Underpricing the competition vs. actually surviving vs. charging a fair price

[grouchyturtle]

I've seen it posted before, that undercutting other charters is considered bad etiquette, and a great way to piss off your competition, but...

How do you know where to draw the line?
How do you factor in the I need to actually get people on my boat, and survive out here factor?
What if your competition is just overcharging?

Apparently someone at my marina, who I haven't even met yet, has been complaining that I don't charge enough.

Well, what is enough? We can't all charge the exact same price. Last I checked, that's called price fixing, and it's illegal. It's also hard to do an exact comparison, since every boat is different, and we're not all offering the same thing. I sort of based my prices off of a similarly sized power boat, that's doing very close to the same thing as me, and then lowered it significantly, based on the fact that he burns much more fuel than me. The complainer is on a sail boat, equipped with a few more toys than me, and selling "sailing". Although, I'm on a sailing cat, I'm not really pushing sailing as my primary focus.

What makes things even harder, is the fact that Miami is the land of scammers and extortionists on one side and cheap asses on the other. Not that I expected my phone to be ringing off the hook, but I've been off to a very slow start, considering how many places, I dropped my info off at. In addition to just getting a handful of phone calls, I've actually had a few tell people tell me my prices are too high. I've also had plenty of others, say the prices are good, although they haven’t called me either.

On top of that, in the age of everyone selling their souls to the deal sites, how do you know if their obnoxious prices are even the real prices, or just put there, so they're not working for next to nothing after Groupon, Living Social, etc. take their huge cut. Last week actually wasn’t too bad, after going live on Groupon 2 weeks ago. I didn’t really see this other guy going out. Maybe his prices are too damn high?

 

[Wookie]

You are trying to break into a tougher market than Scuba, and there are other ways to do it than just walking the street to get your name out. You need a broker, or someone witht he contacts booking for you. Before that, you have to ask yourself a few things:

1. Am I doing this as a business, to make my salary and the boats cost of living, or is this a hobby, a way to make a little dough and give me something to do, no one's going to kick me out of the marina or take my boat away from me for non-payment of the mortgage.

2. Do I really want to do the things it takes to get the business I want, including spend (thousands) a lot on marketing, and countless hours pounding the pavement to get my name out there.

3. do you really want the unwashed masses traipsing all over your house?

I have some words for you that you might not want to hear. I don't mean to be mean.

1. I will never sail with Grouchy Turtle. If I saw the name of the boat in a marina, I'd think it was cute. If I saw the name on a flyer, it would conjure up an image of a 76 year old bald man who will yell at me for scuffing his teak. I can stay home for that .
2. You need someone to get clients for you. You might put your flyers in every hotel, but you also need to let every concierge know that they will personally benefit from every charter they refer to you. Don't skimp on this, be generous. They are doing the hard part.
3. Hire a broker. All of my friends/crew/folks who charter sailboats go through a broker (or more than one). You don't pay the broker for charters they don't refer to you, but that's the business that they are in, referring folks to boats. I know charter sailors that do nothing but referral charters 40 weeks per year, and make a pretty good living at it. Find one who specializes in what you prefer to do (dinner sail, wine and sunset, day sail, scuba sail, whatever).

All of that costs cash, or at least a percentage of the charter fee. I will raise my charter fees for next year, not to put more cash in my pocket, but to increase my commission to the referring dive shops and travel agents who send me business.

In Key West, there are kiosks on every corner peddling para-sail, day sail, sunset cruise, whatever. Most are owned by Fury and Sunset charters, but some are independent. Get your name in every one of those you can (if they exist in South Beach, etc.) They will want a large percentage of the charter price, as much as a third. If you want to get established, that's how to do it. You're working the tourist trade, you'll never see these folks again. That doesn't mean to treat them shabbily, it means you need to develop a way to get new clients always. I'm a little different. My average customer has been with me an average of 4.8 times. I need to keep who I have, not search for new ones constantly.

I really don't mean to diss your boat name. I really see (and always have since I've seen you here) that it is a detriment to your charter business. I may be all wrong.

 

[grouchyturtle]

Well you definitely have years more experience as a captain and chartering than I do. I think I'll survive, knowing that you're one of only 3 people, I've come across who don't like the name.

 

[Akyla]

I don't know, have to side with the Wook on this one. Though I thought Gouchy Turtle was a cute name, I did kinda think it conjured up images of exactly what Wookie refered to. Would it stop me from checking you out, no, but it did give me pause to think "why?". Just saying...

On cutting your prices just because someone is cheaper is not always good business sense. Just look at the airlines and how that does not always set them up for success. The Walmart mentality is not always good for you or your client.

