Thursday, March 25, 2010

BCVMY40 Design Progresses

Tad Roberts is progressing on the design of the Best Coastal Voyaging Motor Yacht Under 40ft.  This design is based on an open discussion with cruisers in a Truebuild Yachts hosted group at

P375model01 P375model03

Pictured above is the planing hull version intended for a top speed of 17 knots

Please join the group or become a Fan on Facebook if you are interested or would like to participate.

Tuesday, March 23, 2010

BCVMY40 – Time to Execute the Project

The group of cruisers discussing the Best Coastal Voyaging Motor Yacht Under 40 ft has agreed there are (at least) two versions of the BCVMY40.  One version has a planing hull capable of 17 knots top speed, the other a displacement hull that would cruise around 7 knots.

The planing hull version has developed the most ardent following to date and is entering the execution phase of costing, sourcing and builder qualification to verify that an exceptional yacht can be realized with radically better value for both the builder and the buyer.

Everyone is welcome in the group discussion.  Join the discussion at

P375deck sketch overlayed on hull

The above sketch from yacht designer, Tad Roberts, depicts the general “rough” concept that has been embraced by the group.  Tad’s willingness to respond to ideas with well thought out images continues to propel the group.

Monday, March 8, 2010

“Free” Yacht Contract Review Promotion to Increase Yacht Value for Buyer and Builder

My previous blog discussed why yacht builders price excessively for the cost of “dealing with buyers”.  

Truebuild Yachts is offering contract reviews to yacht buyers for FREE to illustrate how an effectively crafted yacht purchase and sales agreement can increase value for both the yacht buyer and the yacht builder.

If you are a yacht buyer considering purchasing a new yacht and would like Truebuild Yachts to offer suggestions on the content of your yacht purchase contract please contact for a FREE contract review.

See for additional information of the contract review process.

Monday, February 22, 2010

Yacht builders price excessively for the costs of working with buyers

Let’s talk about the price yacht builders add for “dealing with buyers”. A large portion of this added price is unnecessary as it is the result of poor communication between buyers and builders or gaming by one side or both. Buyer behavior can add or subtract to the selling price. Note: For the purposes of this discussion, the term “yacht” primarily refers to boats, sail or power, between 35 feet and 100 feet in length, built on a production or semi-custom basis.

In my January 6th blog post I offered my view of a yacht builder’s value calculation.

New Yacht Builder Value = (Gross Profit + Brand Enhancement) – (Sales Costs + Buyer “Interface Costs”) “Interface Cost” is the builders actual and perceived cost of dealing with boat buyers.

Yacht builders add price for dealing with buyers. Most builders think the cost of working with buyers does not scale with the size of the boat. I’ve heard it said many times, by many different builders, over many years, that they would rather sell a 50 footer instead of a 40 footer, or a 75 footer instead of a 50 footer, etc. because the customer is the same amount of work.

Some of this cost for dealing with customers is included in the base price and more may be built into change order pricing. If a builder thinks a buyer is going to be difficult to work with, the buyer will pay for it. Builders calculate the price added for dealing with customers in many ways and call it many things but the amount is based on staffing costs, overhead, service costs and perceived risk created by buyer behavior. The builder’s perceived risk can be mitigated by a properly crafted purchase and sales agreement that can result in a lower purchase price on a boat, keeping mind that the builder is not going to risk the brand (see Brand Enhancement in the formula above). I will discuss crafting the sales and purchase agreement to minimize the added price of dealing with boat buyers in a future post.

Don’t get me wrong. Yacht builders love customers, but the challenges and costs of working with each buyer varies greatly and is often unpredictable by the builder at the time a builder signs a sales contract with a buyer. Most yacht builders in business today are the “best of the best”. They have decades of experience and have satisfied many buyers, but often neither the buyer nor the builder believes they got the value they anticipated at the conclusion of the deal.

The amount a builder includes in a negotiated selling price is based on the status of the yacht builders overall sales backlog, the order backlog for a particular model, the builder’s current cash flow and the perception of the type of buyer with which the builder is dealing.

Boats built for stock and sold without modification have a lower portion of buyer costs included in the pricing, but stock boat pricing includes other inventory related costs. Boats that are tailored to buyer preferences may have a higher amount of buyer costs included in the base price and also in change order pricing formulas.

Builders have different attitudes toward customizing boats for buyers and these attitudes may change based on market conditions. Even those builders with a willing attitude generally prefer to do less customizing than more. I’ve heard it said by yacht builder executives, in many different companies, “can’t you just tell the buyer to give us the order and we will call them when the boat is ready”.

