Posts tagged as:

Price strategies

button

Don’t let low prices leave you high and dry.

by Douglas Gould on March 9, 2009

Post image for Don’t let low prices leave you high and dry.

How much do you charge to remove a boat that is high and dry on a beach? (No, not like the one in the picture!) Would you charge more if it was in peril at the time you did the job? (Like, say… the one in the picure?)

A few weeks ago, I promised that I would write about some rates: with dollar amounts and everything! Then I got distracted building this new web site. And then today I got lucky when my Google search brought this link right to my doorstep:  The Galveston County Daily News ran this story that begins with this:

Hurricane Ike stranded hundreds of boats on land. Almost six months after the storm hit, you can see them on 61st Street in Galveston, on the county roads of San Leon and across the Bolivar Peninsula. For property owners with a vessel in their yard, getting rid of them can be a frustrating — and expensive — process.

The article is about the problem of boats that are still washed up on land after hurricane Ike hit Galveston last summer. I was reading along, minding my own business when I saw this:

The rule of thumb, though, is that it will cost about $150 for each foot of a boat’s length — at minimum, Alexander said. Retrieval that requires a special crane and crews will, of course, cost more.

There you have it. The minimum charge to remove a landlocked boat and take it to a fenced storage yard is $150/ft. More if you need a special crane or crews. (side note: We have no ordinary cranes.) It’s not hard to imagine that removing a 45′ sailboat could get up over $200/ft,  or more. Remember, these boats aren’t going anywhere on their own. The damage has been done. And, this price doesn’t include full disposal, this is just to get the boat to this guy’s salvage yard. Gee, how much harder would the job be if the boat was under water, and you needed a diver?

Or on a beach, at night, in the surf…by yourself.

I’ve heard insurance companies screaming bloody murder for a charge of $150/ft to pull a boat off a sandy beach on a lee shore (not like the picture above, but still…) “Outragous! We only pay what is considered customary – fair and reasonable charges, not these huge inflated rates!” I’ve have also heard insurance guys claim that our rates are way out of line with the national standard. I have friends that are surveyors, but I have heard surveyors make some claim to knowledge of “standard hourly rates” for this kind of work.

And you know why? Because we were on scene in 20 minutes of the grounding, the job took an hour, and when we were done, the boat had no damage. You see, if the boat sits and rots away to a pile of rubbish, they don’t bat an eye at paying $150/ft to move it three or four miles (with special cranes, of course!). But if, through your efforts and your very ordinary towboat, the vessel retains all its value, then they think you deserve $150/HOUR, not $150/ft.

The boats referred to in the article are probably all done – worthless wrecks. The company who is getting $150/ft probably has days, if not weeks to prepare to remove the boat during normal business hours, in favorable weather. With a rested crew. From the street. In dry clothes. In daylight. Without a diver. And without risking having their own equipment suffer the same fate as the boat they are removing.

Based on this news story, and my years of experience, I eagerly endorse the minimum rate of $150/ft to move a worthless boat from where it is stuck to a secure yard. More if you need special equipment, like a crane, or a towboat. Add another $20/ft for a diver. Oh, and this is during normal business hours of course. If the boat can be saved to sail again, I would say that $200/ft might be a fair starting price for beach pulls.

Hey, that’s what they’re getting in Texas.

  • Share/Bookmark
button

Standard Deviations…

by Douglas Gould on February 18, 2009

more on the cport meeting….
At one point, a question was posed asking why C-PORT wasn’t the logical forum for the industry to create some standards that would reflect what would be “fair and reasonable” salvage demands. This discussion was swiftly squashed as the executive director (correctly) pointed out that any discussion of prices or fees was strictly forbidden under anti-trust laws, and would jeopardize C-PORT’s non-profit status.

I have some great news for Red Right Returning readers: this blog is not affiliated with C-PORT, and in fact I’m not even a member of C-PORT. I wish I could make money writing this blog, but I don’t make a nickle. Even so, RRR is not subject to any laws that govern non-profit entities. Finally, since I don’t own a towing company (any more), I’m free to discuss the subject with impunity, and I probably will in the near future. (Full disclosure: I am a summertime sub-contractor to a privately held towing and salvage company.)

But couldn’t C-PORT at least cozy up to the issue by discussing some billing standards, or disseminating an industry wide lexicon, so we are all talking about the same thing when we use jargon like “soft-aground” or “Open Form.”

The insurance industry would like to see us adopt some standards, right? OK, let’s play a little game of “good for the goose, good for the gander”. I say we contact the American Insurance Association , and propose that we jointly adopt the following:

C-PORT salvors will abide by the International Convention on Salvage-1989, as ratified by the United States of America, whenever applicable.
The insurance companies will refrain from ignoring or attempting to renegotiate international treaties, and instead recognize that as companies licensed to do business in the USA, they too are bound by the treaties signed by their government.

C-PORT salvors will document everything we can, with photos, video, audio, witness names and signed contracts.
The insurance companies agree that someone who has check writing authority will actually read/watch/listen to that stuff BEFORE they pass it on to an attorney.

C-PORT salvors will submit a written report detailing everything that occurred, and back up our details with the above mentioned documentation.
The insurance companies agree to submit any evidence – including verbal statements that contradict our version of the events – from their clients or witnesses to us in writing, with names and contact info for each.

C-PORT salvors agree to notify the insurance company within 24 hours after the vessel’s redelivery (if not sooner) and request that a claim be opened.
Insurance companies agree to open a claim when they have knowledge of a salvage event, and provide all the parties a claim number when one is requested.

C-PORT salvors agree to submit a detailed salvage report within 15 days of the vessel’s redelivery.
Insurance companies agree a supply a copy of the declaration page of the policy to the salvor within 5 business days after they receive notice that a salvage claim is pending.

C-PORT salvors agree that they are bound by the arbitration clause in signed salvage contracts.
Insurance companies agree that they are bound by the arbitration clause in salvage contracts signed by their clients.

Don’t even get me started about Letters of Undertaking.

….I’m ready to duck…..let ‘em fly.

  • Share/Bookmark

Contemplating Values

photo: Ringo contemplates his contribution to the crew of Water Torture… The salvage seminar at last week’s C-PORT conference included some discussion about “fair and reasonable” charges for salvage awards. I will argue about fair and reasonable in another post. Today, I want to correct what I feel was a serious error brought forth by [...]

  • Share/Bookmark
February 5, 2009 Read the full article →

What’s in YOUR 401(k)?

This year’s C-PORT convention is over. It was fairly well attended, although it seemed to me like too many yellow shirts dashed for the doors at the conclusion of their conference on Friday, just as C-PORT was getting started. In this photo, John Aydelotte uses his new spyglass to scan the hallways for wayward TowBees. [...]

  • Share/Bookmark
February 4, 2009 Read the full article →

What WOULD the Coast Guard charge?

Yesterday, we wondered aloud about the question of whether the USCG would ever actually charge for a non-emergency response to rescue foolish, or reckless boaters. I ended that post with “I wonder what the hourly costs for running a 47′ MLB are?” The question somewhat rhetorical in nature, as I figured that the answer was [...]

  • Share/Bookmark
December 30, 2008 Read the full article →

Traveler’sGate?

I use a service called FeedBurner that helps me keep track of how often people actually visit RRR, and manage the email subscription service. The graphic here shows the top six most visited pages for the last 30 days. (click on it for a larger view) My post about Traveler’s Insurance buying back their umbrella [...]

  • Share/Bookmark
September 30, 2008 Read the full article →