Negotiating the Price

Chapter 7 AgendaThis is the seventh of a 10-part series on how to buy a boat.   If you have not already seen it, check out Chapter 6 – How to Do a Sea Trial.

Once you have found a boat that meets your needs and passes your inspection, the next step is to negotiate the price.  In order to increase the odds of a favorable outcome for you, the boat buyer, it is important to do some homework before you start talking figures.

Assessing a Fair Value

The most important thing you need to do to help you with your negotiations is to first figure out the fair market value for the boat you are interested in.  However, how you do this differs depending on whether you are looking to buy a new or used boat.

New Boats

Determining the fair market value for a new boat is considerably more difficult than for automobiles.   This is because you don’t have the online pricing and dealer cost resources available.  As such, boat shoppers often feel at a huge disadvantage when negotiating with dealers.  But, there are some actions you can take to help level the playing field slightly.  The first thing you need to figure out is what type of pricing model the dealer or manufacturer uses for the boat you are interested in.  There are essentially three choices:

  • MSRP.  In this situation, only the manufacturer’s suggested retail price is provided as a reference point.  It is up to you and the dealer to decide the final amount.  Often there is considerable “wiggle room” between the MSRP and the final agreed-to price.
  • Dealer Sale Price. In addition to displaying the MSRP, some dealers will show a “sale” price – well below the MSRP.  However, there is often padding in this price to allow room to negotiate.  This type of pricing is a very common at boat shows.
  • Nationally Advertised Price (NAP). With NAP, manufacturers set a specific price that all dealers are encouraged to follow.  It is a way to promote value, encourage consistency across dealers, and enhance the shopping experience by taking out the need to haggle.  This is the pricing approach that Bass Pro Shops uses with their Tracker, Sun Tracker, Nitro, Regency and Mako boat brands.  Whether you purchase from a Bass Pro retail store or from one of their independent dealers, the price should be exactly the same except for the cost for freight.

To estimate the fair market value for a new boat, take 75% of the MSRP or 95%-100% of the Nationally Advertised Price (NAP).

So, how do you estimate a fair market value?  If the dealer uses one of the first two pricing approaches, you can often get a rough estimate by using my new boat price estimator tool or by simply multiplying the MSRP by 75% to 80%.  This is based on the knowledge that dealer cost is often approximately 70% of the MSRP and dealers typically look to earn a 10% to 20% gross margin on new boat sales.  Of course, not all manufacturers have the same MSRP to Dealer Cost relationship, and the acceptable gross margin will vary by dealer and consumer demand.  Nonetheless, this is a good starting point to assess the fair market value.

On the other hand, if NAP is used, the fair market value (what most can expect to pay) will be at, or very close to, the listed price.  There is little if any room to negotiate.  However, you might still be able to get “throw ins” (e.g., life jackets, safety gear, watersports equipment, etc.) in some cases.

Used Boats

Estimating the fair market value for Used boats is often a bit easier.  There are at least two types of information sources that you will want to use – Price Guides and Online Classifieds.

  • Price Guides: JD Power (formerly NADA) offers a free tool to look up estimated market prices for boats.  Simply enter the make and model year to see a list of models available.  A nice feature of this tool is that you are able to customize various aspects of the boat such as the engine size, optional features and trailer details for a more accurate estimate.

If you want something that is more “professional grade”, check out BUC Used Boat Price Guides.  This is the source used by dealers, boat brokers and other industry professionals.   They offer a free version (BUCValu Consumer) that enables you to do 3 unique price lookups every four months.  However, with this free version, you cannot customize the boat and the reported values do not include the outboard motor or trailer.  To get this information and unlimited searches, you can purchase a monthly subscription to Online BUCValuePro for $33.95 as of this writing.

  • Online Classifieds: To confirm or refine the value estimate from a Price Guide, you should also check out listings of the same make and model on online classified sites. Start with the most popular sites such as BoatTrader and Boats.com which are more likely to have listing for the boat you are looking for.   If you are searching for a larger boat, also check out YACHTWORLD or POP Yachts.  There are also specialty sites for things like Bass Boats, PWCs, Performance boats (aka, “Cigarette Boats”), Inboards and even Pontoons.  To see a list, check out my article on the Best Places to Buy a Boat Online.

When you start your search, set the distance or location to “Any”.  Then, if several listings are available, you might be able to refine your query by your location in case prices vary by region.  Recognize the sellers (whether dealers or private parties) typically inflate the prices slightly knowing there will likely be some negotiation.  Therefore, the actual market value will likely be somewhat lower than the price listed.

To estimate the Fair Market Value of a Used Boat, take either the average retail from Price Guides or ~90% of the average price from Online Classified listings and adjust based on the hours and condition of the vessel.

