Anyone who is looking to get into owning their own boat dealership absolutely needs to know whether it’s going to make any money. After all, you don’t want to get into a new field or a new career and find yourself going nowhere fast. So, we’re going to take a look at whether or not boat dealerships are really profitable and what you need to do to make something from yours.
How Do Boat Dealers Make Money?
There are a few different ways that a boat dealer can make money but the best one is through financing the purchase of a boat. This allows them to get additional revenue through the interest rate on the loan that the customer gets.
Loan financing is one of the best ways for any type of dealership (including car and motorcycle dealerships) to make some money. The interest rates, as well as added fees, are often quite high and the dealership gets all of this money. Also, getting the customer to add on extra services, upgrades or accessories will help a dealer make more money as these usually have a higher markup on them.
How Much Do Boat Dealers Markup Boats?
There is no clear amount that boats are marked up by dealers as it depends on the dealer as well as the specific boat but the estimate is that they are marked up approximately 30%. It’s important to note that this markup also accounts for other costs to the dealer.
If you’re looking to purchase a boat it’s a good idea to offer less than the current posted price, as this includes a great deal of markup. Keep in mind that you should not offer 30% less, however, as the markup includes all of the dealer overhead for keeping that boat as well as keeping the rest of the dealership going. Overhead generally takes up 18-22% of the boat’s markup.
Is Owning a Boat Dealership Profitable?
Owning a boat dealership can be profitable but it takes a great deal of work and you will need to be good at making sales in order to earn money. On a boat sale, a dealer will generally earn between 8-12% profit over and above the costs of operation.
In some cases, you may be able to get as much as 17% profit on certain makes and models of boats, though this is not common. It also depends on the overall price that you sell the boat for and whether you’re getting financing charges as well.
Do Boat Dealers Negotiate the Price?
You absolutely can make deals and negotiate with boat dealers. In fact, much like going to a car dealership to purchase a new vehicle, it’s expected that you will negotiate and attempt to haggle the price that you see on the ‘sticker’ for the boat.
When you do deal remember that you want to offer something that is reasonable for both you and the dealer. They need to make some type of profit and you also want to get a good deal. Though markup can be as much as 30% that does not mean all that money goes directly to the dealer. There are other costs involved. Negotiations can also take the form of add-ons or upgrades rather than cutting the price.
How Much Does it Cost to Open a Boat Dealership?
If you’re looking to open a boat dealership you should know that it is going to cost quite a bit. Even a used boat warehouse would cost at least $50,000 to open. If you’re looking to purchase brand new boats you will most definitely pay more than this.
You’ll need to include the cost of the boats, your sales team, service team for maintaining the boats, overhead costs related to the building or property that you own/rent, insurance costs, and more. All of these mean that it will likely cost you hundreds of thousands of dollars to open your own dealership and that will depend on where you open (state as well as locations within that state) and how large of a dealership you’re starting out with.
Is Selling Boats a Good Job?
If you are a good salesperson then selling boats can be a great job for you. Keep in mind that the only way selling boats can be good is if you’re able to convince people to purchase a boat and you’re able to negotiate a good price for yourself and them.
For people who are great at selling and who excel at negotiations, you can make quite a good living in any type of sales position. There are some boat sellers who can easily earn upwards of $60,000 per year. However, there are others who are able to earn only $24,000 or less per year. It’s important to be good at the job if you’re planning to make it your career.
Do You Need a License to Sell Boats?
Whether you need a license or not depends on what type of boats you are selling and where. Some states require a broker’s license in order to sell. Others do not. If you are selling only your own personal boats (not through a dealership) you generally do not need a license.
In some states, the only people who need licenses are those who wish to sell ships and yachts rather than smaller size boats for more average use. Be sure to check out the laws and regulations in your particular state if you’re looking to start your own dealership.
Starting a boat dealership is definitely not something that you want to do lightly. You want to make sure that you weigh out all of the pros and cons and that you are careful about where you’re starting and how quickly you’re jumping in. Keep in mind that boat dealerships can be expensive to start and there is no guarantee of the amount of profit that you will actually get.