O & M costs?
Any of you guys have an idea of what operation and maintenance costs by the hour are for your boat? I'm not counting fuel costs.
Just trying to figure things such as: maint costs both major and minor and depreciation that can be attributed to hours.
Here are some rough numbers I came up with. Lets assume that you can go 1000hrs before needing major motor/tranny/vinyl repair. Which all together would cost $10k. Now lets assume that each hr on your boat costs $20 in deprecation. This is hard and I have no real basis but assume I was buying someone's used G23 identical boats 1 had 100hrs and 1 had 50hrs I'd pay atleast $1000 more for the one with 50 just because.
Lastly lets throw in $5 an hr for oil changes both tranny and motor and other incidentals that may come up. By my math it's $35/hr in just O&M!
So with that when my buddy asks should we take my boat or yours I know what my answer will be! :)
Thanks for the link, I know how the search button works. But my question is more towards a true variable O&M. I'm not counting fuel nor am I counting fixed costs such as finance/storage/insurance/fixed depreciation. Basically only those costs you incur when you've got someone out on the boat at the end of your line! Not the costs you incur with your boat just sitting in the garage. We've got some pretty smart business people on this site and I'm sure they understand exactly what I'm talking about.
I never want to know that number. If we try to find the ROI on many "passions" in life we will almost always be backwards in the numbers.
If you're concerned about your buddy using your boat and the cost of the use, IMO it's not within your budget to own or he's not worth the risk....
Sent from my iPad using Tapatalk HD
Ron - your question and your own analysis are basically in conflict. In very simple terms - the only variable cost for your boat is basically fuel (and to refer to the other post/link - beer). I assume some people here will disagree at first but let me explain this from a costing perspective. First - let's list the cost factors (not claiming that the list is complete but these are more or less the items if I don't add equipment to it):
Let's also assume at this point that the boat is driven 100 hrs/year and you'll keep the boat for 10 years (to be somewhat in line with your initial question/comment about big repairs at around 1000 hours).
Now let's look at this list and think what is truly variable - which is in essence fuel and your time and the vehicle fuel/mileage to tow the boat to the lake if applicable (but will leave it out for now as it won't really matter until we get to the end).
The reason that I didn't count oil and scheduled maintenance into it is simple: Even if you drive less than 100 hrs a year - you will still have your scheduled maintenance performed - so the cost will incurr no matter if you drive or not. When we talk about repairs - you likely end up over these 10 years to replace a battery, an impeller etc. and some of those you could count as variable (impeller every 300 hrs or so) - others will happen eventually but you can't consider them as variable except you would say I replace the battery every 100 hours as an example.
So let's continue now to the basic variable cost - your time and fuel. I'll assume you will drive for free - so that's easy ;-) Fuel for simple purposes = 2 gal/hr = $8 (change the number if you have an Epic to about 5 like me :( ). The only other variable cost which you can attribute to take the boat out is your truck if you need to drive (but eventually you'll be left with the same problem to allocate the variable truck cost to it) That's your variable cost you can truly attribute to each hour you actually drive - anything else becomes arbitrary which I will explain below.
As I said before - you will do maintenance and exchange the oil, use cleaners etc. - some in regular intervals and other things when you have time (like cleaning the boat) - so your biggest problem is to find a predictable driver (not boat driver - here I mean a cost accounting term - driver = trigger) to associate the cost with time - because you're asking for the hourly cost.
So let's put some numbers to this:
8000.00 Fuel over lifetime
3000.00 scheduled maintenance (yearly oil change etc.)
1000.00 3x impeller replacement
12300.00 over the 10 years you own the boat
As you can see - the fuel is your highest cost BECAUSE you left depreciation out. I said earlier that depreciation is not variable and some may disagree but hear me out. We assumed in my example that you keep the boat for 10 years. Bottomline when you try to sell the boat - the hours won't matter much - even if you have not driven it at all - you won't get your money back - so the boat just depreciates - even if you only stare at it. If we go linear for a 50K boat - you will depreciate 5K every year and you should put the money actually aside as you will need the 50K in 10 years to buy the new one. You obviously will get some money back for your old one (trade-in etc.) but the new boat will also be more expensive as you will see the surf gate, wetsounds etc. so chances are your 50K you put aside will barely get you something to brag about :banghead: So if you now compare the variable vs. fixed cost on a yearly basis (which is 1230 vs. depreciation which is 5000) you'll see that you're not going to make the right decision which boat to take - because your boat is still costing you money - regardless of sitting in your buddy's boat ...
and to add the car problem back into it. If you don't have a boat you may not need the big truck to tow but is the truck now part of the math or considered truly variable based on the 0.55/mile?
