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What Will It Cost...?

The Most Commonly Asked Question

Copyright 2008 - 2011 Michael Kasten

It is for the most part entirely foolish to even be dragged into trying to answer this question...!  However in order to address this inevitable question, below is an essay that expands upon an inquiry regarding the cost to build one of my designs...
 

WHAT WILL IT COST...?

Cost to build a boat or to have one built is by far the most common question I am asked.  But it is a question for which I do not have an answer.  This might sound odd, but consider the following:

It is very difficult to pre-guesstimate boat building costs, especially prior to a design having been created.  Prior to the plans having been developed, the vessel is merely a twinkle in the prospective owner's eye.  It would be the height of folly to even attempt a guess at build costs until sufficient detail in the form of Estimating Plans has been created.  If you'd like to know what is involved, the process of creating a new design is outlined well at our Custom Design web page.  

The purpose of first developing a good set of Estimating Plans is to thoroughly outline the structure, the layout, the rig, and the intended equipment and outfit so the builder will know what is intended.  Without this vital tool, any discussion of eventual costs nothing more than a pipe dream...!  Without sufficient information about what you intend, the builder that you have contacted - even if they may be very familiar with boat building - will inevitably have a different "vision" of the vessel in their own mind.   Without a well-developed set of plans and particulars in hand, there can be no reliable specifics with regard to cost.

Even if a completed set of Estimating Plans already exists it is not possible for me to know the cost to build the boat, except possibly in extremely broad terms, which by their very nature will be at best entirely wrong, or at worst extremely misleading.

On the question of cost, Boat Builders will know best, but only after they have been able to look at the design on the basis of a 'sharp pencil' estimating regime.  Even with thorough Estimating Plans, the builder may still envision a different level of finish than you do.  Over the years, we have seen good 'sharp pencil' estimates come in all over the place.  We can only attribute this to differences in builder efficiency, builder overhead, local labor costs, builder skill and the like, but also differences in how they may have interpreted the owner's wishes. 

Thorough communication is key.  That is why we take the trouble to provide a 'Designer's Cover Letter' to the builder, in order to explain the level of our support during construction (for example whether there will be NC cutting files, etc.).  We also provide an 'Owner's Cover Letter' template, wherein the owner can explain precisely what is expected of the builder.
 

AN EXAMPLE...

In order to illustrate the variables that affect the eventual cost of a boat, I would like to use my Redpath 44 as an example.   I designed Redpath as a replacement for my own 34' schooner  Emerald.  As designed, the Redpath 44 was therefore exceedingly simple. 

I am possibly a bit extreme in the pursuit of simplicity.  For example, on my 34' schooner Emerald the entire electrical system was contained within my flashlight..!  Well nearly so.  There was no wiring.  The engine starting was via hand-crank only - I did not have an electric starter.  Running lights each had their own batteries.  Radio was self contained, etc. 

In the mid-80's when I completed Emerald the final price tag was under USD $35,000.   Even though my own labor was supposedly 'free' I could easily have done it for less.  I admit, I wasted money on stuff that I should not have.  For example I added a sealed-cell lead acid battery to run a car stereo.  This 'system' was also self contained with a small battery charger to plug in when dockside.  These, I thought were an extravagance.

On the other hand, I got a terrific deal on very high quality hand-stitched Dacron sails which would probably cost eight times as much these days, so I cannot complain.  In fact, the boat was finished quite nicely inside and out.  The rigging was simple, strong and highly effective.  Maintenance was no trouble.  In all, it was a great deal of fun.  Most of the reason for this is that the whole boat was exceedingly SIMPLE.   Emerald is in fact a good example of what I mean by Nomadic Watercraft.

A lot has changed since then, in particular my age, and of course the value of the US dollar has diminished greatly.  However if I were to repeat that same adventure now (2011) with my Redpath design, building in steel and assuming a US build venue, I'm quite certain I could achieve a similarly appointed vessel with a bone-simple electrical system (or none) for less than USD $150k or so.  That said, I am probably no longer willing to do 100% of the work myself as I had done on Emerald, so I would likely hire the hull built professionally.  That might add something on the order of USD $100k or so for the fabrication labor assuming the structure would be NC cut, plus maybe $15k or so for the blasting and painting labor.  At that point I'd still have the fun part ahead of me, i.e. the joinery, the rigging, and the other installations.

In my present day economy even that would be an impossible stretch, so I do absolutely understand the need to economize to the max in most cases.  That sentiment is what drives the majority of my designs, in particular the ones I've designed 'for myself' such as Redpath, Zephyr, Moxie, Quinn, Renegade, Peregrine...  They are all very simple boats, intended for maximum economy during construction and ownership, but lacking nothing in terms of elegance and grace!