Offer what you do at a price that covers your costs to include your fair profit and then make sure you deliver on the customer service that makes them want to come back. I would rather run charters for divers that know and appreciate that they are getting what they pay for than the ones that call and try and weasel the costs down lower. They are not the customers I want or need and I often refer them over to the large cattleboat operations that can have a lower per seat price. BonVoyage...

 

[grouchyturtle]

I don't know, have to side with the Wook on this one. Though I thought Gouchy Turtle was a cute name, I did kinda think it conjured up images of exactly what Wookie refered to. Would it stop me from checking you out, no, but it did give me pause to think "why?". Just saying...

Damn it! Now it's 4!

On cutting your prices just because someone is cheaper is not always good business sense. Just look at the airlines and how that does not always set them up for success. The Walmart mentality is not always good for you or your client.

I'm not talking about cutting my prices. I'm talking about just establishing your prices to begin with. Also, the guy who was apparently complaining, doesn't even have prices listed on his website. So it's kind of hard to make a comparison.

Offer what you do at a price that covers your costs to include your fair profit and then make sure you deliver on the customer service that makes them want to come back.

That really is what I thought I was doing. Apparently by Miami standards I'm a cheapo, though? Or do some people actually base their pricing on the idea that the boat is rarely ever going to be booked?

 

[Wookie]

That really is what I thought I was doing. Apparently by Miami standards I'm a cheapo, though? Or do some people actually base their pricing on the idea that the boat is rarely ever going to be booked?

As I said in my first reply, maybe they don't want to be booked, they want the tax benefits of running a "charter boat". I suspect you and I need to run a charter boat, it needs to buy our lunch and pay it's own dockage.

I feel bad that the only thing you got from my first response was that I didn't like the name of your boat. I almost didn't put that down because it detracts from the rest of my answers, but I thought it was important enough to mention. I was actually shocked to see that you are as young as you are (when I saw your pictures on the boat's Facebook page). I honestly thought you were a bald old man....

 

[grouchyturtle]

Very good point, and yes to that question. Also being a live aboard...err I mean cruiser (damn Florida semantics) I don't need to make as much as some of the other charters, to actually make a living, because I have less expenses. No rent or mortgage, car, that big cable bill every month, etc. That could be were my math is a little off from some others. So maybe I actually fall somewhere in the middle.

Sorry Wook! No, that's definitely not all I got. You wrote a mouthful, and I'm still absorbing some of it. I am looking into what you said, and trying to decide where to focus my efforts...and money. Also, after thinking long and hard about, I'm doing a shift in my marketing. I really want to make term charters my primary focus, with this Miami crap more of a secondary thing...I say as I'm going to to be redeeming deal site cheapos for the next year. So I think my primary advertising focus is going to be online based. I've also been talking on and off with one of the big brochure distributors, and may be subscribing to their digital package. And I'm thinking of doing direct banner placement with some of the big cruising blogs. Some of those guys have pretty big followings, and their readers are mostly going to be my ideal target demo.

 

[Wookie]

I've recently lost my cook and deckhand for the summer. They have a cruising charter sailboat in Key Largo and do trips to Key West and the Bahamas. They just started chartering the first of the year and things were slow, so they signed on with me for the summer with known charters off. They have their name in with a broker in Ft. Lauderdale that specializes in Beneteau 500's, and they are now booked over half of the summer with more to come, so as soon as I get them home, they are gone. They only figure that they need to charter 20 weeks a year, and also figured it would take 2-3 years to work up to that. It looks like they will surpass 20 weeks this year. Sucks to be me, but I'm happy for them.

 

[ComputerJoe]

Although I didn't take this advise I hear tell that crewing with another charter is a good way to get an idea of the hidden costs before setting your rates. In the end you have to decide what your time is worth to you. Add up insurance, association fees, license maintenance, and fuel then devide that by the number of charters (worst case senerio) and you have your nut. Now add on a per hour for your time, don't forget the hours you spend hearding cats getting the deposits. I haven't done this long so I am going through the same analysis so I looked at what the survivors are doing and charging the same and trying to provide more customer service because return customers is what will make you sucessful. When you have more bookings than time you haven't raised your prices high enough.

 

[grouchyturtle]

Speaking of term charters, does anyone know where I can find a decent sample charter agreement, to use as a starting point? I've done a little googling, but most of what, I'm coming across is 1000 pages long and written in lawyer speak. Or would simply copying and pasting what I have on my site, once I'm done editing, and just slapping a signature field on it, be enough?