The only time this calculation above is not as bad is if you do this as a business (wakeboarding school etc.) - then most of these costs become much more predictable as you will trade your boats on a yearly basis etc. but that doesn't make the costs variable - but you will have a better idea how much you charge your students to break even or better make a profit.
So to conclude this: A friend of mine said one night on the boat when we talked about people chipping in for gas (or not chipping in) etc. Every minute on the boat is basically a buck. If you drive 100 hours a year = 6000 minutes = 6K which is probably what it's going to cost you with depreciation, gas etc. and that's surprisingly accurate. So if you give someone a pull - count the minutes in the future ;-)
Bottomline is: If you have a boat - keep enjoying it and never show this math to your wife - you likely won't have another boat EVER! And add more of the other variable cost: beer.
Don't ask questions that you don't want to hear the answers to.
Nic I see where your coming from but disagree alittle that hrs don't count. Lets look at this way: Say you go out with 2 other buddies on the boat, you guys have your 2 sets each and are done. Now lets say instead of 2 buddies you have 4 buddies who all each get 2 sets. Thats 2 extra hrs on the boat, besides gas what do those 2 extra hours cost besides the fuel. You already towed the boat, paid insurance and all that business. I'd argue that those 2 extra hrs do have a cost besides gas. Over the season will this push you into an extra oil change? An extra impeller? Basically more wear and tear on the boat correct? And again if I'm looking at identical 3yr old boats and one has 300hrs and one has 200hrs, I know which one I'm buying and probably will pay a premium for that one.
That's like asking what my actual beer consumption costs or what a night of blackjack "really" costs. If want the real answer, than this is not the hobby for you. Just when you think you figured it out, some dumb ass hits your boat, gets your $100 rope caught in the prop, or you hit a submerged something.
Ron, the proper term for your question would be 'incremental cost' - which you are correct do exist.
The problem is that the incremental cost is negligle in the big scheme of things. Your example with buying the 200 vs. the 300 hours boat is exactly why. How much is the 100 hours less worth to you? 2K, 3K or even more? Regardless that's not part of your variable cost - that's the difference in how the boat lost its value (depreciation) for the previous owner - not for you.
My example was based on the 10 year life span (compared to the wakeboarding school example) so the maintenance will happen during this period - it might be in the 3rd year for the impeller or at the beginning of the 4th - but the cost remains the same. You're asking - how much does it cost me extra for the 2 hours but you don't factor in how long you will keep the boat because the answer you'll get depends on that. To make this clear: If you keep a boat for 3 years/100 hours per year you may get by w/o replacing the impeller based on my example (I know that some say replace it every year but if we do that the whole discussion becomes mute as the yearly cost will now be the same). If you keep it for 4 years then you will have the additional cost for the impeller. Now going back to your math: So you drive for 300 hrs and don't replace it so you saved yourself 1$ per hour. So if that's the reason to take your buddies boat so be it.
If I take your example and apply it to a manufacturing plant - then you may see why your logic is leading to the wrong conclusion: Let's assume you own a plant and your buddy does - you both make PVC pipes and have the equipment to do so. Now you get a big order in which you can fulfill but you're thinking that the wear and tear on the machine might cost you too much so you ask your buddy if he wants it. He says - sure and likely thinks - he's a good guy but not sure how long he'll stay in business ...
Why? Because you saved yourself the variable cost - which is basically raw material/labor/utilities. However your fixed cost stays the same regardless of you producing or not. You still have the building - your equipment will depreciate, you still pay property taxes etc. and unfortunately maintenance - even if they just sit around - your equipment will require it.
So you just gave up on a good order because you're worried about maintenance cost but you basically lost out on possible revenue to cover your fixed cost. Compare that to your boat equation: If you go with your boat - you may get some money beyond the variable cost of gas which would be a contribution to your fixed cost. If you go on your buddy's boat - you end up getting nothing but your fixed cost is still there and you contribute something to his cost.
So to conclude this: The entrance barrier is high (boats are expensive) but once you have it you'll better run it as often as you can (that doesn't mean to trash the boat, not cleaning it etc.). Or you do this (and I assume everyone will agree): The cheapest way to go boating is not to own one but to go on your buddy's boat. It will always be cheaper rolleyes:
|All times are GMT -7. The time now is 12:38 AM.|