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
Please see our AVAILABLE BOAT PLANS web page
What Does It Cost To Design A Yacht...?
Copyright 2007 to 2011 Michael Kasten
As it turns out, design cost is very nearly the most common question we are asked, so I will elaborate.... First I will review how the cost of a stock boat design is determined, then I'll explain a few of the various fee approaches that may be used by designers when creating a new custom yacht design.
STOCK DESIGN COSTS
You can review the cost of our stock boat designs on our Plans List page. Prices there approximately reflect the amount of detail within the plans set for each vessel, and also whether there remains any work to be done in order to finalize the design. Those prices are likely to be approximately representative among designers, provided that the amount of detail being offered in the plans and design documents is about the same.
If interested, you will find a thorough description of what's included in a typical Stock design package on our Stock Design page.
CUSTOM DESIGN COSTS
For any new Custom yacht design, regardless of who will do the design work, an orderly and well-established process will need to be followed in order to achieve a completed design that ready for the builder. If you'd like, you can review our approach to the custom design process in detail on our Custom Design and our Design Stream web pages. You'll find several links there to other articles about our design process as well.
As for the fee structure to create a new custom yacht design, there are differing approaches taken. Some designers prefer to work on a "commission" basis, charging a percentage of the yacht's build cost, and other designers prefer to work on an hourly basis throughout.
Still other designers will use a hybrid approach, working first on an hourly basis in order to create a preliminary design and specification and then on a commission basis for the final design. This allows the owner and the designer to get most of the decisions and changes out of the way so that the preliminary design can be used as an estimating tool and as a beginning place for detailing the completed design. With a hybrid approach, once the preliminary design is done, a commission is arranged for the final design work based on the projected cost of the vessel, payable at least in part prior to beginning work on the fully detailed design for construction.
A general summary of these differing approaches follows, including some of the rationale for each...
COMMISSION BASED YACHT DESIGN
When a "design commission" is arranged in advance, the commission is based on a fixed percentage of the cost of the completed yacht.
A fixed-commission yacht design arrangement requires an extremely well defined owner's specification and a highly explicit design contract that will usually restrict the client's flexibility during the design process. For example, any design changes requested would necessarily involve a well defined change proposal, and then executing a formal 'change order' involving a separate negotiation for each change request in order to determine the cost of the change. This can become complex and inordinately restrictive, and per our usual arrangements (outlined below) it is quite unnecessary.
When used, a fixed design commission is ordinarily based on a percentage of the cost of the vessel 'as-built' by a professional yard. It turns out however that it is generally not possible to determine a vessel's build cost before the design even exists...! In other words, one cannot pre-ordain a yacht's build cost before there is even a design on which to base its build cost.
Further, in order to cover unforeseen contingencies during the process of developing a design that will ultimately be exactly tailored to a client's specific requirements, in advance of even knowing those requirements, a fixed-commission-based design will necessarily include a generous margin, and the owner will be bound to the pre-arranged percentage regardless of the eventual cost of the yacht.
In other words, while the commission percentage may well be agreed upon in advance, the amount of that commission will still not be known since it will vary according to the final cost of the yacht.
Typical Commission: A fixed-commission design fee will often be in the range of around 10% to 12% of the as-built cost of a yacht, assuming it is finished to a turn-key stage of completion and fully outfitted. It is important to note that these percentages do not include further development work, such as the cost to develop NC cutting files. It is only for the design itself.
These percentages assume that the build venue will be local to the designer. For example, if the designer is in the US and the yacht is built in the US, then it is reasonable to expect that those percentages will approximately apply. On the other hand, if the vessel is designed in North America or Europe, but built elsewhere - possibly in a much lower cost venue - the vessel's cost may well be less but the design cost will not vary, thus the 'commission' percentage will necessarily be higher.
This kind of arrangement must always take the form of a formal legally binding contract, whereby the client is liable for an agreed upon percentage. Such a contract must outline in extreme detail what will and will not be delivered in the completed design package. Due to the extra 'margin' that the designer must include in the commission in order to cover the uncertainty factor, a fixed design commission will nearly always be the most costly design arrangement. As a result, it will usually be by far the most lucrative arrangement for the designer, in particular with larger craft.
In addition to the inherently higher overall cost, a percentage based commission encourages the designer to specify higher cost equipment and furnishings, more elaborate structure and a higher level of finish than may be necessary to satisfy the owner's actual requirements... after all, the designer is getting a percentage! This is exactly why building architecture is so profitable - and the same applies to marine architecture.
As a result of these factors, it should be fairly obvious that a fixed yacht design commission will not be especially advantageous to the client, nor will it necessarily be favorable to achieving the most suitable design...
