll!

[Suijin]

Originally Posted by Super-Yacht

Ah, the OP is for real haha, feel free to google me and you'll find me. But we will have a crew of max. 5 and you can believe me that we have done the math. (but thanks for thinking with us :-))

We know that we won't be operating with huge margins, but the idea is to get more yachts and divide part of the operational cost amongst them. Also, we want to use this year as a learning process and don't mind to put some money into that.

What I don't really get feelingwise and where everyone is pointing at, is that I do see a huge difference in 25k or 50k. If you have a group of 10 who want to charter a yacht, it's 2,5k for the week each, not so different from "normal luxury cruises" is it?

I guess it's more the fact of the commission, that point I do see.

Thanks everyone!
Roger

I would think that your best source of information is the brokers themselves. I would expect them to be forthcoming regarding their logic for the price point that they want to put you in. It may be as simple as protecting the market. If it were just the issue of commission, then they would benefit as well as you were you to book more weeks at a lower rate as they take a straight cut out of your gross, correct?

It seems to me that you are fairly low on the learning curve for this business. You want to offer the charters at reduced rates, to book more weeks at lower margins, yet want to buy more boats. I would think that showing a healthy bottom line would be important to getting financing to expand your business, and if you don't need the revenue right now, then why cut the price to drive more bookings?

I think you should consider the implications of what you're considering. If you're trying to build a brand (and I would assume that brand is important in this business, from a B2B perspective in terms of your standing with brokers, who are essentially your clients), then you're positioning yourself in the market as the "budget" luxury yacht charter.

I'm pretty sure if the business model that you're contemplating were viable that the market would have evolved to service it. There have to be some dynamics that have kept it from going there.