Having said the above about Redpath 44, if the boat were to be built professionally to a 'turn-key' stage of completion, the cost would of course be greater.  One Redpath 44 was built in New Zealand in steel during the early 00's which was blessed with a very high standard of construction, an extremely fine finish, and just about every bell and whistle imaginable.  The price tag..?  It was offered by a broker on the US East Coast for over $800k.  A few pics of that boat are on the Redpath web page. An extraordinarily fine job I say - and no doubt worth every penny..! 

However... if built with a vastly simpler approach to equipment and outfit (but no less elegant a final result) I have little doubt that I could get Redpath professionally built in the USA for somewhere south of $450k and the result would still be stunning. It is possible that I would participate to some extent in the construction in order to achieve that price, say to do some or all of the interior joinery and all the interior varnish and paint. Every item would be only what it needs to be, rather than what I might wish for in my wildest dreams.  It should go without saying that there would be no fancy electronics or flat screen TV..! 

If I were to take the opposite tack, I have no doubt that with no holds barred if I were to build Redpath to an equal or higher degree of finish as the vessel shown in those pictures I could easily spend a million or more. 

Believe me, I am in no way disparaging the wish to have only the finest yacht available.  What I wish to illustrate here is the extremely wide cost variation that is possible even with the same design. It is all a matter of the owner's budget vs. the approach taken, the equipment spec'd, the venue selected, and the level of high finish required (and the consequent amount of labor required to achieve that end).

This is why we consider it essential to submit detailed Estimating Plans to a hand-picked selection of builders in order to obtain a firm quote.  We also prefer to include a thorough Vessel Specification and Equipment List in order to outline each owner's unique requirements.  The intent of those documents, drawings and cover letters is to clearly outline the owner's intent so that the builder can land reasonably close to the mark, rather than having to simply guess.
 

BUILD VENUE

Despite the rather extreme damage done to the US dollar in recent years, we have found several offshore venues to still be quite a good value.  Presently, Turkey tops the list due to proximity to the EU and a legal framework that is continually trending in that direction in anticipation of eventual EU membership.  I think we may eventually see New Zealand come back to the 'favorable' list, although it has not yet achieved that status.  Thailand is a good possibility, as well as the Philippines and Taiwan.   It is possible China will become important as well, however as of 2011 access to Chinese yards is still somewhat awkward for the small one-off player, and of course China has practically zero legal protections of the sort we are accustomed to having.

Today, if I were to want to build a boat for myself and I were willing to venture into a foreign venue, I'd first get a good idea of the cost of a "power-away" fully weathertight package from Holland.  I would then compare that to the same level of completion in Turkey.  My rationale is that even though I know for certain that Turkey can offer a better value due to much more favorable labor rates, I also know that Holland builders are extremely skilled with metal boat building, therefore able to offer very high efficiency even though labor costs are much higher.  Prior to making a final decision, I would then check out the cost to build in the US.  These days, I would not be at all surprised to find the US to be competitive.

I have not been to Turkey, but it is certainly on my wish list of places to go.  After all, what better place to take delivery of your vessel than the Aegean Sea..?  I've communicated with several capable and willing builders in Turkey, one of whom has built my 32' Terrier.  That builder may soon be building my 38' Nidaros and possibly my 50' Renegade. 

Note that even if a vessel is built inside the EU (say Holland) but is not for ownership within the EU, then the added costs for a CE Mark (possibly 10%) and for VAT tax (around 25%) do not apply.  And if the vessel is owned and used outside the EU for five years, neither will apply on its importation to the EU.

Of course if only the best will do, and if it will be a metal boat, then I would still investigate Holland first.  Nowhere in the world will you find such a concentration of highly skilled metal boat builders with a well developed network of suppliers and sub-contractors to support them.  In fact, boatbuilding is very nearly a national passion.

These days, given the uncertain state of the world economy prospective boat owners are extremely well positioned for a bargain...  In other words, I think builders may soon be begging for work...  even in Holland..!

The next question is how to hedge against the inexorable devaluation of world currencies between the beginning of construction and the vessel's completion.  An extremely tough question at best, since all currencies seem to be racing each other to the bottom.  I do not see any one currency as a safe haven since none of them are backed by anything more than promises.

Today's currency exchange rate (as of August 2011) is approximately USD $1.45 = EU 1.00.  After excursions all the way from USD $1.20 / Euro to USD $160 / Euro within the last few years, none of this is very dependable.  When we have seen the US dollar exchange rate become more favorable, it has not been because the dollar has "improved" in any way shape or form, but rather that other currencies have simply devalued more quickly.  Given this uncertain global monetary climate, gold and silver look quite good as a hedge against currency devaluation, especially if viewed over a multi-year time frame...  

The latter paragraph is my purely amateur opinion...!  However the paragraphs prior to it reflect my professional opinions, which are based on much longer tenure paying attention to the trends.
 