HOURLY FEE BASED YACHT DESIGN
Rather than working to a fixed-percentage design commission, at the opposite end of the spectrum is an hourly fee based design arrangement. This approach will be elaborated below.
HYBRID APPROACH TO YACHT DESIGN
In many cases a yacht design will be created using a 'hybrid' approach, with part of the design work done on an hourly basis, and part of the design work done on a commission basis.
By this method, it is most common to develop the Preliminary Design (Stage I) and possibly also the Estimating Plans (Stage II) on an hourly basis, and then arrange a fixed fee or percentage based commission for completion of the Building Plans (Stage III drawings and documents).
This approach allows the preliminary design to be defined in terms of size, layout, materials, and preliminary performance, weights, hydrostatics, stability, etc. on an hourly basis. During this development, changes can be freely made and the designer's time is simply paid for by the hour. Once the yacht has been well-defined and the likelihood of any change orders diminished, a packet of Estimating Plans can be prepared and circulated to a selection of builders in order to determine the cost of the vessel.
Once the vessel's cost is known, the remaining design details, i.e. the Building Plans, can then be developed on a percentage basis. In other words, once the cost of the vessel has been determined, the Stage III commission can be based on a percentage of the known construction cost.
Typical Cost: Taking this approach, the design commission percentage may be on the order of around 8% to 10% of the cost of the as-built yacht. This commission percentage will be added onto the overall build cost and paid to the designer prior to the start of construction. For second or third-world build venues, the percentage will of course be varied accordingly. In other words, these percentages assume the vessel will be built in the same location as the designer.
Using a hybrid fee approach, the design commission percentage paid is in addition to any amounts already paid on an hourly basis in order to develop the Preliminary Design and Estimating Plans. Using this approach, the overall cost of the design work from beginning to end will amount to more or less the same percentage as would have been the case with an entirely commission based yacht design - in other words somewhere between 10% and 12%. Of course this can vary, depending on how many iterations are explored before a preliminary design is settled upon. It is important to note that this is for the design itself, and does not include construction related services such as developing NC cutting files, etc.
The hybrid approach is relatively safe for the designer, as the likelihood of unforeseen changes being introduced late in the design development is minimal. For larger yachts, this approach is extremely lucrative for the designer, though it does require a very secure, legally binding, explicitly worded design contract that is agreed to by all parties, plus a highly specific definition of what the deliverable documents and drawings will be. Change orders must then be negotiated if the owner or builder request any variations from the preliminary design.
Using the hybrid approach, the actual cost of the design work will still not be known in advance, essentially being a percentage of a variable (the cost to build the yacht)...!
OUR PREFERRED APPROACH
In my view, both a fixed commission and the hybrid approach seem inordinately complex, restrictive, and not especially advantageous to the client / owner. We therefore prefer to work on an hourly basis throughout, which we find to be 100% fair to both client and designer, more flexible, less costly overall, and in the end much less hassle for everyone involved. By this method we are compensated for the hours expended to achieve the design, and we charge only for the hours actually spent in pursuit of that goal.
An hourly based approach offers the client maximum flexibility with regard to the scope of the design work, and to accommodate any changes or other special requests they may wish to include as the design emerges. By this we mean that an hourly arrangement allows the client maximum freedom during the development of the design; compensates us most fairly for our time; avoids the expense of drawing up contracts and change orders; and ultimately reduces the overall cost of the design work to the client.
How then do we know what the design costs will be?
For each potential new design, we pre-estimate the required design hours based on the 'owner's specification' or 'mission statement.' This estimate takes the form of our usual written 'Design Proposal.' Our Design Proposal is an outline of the design process, a list of the deliverable documents and drawings, an approximate choreography and an estimate of the hours required to achieve the design work.
Our Design Proposal is task-specific, therefore it is ordinarily quite accurate in terms of the hours required to achieve the actual design work. The variables then are the number of changes requested and the amount of communication that the owner may require.
We develop the design in a series of stages. We refer to the Preliminary Design as Stage I, during which we take the napkin sketch or preliminary owner's requirements and turn them into a proposed design. Once that has been approved, we then begin to develop the Estimating Plans within Stage II. These consist of the essential drawings and documents that a yard will need in order to prepare construction estimates.
During each stage, we provide images or PDF's by email to illustrate the emerging design, and to solicit owner feedback. We provide a thorough accounting of the hours spent on each task and periodic invoices to keep everyone up to date.
As soon as we have sent the Estimating Plans out to a selection of builders, we immediately commence our work to complete the Building Plans within Stage III. During our Stage III work, we fully detail the design for construction, finalize the various calculations, create a number of additional drawings, and issue the final documents, calcs, and Building Plan drawings.