There are many valid reasons why builders worry about and price for the costs of dealing with buyers. A common friction point between yacht buyers and yacht builders is the cost and production schedule effects of change orders. Builders feel they cannot charge enough for changes and buyers regularly feel ripped off. Some buyers do not care what change orders cost, as long as the pricing is “fair”. They want their boat the way they want it. These buyers are willing to pay a fair price and to wait extra time when necessary. This is fine for that buyer, but in a series production or sequenced production situation, delays from change orders can ripple through production schedules, causing delays to customers following in the queue. Delays cause accumulation of overhead costs on all boats in process and reduced production value throughput. In some cases, there is no way a builder could justify charging a single buyer what extensive change orders or customizations really costs for a single buyer. Builders willing to customize boats run a significant risk, especially if they encounter a domino effect of production delays.

The definition of a change order is often not clear between builder and buyer. The yacht buyer believes a change order is added features after the purchase and sales agreement is signed. The yacht builder looks at a change order being any buyer instruction that requires execution. Buyers often argue that instructions are merely defining the specification. Buyer instructions can include moving a thru hull a few inches, re-routing a hose, modifying cabinetry or locating machinery among other things. I’ve witnessed Buyer instructions exceed 300 items. Buyers rarely expect to pay the builder for implementing their instructions.

Buyer Types

I offer below, my own characterization of some buyer behaviors I’ve observed. Some buyers are composites of these types. The purpose for including this list is that buyers can save money for both themselves and the builder by identifying the type of buyer they intend to be and documenting it in a properly crafted purchase agreement.

Smartest Buyer – The builder perceives this buyer will ask questions, request quotes and make changes for the sole purpose of gaining recognition as the smartest boat buyer that the builder has ever worked with. The builder perceives minimal, if any, merit in many of these time consuming buyer requests.

Helicopter Buyer – This buyer wants to constantly be in the yard, is in daily contact with questions and information requests which are often based on what they “just heard” from a friend, forum or supplier and is frequently looking over shoulders challenging ongoing work or outcomes. The build process is slowed owing to daily uncertainty on how to proceed and frequent rework.

After the Fact Buyer – Does not reveal intentions to be deeply involved in fine details of the boat build until “after” things are done, then surfaces with experts and opinions requiring explanation, re-work and back tracking.

Disengaged Buyer – Does not respond in a timely manner to the builder’s information requests leaving the builder uncertain as to execution details causing delays as production milestones get missed and build costs to escalate.

Easiest Buyer – When a buyer states to a builder they are going to be the easiest buyer the builder has ever worked with, the builder usually assumes the opposite. This buyer seems to understand that there is a price to be paid for not being an easy buyer. This buyer often wants to “make all the changes” up front and will “forget about the boat” until it arrives. Builders rarely see a Buyer actually behave this way.

Experienced Buyer – Once a builder has had experience with a buyer, the builder knows what to expect and can price the deal accordingly. Buyers and builders that have built a good relationship with one another on prior yacht builds generally price a deal with minimal “interface costs”.

The overall goal of this blog is to find radical new ways to increase value for both yacht builders and yacht buyers. A key element of that effort is builders and buyers “declaring” what kind of relationship they will have and effectively documenting it in the yacht purchase and sales agreement. A properly crafted agreement can minimize the initial price, minimize change order costs and increase schedule reliability for the benefit of both the yacht buyers and yacht builders.

All comments are welcome.

Thursday, February 11, 2010

Specification (Rough Draft) For Best Coastal Voyaging Motor Yacht Under 40FT

The very rough draft specification for the best coastal voyaging motor yacht under 40Ft has been posted on the Yahoo group site for comment and discussion.

The specification document includes the mission statement as well as a description of the unique development appraoch.

Everyone is welcome to participate, please join the group at this link

Wednesday, February 3, 2010

Why Does Truebuild Yachts Host Discussions on New Yachts?

Truebuild Yachts is on a quest to find radical new ways to increase the value for boat buyers and boat builders.  The best way to achieve this is through colaboration.

Truebuild Yachts is in the business of increasing value for both yacht buyers and yacht builders. That means we increase profits for builders and save buyers money. Both get better outcomes with fewer hassles based on processes and knowledge developed over decades of yacht building experience.Lately, I have seen the need for a radical increase in value for builders of new yachts and buyers of new yachts as builders are struggling with profitability and buyers think new boats are over-priced. This is more than just a sign of the current economic times. It is a deeper problem.

Yacht ownership is returning to elitist status and excluding many from enjoying its pleasures. I am blogging on causes and immediate solutions available to this value proposition problem. There is much that can be done immediately on individual boat deals to get better outcomes for all parties. This is what Truebuild Yachts does, but deeper, broader and sustainable solutions are possible through teamwork.