In most cases, the value based on the price guides should be similar to that of the online classified listings (after factoring in that the latter are likely to be slightly inflated).  After all, dealers and private parties often rely on the price guides to set their (online classified) prices.  However, if there is a sudden change in consumer demand due to economic issues or other factors (such as with Covid), it is possible that the two sources might not align well – depending on how quickly the price guides are updated.

So what do you do if the two sources are not in agreement?  If there are several boat listings available of the desired make and model, lean towards the average price derived from the online classifieds as this should reflect current market conditions.  Just remember that the fair market value will be slightly less than the asking price.  However, if there are few if any listings available, you will have little choice but to rely on the price guides.

Once you have determined the fair market price from either Price Guides or Online Classifieds, the final step is to adjust the value based on the condition and level of usage (engine hours) vs. expectations for a boat of that age.  While most used boats are expected to have some imperfections, if you uncovered any major repairs/defects during your inspection or sea trial, you should deduct the cost for the needed repairs when estimating a fair market value.  Here is where you might want to solicit input from a marine dealer or repair facility.  Otherwise, you might be taking on additional risk by not knowing the cost to restore the boat to good working condition.

Alternative Valuation Approach for Used Boats

There is one more source to consider – especially if you are thinking of buying a fairly expensive used boat – and that is a “Condition and Valuation” Marine Survey.  In addition to providing an estimate of what the boat is worth, the surveyor will also point out any flaws with the boat that can help you with your negotiations (similar to a home inspection).

As mentioned in the previous chapter, the typical cost for a marine survey is around $25 to $35 per foot (approximately $500 to $100 for most boats).  Though not cheap, a professional marine survey could provide the peace of mind of knowing the true condition of the vessel and might prove to be a good financial investment considering its potential impact in any subsequent price negotiations.

Visit the National Association of Marine Surveyors (NAMS) or the Society of Accredited Marine Surveyors (SAMS) to find a qualified marine surveyor in your area.

Other Considerations

Besides establishing the fair market value, there are some other factors to take into account that might impact your ability to negotiate a more favorable price.

  • Time of Year: Used boat sellers might be more willing to “deal” at the end of the boating season as they might be able to avoid the hassle and expense of winterizing and storing their boat. Likewise, dealers are often more motivated at the end of the season to generate some revenue during a typically slow time of year and to potentially avoid paying floor plan financing charges.
  • How Long on Market: If a private seller has listed his/her boat for an extended period, they might naturally be more inclined to work with a prospective buyer.  Similarly, a dealer is more likely to cut the price as well to “stop the bleeding” with finance charges and knowing that the boat will continue to depreciate over time.
  • Consumer Demand: Environmental factors such as the state of the economy, interest rates and supply-chain issues can distort boat sales prices by altering the supply vs. demand balance. For example, during the pandemic, most people had to pay the full list or asking price to even have a shot at buying a boat.  However, the impact usually works in the other direction with things like a recession or rising interest rates resulting in a more favorable buying window for the reduced number of people who are still interested in buying a boat.

If any of the above factors are “in play”, you might adjust your target purchase price expectations accordingly.

Negotiating the Boat Price

Before you begin talking figures, you should confirm what is to be included in the purchase so that you know exactly what you are bidding on.  This includes things like electronics, safety gear and any other equipment.  And, if you ultimately come to terms on a price, you should get this information documented in a purchase agreement before you leave (which will be discussed in the next chapter).

Who Should Go First?

One common question is whether the prospective buyer should go first or ask the seller for their best price and then counter.  While I don’t claim to be an expert negotiator, I can tell you that many professional buyers suggest that the person who goes first often has an advantage because of something called the “anchoring effect”.  That is, people have a tendency to rely heavily on the first piece of information when making decisions.  Based on this theory, which has been supported by research studies, you are more likely to end closer to your target price by throwing out the first offer vs. waiting to respond to the seller’s proposition.

An exception to this, however, is if you have no idea of how much the boat is truly worth.  This can happen, for example, if you are looking at a rare or unique boat with no price history or other frame of reference to guide you.  In this situation, it might be advantageous to ask the seller to first state what is the best they can do to avoid overshooting what they may be offering.

How Low Should You Go?

Of course, your first offer should be below your target price or estimated fair market value but how low you should go is a matter of much debate.  Some believe you should throw out a price well below the initial listing (say 50%) thinking that if you ultimately “meet in the middle”, you will end up in a better place by starting with a low floor.  This is kind of a win/lose approach.  My personal orientation is to want to treat people fairly and end up with a win/win solution.  So, if I think the fair market value is 10% less than the original list price, I might start by doubling the discount (20% below ask in this example) with the hopes of splitting the difference.  In mathematical terms, the initial bid would be as follows:

Initial Bid = Original List Price – [(Original List Price – Estimated Fair Market Value) x 2]

Note that you might end up with a better price with the first approach (extremely low floor) but it is a matter of which you feel comfortable with.