By this method, as soon as the construction estimates arrive we are in the best position to commence work on the next stage... i.e. building the boat...! Our involvement in the construction side of things is limited to developing NC Cutting files. Yes, we actually begin the construction process by starting to build the boat right here on the computer...!
For a more complete outline of the custom design process and a description of the deliverable drawings and documents, please see our Custom Design page.
Typical Cost: Using this approach, we have found on average that for a mid-size yacht (say 40 to 80 feet) our design costs will vary somewhere between 5% and 8% of the eventual build cost. This is for the design itself, and does not include construction related costs that may eventually be transferred to the designer, such as developing NC cutting files, etc.
Of course the same caveats apply with regard to build venue. In other words, these percentages assume the vessel will be built in the EU or in North America. If built in a low-cost venue, the vessel's cost will be less, but the design work will still cost the same, therefore the design cost percentage will turn out to be higher.
Naturally the eventual design costs will vary according to the relative complexity of the vessel, thus the range of approximate costs. For example, a simple canal boat vs. a multi-level ocean going motor yacht, even though they may have the same length, will require a very different number of hours for the detailing, drafting, analyses, specifications, etc.
It is imperative to note that one cannot attempt to predict the eventual cost of a yacht based simply on the projected cost to design the yacht...!
Process: While developing the design, it is our aim to keep the owner involved as much as possible with planning the layout, the overall aesthetic, the equipment choices, performance, etc. From the preliminary imagining to the eventual designing of the yacht, we assume the role of owner's advocate and consultant. In other words, we view our role as being that of owner's representative. In that sense, we are the owner's best tool to achieve their vision of the yacht, from napkin sketch to launching.
How do we accomplish that once the Building Plans have been completed...?
OUR CONSTRUCTION-RELATED SERVICES...
We remain available during the build process, on an as needed basis. While the completion of the Building Plans is a requirement prior to being able to build any new vessel, during the building process we also offer several optional construction-related services. When we are asked to participate in the construction of the yacht we are pleased to do so, and that work is done on an hourly basis.
A few examples are as follows...
When the Building Plans have been completed, we will make builder recommendations and introductions. We can help review the builder estimates and we will assist with contract review as needed. Once a builder has been selected, we will assist the build process as needed.
For metal vessels we advocate pre-cutting the metal structure. In order to do this, we will develop NC cutting files to prepare the vessel's structure for automated cutting. At this point, we are in fact building the boat virtually on the computer.
How is that done...?
Each of the vessel's structural parts are pre-defined by computer, fully detailed, labeled, and nested onto the cutter's available sheet sizes. At that point the parts are ready to be cut by plasma or water jet, and will then be sent to the builder. This is not only extremely accurate, it also has the potential to save the builder considerable fabrication time. Much more detail on the NC cutting process can be found on our NC Cutting and CAD Design Stream web pages.
During construction of the vessel we remain available as needed to create shop drawings of possible new features or small parts; to make on-site inspections of construction to establish progress, or for quality assurance; for consultation on any matter during construction; to make any requested additions or changes; to provide documentation for commercial registry; etc.
In other words, throughout the construction process we are 'on call' as needed.
OVERALL...
You will find a complete outline of how we approach the design process itself on our Custom Design page and by following the links provided there. A small window into my design philosophy can be found in my Nomadic Watercraft article.
As always, please feel free to contact me as needed for more information or possibly to request a written Design Proposal for the vessel you have in mind. My written Design Proposal is an overview of the design process, a list of the deliverable drawings and documents, and an estimate for the design work involved that is tailored to your requests. It is provided at no cost, and implies no obligation... At this point, it is just good information for your planning purposes.
Your specification need not be elaborate since most of the various details will grow out of the design process itself. A paragraph or two that describes the size and general configuration or other preferences will ordinarily be sufficient for the purposes of estimating design costs, and to provide you with my Design Proposal.
I think you will find our design services to be attentive to your requirements; thorough; competently done; and fairly priced. It is our goal that the design process be a pleasant journey as well! If you'd like to review several excellent comments from our clients, check out our Testimonials web page.
More Articles on Cost:
Nomadic Watercraft | Estimating Boat Building Costs | Affordable Boatbuilding | What Will The Boat Cost..? | What Will the Design Cost..?
Please see our AVAILABLE BOAT PLANS web page.
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
- All Web Site Graphics, Layout, and Written Content at this Domain Created by Michael Kasten.
- All Graphic and Written Materials at this Domain Copyright © 1989 - 2013 Michael Kasten.
- All Content Registered with US Library of Congress and US Copyright Office.
- Copyright Violations will be Prosecuted. All Rights Reserved.