Yacht builders do not have an effective way to listen to yacht buyers and yacht buyers, as a group, have no effective mechanism to speak to builders. My hope is that the discussions that emerge will interest and encourage the participations of boat owners, prospective buyers, yacht builders, repair yards, industry suppliers, lenders, insurers, naval architects, structural engineers, and anyone that cares to share ideas that will help build boats that better serve markets.

What is in this for Truebuild Yachts? I will personally get satisfaction if this process can make a positive difference in an industry in which I have participated most of my life, Truebuild Yachts may get more consulting work or may take on new roles in executing some of the projects that develop.

My goal though, is that all who choose to participate will have equal opportunity to benefit from these discussions. 

Please join the discussion on Yahoo Groups at

Gene Kohlmann

Truebuild Yachts is Creating Discussion Regarding New Yacht Value

Truebuild Yachts is now hosting discussions on Facebook regarding development of new yachts in pursuit of radical improvements in yacht value for both yacht builders and yacht buyers.

The goal is to get prospective buyers, yacht owners, yacht builders, yacht repairers, naval architects, systems experts, suppliers, and anyone who would like to participate join in the discussion.

Let imaginations run wild with no limits and see what happens.   Plese visit Facebook to get involved.

Seattle Boat Show Reinforces My Opinion that Radical Improvements in Yacht Value is Needed

Attending the Seattle Boat Show reinforced my opinion that it is time to find Radical New Ways to Increase Value for both Boat Buyers and Boat Builders. Builders are struggling with profitability and Buyers think new boats are over-priced.

It is more than just poor economic conditions.

Thursday, January 28, 2010

Creating The Best Coastal Voyaging Motor Yacht Under 40 Feet

A discussion has started on Truebuild Yachts' Facebook page for the purpose of Creating The Best Coastal Voyaging Motor Yacht Under 40 feet.

This discussion is open to all people that desire to participate and is intended to set a new standard for exceptional value in new yachts based on a collaborative effort and unrestricted imagination.

I look forward to broad and enthusiastic participation.

Tuesday, January 19, 2010

How the evolution of yacht brands reduces yacht value

I’ve had the pleasure of participating in boat model decisions for major yacht brands on over 40 boat models during my career, so far. Most models were successful and some were not commercially viable. In all cases, decisions on boat models were made by a small number of people in each yacht builder.

The yacht building industry remains largely entrepreneurial owing to cyclical profitability. Yacht building is reasonably profitable in the good times, but is subject to sudden, deep and prolonged negative profitability during periods of economic uncertainty or decline.

Once a builder succeeds in a particular market niche future models are typically scaled versions of the original successful model to appeal to buyers of like tastes, but with different budgets and space requirements. The boat model line is then populated with additional models, separated by a few feet in length, based on the original successful boat model concept. (For the purposes of this discussion, the term “yacht” or “boat” primarily refers to boats, sail or power, between 35 feet and 100 feet in length, built on a production or semi-custom basis.)

Successful builders have a “fan base” that grows with each new model introduced. The successful builder listens, almost exclusively, to this fan base and modifies its boat models either continuously or from time to time based on input from their fan base. Ideas from outside the fan base are rarely heard.

As the population of delivered boat models of a particular brand grows, that builder faces the challenge of differentiating new boats from previously built boats to keep the production running and maintain gross profits as gross profits trend downward as each boat model ages. The typical builder response is to add features, upgrade features, enhance luxury and occasionally modify an existing model’s hull to create a new derivative boat model. Radical change is risky for the builder, especially if it signals to current boat owners that features used in the past may have been sub-optimal or if significant model changes, when publicized, may lead to a slowdown in current orders as potential buyers defer purchase decisions while waiting for details on new models.

Builders have every financial incentive to sustain the boat model concept that made their brand successful. The number of builders with the capital to launch a new line of boat models to expand their brand is rare in the yacht market segment relevant to this discussion and it is risky to pursue a new market owing to uncertain appeal to a new fan base.

On the one hand, builder value is enhanced by leveraging the successful boat model concept in that many fewer decisions need to be made by the builder, the builder’s team can effectively make the correct execution decisions more often given a focused brand philosophy and buyer’s expectations are well defined.

On the other hand, buyer value is reduced over time owing to evolution that leads to bloating of features, added equipment, changes to interior features as well as improved fit and finish (luxury). Prices of new boats escalate more rapidly than overall inflation.

Higher prices lead buyers to search for ways to improve their personal value proposition. Buyers attempting to delete standard equipment are frequently disappointed by the small amount of credit offered by the builder. Buyers seeking customization of equipment, system operation, interior layout, interior features, interior finish, etc… optimize their personal value proposition find these modifications to be expensive.