However, one risk – especially with the first approach – is that you might offend the seller, or he/she might not take you seriously.  Therefore, before you throw out your first offer, it is a good idea to preface it with your reasoning (e.g., identify flaws or deficiencies that will need to be addressed) to let the seller know that you are serious and not simply trying to get a steal.

Other Negotiating Tips

In addition to the above, here are some additional tips to help you successfully negotiate a fair price for the boat you are interested in.

  • Handle Trade-Ins Separately. If you are purchasing from a dealer, do not negotiate any trade-ins until after you have come to terms on the boat purchase.  Otherwise, the dealer might play a “shell-game” and offer you more on the trade while secretly reducing the discount on the boat purchase to secure the deal.
  • Cash Buyers. If you are dealing with the dealer, do not announce up front that you intend to pay with cash.  Financing is a big profit center for dealers and so if you take this opportunity away from them, they might be less inclined to deal on the purchase price.
  • Consider Freight/Prep Charges. When purchasing a new boat, there are legitimate expenses such as freight, prep (e.g., rigging or installing accessories) and administrative fees (registration, titling).  Some dealers might try to pad these charges – especially if the boat is low margin or if sold at a Nationally Advertised Price (NAP).  Therefore, ask the dealer to itemize the individual charges and challenge them if they appear excessive.
  • Ask for Throw-Ins. Once you are bottoming out on your price negotiations, don’t be afraid to ask the seller for other items that they could throw in to sweeten the deal.  This could include things like life jackets, safety gear, watersports equipment, etc. that often add up to a lot of money.  For private sellers, they might gladly give up these items – especially if they intend to get out of boating.  And for dealers, making concessions with merchandise is often much more palatable than a reduction in the price.  This is because they would be giving up the wholesale cost, not the retail value.  Therefore, a $100 inflatable life vest might only cost them $50 in actuality.

Note that asking for throw-ins could be your only course of action when dealing with a dealer selling a boat at a NAP since they might be restricted from discounting the purchase price.  (However, be aware that some manufacturers/dealers like Tracker still might not be permitted to offer throw-ins).

  • Don’t Be Emotional. If you make it evident that you love the boat, the seller will be less likely to discount the price significantly.
  • Be Patient. Take your time with your negotiations and don’t be in a hurry to force a resolution.  Similar to the tip above, if you appear too eager, the seller may be less likely to compromise.  But if you wait and avoid the temptation to move too quickly, the seller might give-in to avoid potentially losing a sale.
  • Be Prepared to Walk Away. This is really an extension of the prior point.  If you can’t get close to your estimated fair market value or target price, give the seller your contact information and then walk away.  Unless it is a hot market or popular model, there is a good chance that the seller will re-contact you at a later date.

Once you and the seller have come to terms on a price you are now in the home stretch. The next step is to finalize the purchase which is the subject of the next chapter.

Sources:

Horsfall, Sean.  “How to Get a Good Deal on a Boat.” YouTube Video.  Len’s Cove Marina.  2020.

Horsfall, Sean.  “What is the Best Time of Year to Buy a Boat.” YouTube Video.  Len’s Cove Marina.  2019.

11 TIPS FOR NEGOTIATING PRICE ON A BOAT.” Web Blog Post.  The Yacht Market.  15 December 2020.

Sellhorst, Matt.  “The truth about Boat Sales MSRP and Boat Dealer Margins.” YouTube Video.  Boat Buyers Secret Weapon.  2020.

How to Negotiate New Boat Prices.” Web Blog post.  Vessel Vendor. 

HOW TO NEGOTIATE THE BEST PRICE ON A NEW BOAT PURCHASE.” Web Blog Post.  Volvo Penta.  15 July 2023.

Wilson, Samantha.  “How to Negotiate a New Boat Price?” Web Blog post.  Rightboat.  3 July 2019.

Mills, Chris.  “Can You Negotiate Boat Prices?.”, Web Blog Post.  Best Boat Report.  20 July 2022.

How to Negotiate Boat Prices“, Web Blog Post.  Boatline.  19 November 2021.

Schultz, Mike. “Who Should Make the First Offer in a Negotiation?” Web Blog Post.  RAIN Group.  4 August 2023.

In a Price Negotiation, Should You Make the First Offer?” Web Blog Post.  Harvard Law School – Program on Negotiation.  29 June 2023.

Jerry Mona - BoaterInput

About the author

Jerry Mona is an avid boater and angler and long-time boating industry insider. With over three decades of experience, he is often considered to be the leading research expert with boaters and has helped numerous manufacturers and trade associations to understand the needs, wants, attitudes and behaviors of boaters. He now shares many of his insights about boats and boaters for free on his BoaterInput.com website.

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