REGISTRY

For a vessel built for ownership or use within the US, I would seriously consider flagging the vessel in the Marshal Islands.  No taxes, no annual reports, excellent privacy of ownership, a body of corporate law inherited directly from the State of Delaware, and a 'Most Favored Nation' relationship with the US.  This latter status means not having to formally enter and depart from each US port when cruising, plus having extended stay privileges in the US without being hassled.  More importantly, your vessel will carry the Marshal Islands flag and will therefore be less of a 'mark' when traveling elsewhere worldwide as compared to a vessel carrying the US flag.

For a vessel built for ownership and use within the EU, the boat will usually carry the flag of the country of origin or the country of the owner.  That said, there are other flags of convenience which may provide an advantage regarding fees and taxes.  Examples are the Cook Islands, the Cayman Islands and the Channel Islands, among others. 

Unless there is an extreme tax benefit though, I regard most of these as being flags of "inconvenience" due to the restrictions on movement.  For example, not being able to stay within the EU for more than six months without incurring the full cost of VAT (value added tax) plus other registry requirements.  One slight reprieve in the EU is that once a vessel has been in service for five years, the requirement to have a CE Mark is waived - and if owned for that period of time outside the EU, it can be "imported" at a greatly reduced valuation for VAT, or in some cases with VAT waived. 

All of these wild games, despite their intrigue, may in the end cost as much or more than simply playing by the rules..!
 

FINDING A BUILDER

While we will always help with builder recommendations, we do not provide builder lists or any builder contact information until an Estimating Plans set has been developed, or in the case of a stock design, purchased.  

Why. . . ?

Actually there are quite a few reasons:

Our builder recommendations are based on a number of considerations: 

Without a good set of Estimating Plans, a builder will be in the unfortunate position of "attempting to apply a fudge factor to a variable that's been based upon an assumption about an unknown."   In absolute terms they can only end up with. . .  an unknown!

Further, our builder recommendations will be made on the basis of the builder's suitability to the project being considered.  

Why is this 'suitability' consideration important. . . ?  Some builders prefer to only build the metal hull / deck / cabin structures, while others prefer to build the whole boat.  Some can build only up to a certain size of boat.  Some do not want to fool with power boats, nor others with sail boats, some have a specific suitability to being able to provide the owner's expected level of finish, and so forth.  

Essentially, for every design there will probably be several qualified builders, and there will be others that are neither suited to the project nor possibly even interested. So, while we most definitely do make builder recommendations, we will do so only when we have also supplied the prospective boat owner with sufficient information for those builders to determine construction costs in the form of actual Estimating Plans.  

In this way an owner will not be wasting their own time. 

Just as importantly, an owner will not be wasting the builders time...!
 

WHAT ARE ESTIMATING PLANS...?

 In order to be able to determine a 'completed vessel' cost or even a 'power-away' cost, there must necessarily be a well defined plan.   In other words, the owner must present sufficient information to the builder so that the builder can actually sharpen their pencil and provide a firm quote for construction. At the very least the builder must be provided with what we call an 'Estimating Plans' package.  This consists of the first few drawings of the actual "Building Plans" plus a few preliminary design documents, as follows:

Drawings

Documents

The Equipment List includes all the various mechanical and electrical equipment items. The Vessel Specification outlines the intent of the design, gives the vessel's proposed scantlings, construction materials for the hull and the interior joinery, the proposed paint schedule, and a preliminary indication of power, range, tankage, performance and stability.  With the Estimating Plans, Vessel Specification and Equipment List in hand, one can then approach builders to inquire about actual construction costs.

For a complete list of our available Study Drawings, Estimating Plans and Building Plans, please see our Plans List page.
 

WHY BUILD. . . . ?

Although I don't keep track of what new or used production boats are selling for, I do know that a yacht broker's commission is ordinarily 10%.   This seems a heavy price to pay simply as a finder's fee.

Even when an entirely new Custom Design is created out of an owner's preliminary description and a few napkin sketches, the design work will not usually cost more than a yacht broker's commission - often considerably less. . . !  For more information on this subject, please see our web article on Yacht Design Costs.

Of course if a Stock Design has been used, the entry cost is even less.

Why build. . . ?

Why not. . . !

More Articles on Cost:
Nomadic Watercraft  |  Estimating Boat Building Costs  |  Affordable Boatbuilding  |  What Will The Boat Cost..?  |  What Will the Design Cost..?
 

Please see the Plans List page to review our available Boat Plans.

Home  |  Intro  |  Custom Yacht Design  |  Stock Designs  |  Motor Yacht Gallery  |  Sailing Yacht Gallery  |  Prototypes Gallery  |  Plans List
Articles  |  Our CAD Design Stream  |  MAXSURF For Marine Design  |  News..!  |  Design Team  |  Site Map  |  Site Search  | Contact Us