The net effect of buyers attempting to adapt to the reduction in builder provided value in the standard boat is expensive change orders and increased buyer interface costs for the builder. There are also a plethora of boat purchase contract issues that surface as “friction points” between the buyer and builder as the build progresses on customized boats. If the boat purchase contract is properly crafted and the build is effectively managed by the buyer “friction points” can be prevented from becoming serious issues that can result in cost overruns, defective execution and schedule delays.

My initial blog entry on the topic of finding radical new ways to increase the value of new yachts offered algorithms for calculating value from a buyer’s point of view and value from a builder’s point of view. Some buyers perceive great value in a yacht build and ownership experience that is based on a specific execution of their preferences. These buyers are willing to increase the purchase price for customization as well as accept resale value risk. Escalating prices are increasingly excluding other buyers from purchasing as they struggle to justify the value proposition by pursuing extensive modifications or the price of the boat simply moves beyond their budget.

Some builders embrace buyer changes across all the models or some of their models. Other builders view requested customer changes as unwelcome and will only reluctantly make them for a significant price. No matter what the builder’s attitude about changes, there is an element of price, it can be significant, included in the base price for “buyer interface costs” as included in the builder value algorithm.

I share these thoughts as part of a foundation for a conversation in pursuit of finding radical ways for boat buyers and boat builders to get greater value.

Monday, January 11, 2010

Why Are Radical New Ways Needed to Improve the Value of New Yachts?

Radical new ways to improve the value of new yachts are needed owing to escalating sales prices, cost of maintenance and complexity of operation of new yachts excluding potential buyers or causing many to buy less yacht than they desire. For the purposes of this discussion, the term “yacht” primarily refers to boats, sail or power, between 35 feet and 100 feet in length, built on a production or semi-custom basis.

Yacht builders which have been in business for a number of years and are still in business today are very good at what they do. These yacht builders are among the best ever, having survived many competitive and economic challenges. If the assumptions of the first paragraph are valid, the value of new yachts is declining for both buyers and builders. Profits of builders of new yachts are severely depressed in the current economic environment. Even in good times, builder’s profits are less than many buyers of new yachts expect.

In my previous post I offered the calculation of value used at Truebuild Yachts to guide its process of enhancing value for all stakeholders. Even when acting as advocate for a yacht buyer, Truebuild Yachts increases value for the builder by reducing the buyer interface costs for the builder, enhancing the builder’s brand and increasing the builder’s gross profit by facilitating achievement of the buyer’s desired outcome in the most cost effective professional manner (Think Lean). Truebuild Yachts lubricates the process.

There are a number of value reducing trends in the yacht building / buying process now. Among the enemies of value are:

1) Evolution of brands

2) Emulation of successful brands by new yacht builders entering the market

3) Increasing buyer interface costs

Truebuild Yachts can currently increase value for all, but Truebuild Yachts is also aggressively pursuing how to radically increase the value for both buyers and builders of new yachts so all comments are welcome on this, past and future posts.

Wednesday, January 6, 2010

Radically improving value for buyers and builders of new yachts

I've begun 2010 by steering Truebuild Yachts on a quest to find radical new ways to increase value for both buyers of new yachts and builders of new yachts.

What is value? How can value be increased for all stakeholders? By what process can the answers be determined?

The yacht industry does not have an effective mechanism for listening to buyers, at least one of which I am aware. This blog has been created to enter discussions in pursuit of answers to the above questions and more. I hope many will contribute their thoughts and ideas.

A key step in this process is arriving at the best possible understanding of how value is defined by yacht buyers and yacht builders. Below is the operating definition of Value that Truebuild Yachts currently uses, based on over 35 years of experience in the yacht industry. Clearly, it took me a while to dedicate myself to deeply understanding the value propositions.

Buyer of New Yacht Value Calculation:

Buyer of New Yacht Value = (Purchase/Build Experience + Ownership Experience) - ((Purchase Price + Operating Cost) - Resale Price)

Builder of New Yachts Value Calculation:

Builder of New Yacht Value = (Gross Profit + Brand Enhancement) - (Sales / Service Costs + Buyer Interface Costs)

Obviously, some of the value elements are personal and not readily quantifiable, but they do translate into a "willingness to pay" amount for buyers and a "willingness to build" amount for builders.

I will share more thoughts on the broad and far reaching implications of these value elements in future blogs. Meanwhile, your thoughts and ideas are welcome.

Friday, January 1, 2010

Radical Ways to Increase Value in New Yachts

2010 - It's time to find radical new ways for new boat buyers and boat builders to get great value.