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Measuring Value – The Subjective and Tangible Values of Yachts

Discussion in 'General Yachting Discussion' started by AffrayedKnot, Jul 24, 2009.

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  1. AffrayedKnot, Jul 24, 2009
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    AffrayedKnot

    AffrayedKnot Senior Member

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    How can we securely distinguish, using the inputs of our fallible senses, that which we value from that which we do not? How can we figure out what another person values? Money, wage labor, markets, and many other economic institutions take the forms they do primarily because they solve problems of measuring value. Such questions also lie at the heart of the current challenge in recreational boating; Market value and market price being equal only under conditions of market efficiency, equilibrium, and rational expectations - which today they are not.

    Questions of value are inherently subjective and personal. Value is very different from the objective phenomena of physics, chemistry, and the like. Societies have evolved institutions such as corporations and competitive markets to set prices, legal precedents and judicial proceedings to make judgments, and so forth. These institutions in turn often rely on answering the second question, -- how can we securely determine value from what we observe?

    In the ideal market, supply balances demand resulting in a price that incorporates all the relevant skills and preferences of the market's participants. In such a market, this balance between skills needed to create a commodity and the preferences for that commodity constitute the value of that commodity -- we can measure value by the equilibrium market price.

    In the competitive market, one commodity is traded for another. (Money is just a particularly interesting kind of commodity). In order for this market to work -- in order for prices to accurately communicate value -- the participants must first be able to measure the value of the two commodities traded. Indeed, that's the main property that distinguishes a commodity from a less economically tractable good or service -- the ability of parties to measure its value -- the ability of parties to observe properties of a good or service, matching what they observe against their private preferences, and making sure this process isn't spoofed by wily traders.

    So what measurements do we consider when valuing a yacht? Size... Builder... Age... Condition... etc., etc...???

    And what relative weight do we assign each measurement?

    And if there really are subjective values, how do we weigh these intangibles?

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  2. AMG, Jul 24, 2009
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    AMG

    AMG YF Moderator

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    It is simple: Desire.
  3. Seafarer, Jul 24, 2009
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    Seafarer

    Seafarer Senior Member

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    Intangibles are called intangibles for a reason. They can't be touched, precisely quantified, accurately qualified, or objectively defined.
  4. K1W1, Jul 25, 2009
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    K1W1

    K1W1 Senior Member

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    Hi,

    That's a pretty simple one to answer based upon your picture.

    Bennetti on the left and Feadship on the right :)
  5. Capt J, Jul 25, 2009
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    Capt J

    Capt J Senior Member

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    In my opinion the value of something is simple. It is what another person is willing to pay for it in a reasonable amount of time. For example, a yacht should be sold within 6 months as long as it is properly marketed. Otherwise, nobody is willing to pay that much. Value is also determined by the seller. The seller determines how quickly he would rather have the money (for other things) then the good. If he needs the money right away, the seller will price it lower to sell it faster.
  6. yachtbrokerguy, Jul 25, 2009
    #6
    yachtbrokerguy

    yachtbrokerguy Guest

    Sellers do not determine the market value of a boat, brokers do not determine the market value of a boat, only buyers determine the market value.

    Market value is defined as the price a willing, able, and informed buyer will pay, and a willing, able, and informed seller will accept.

    As a broker I will do a market analysis for a seller, based on what is currently on the market, the length of time those boats have been on the market, what similar boats have sold for recently, research with other brokers, and my personal experince of having inspected thousands of boats over many years and listened to hundreds of buyers.
  7. AffrayedKnot, Jul 25, 2009
    #7
    AffrayedKnot

    AffrayedKnot Senior Member

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    Mercedes is to Yugo as Fedship is to Azimut?

    Okay… Engineering, technology and craftsmanship set builders apart. So how would you rank and score a builder? What empirical data would you measure to determine the quality of a builder or yard?
  8. Capt J, Jul 25, 2009
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    Capt J

    Capt J Senior Member

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    The quality of what they build. Feadship is known for having superior quality (for example) in comparison to Broward. Resale value is a good indicator to the quality of the build, but only an indicator. Opinions of surveyors and naval architects as well as current owners. I don't know how much data there is to measure.

    For example Cabo is known as one of the best production builders in the 32'-52' Sportfish size segment. Viking one of the best from 46'-84' SFs. This is based upon electrical, strength, design, speed, craftsmanship of interior etc....
  9. YachtForums, Aug 12, 2009
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    YachtForums

    YachtForums Administrator

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    I’m Affrayed this question begs for answers on a broader scale. Each of us assigns different weights to our deliberations. With the global paradigm shift away from conspicuous consumption, elite brands are finding their value was rather inflated. Finally, a moment of truth, for us all. And just maybe, a new reckoning.

    In my decision making process… emotion takes a back seat to engineering. Boat building is as much an art form as it a science. It is a statement of execution that exceeds the sum of its parts. There exists a disparity among yacht builders today. There are those with capacity and those with creativity. I’ve seen small yards with a minimum crew producing world class products, while big builders with big overhead struggle to overcome quotas and queries.

    To watch the daily operations of a boat being built, from the ground, up, you might have a different perspective then you would walking along the docks at a boat show, where sultry lines, over-the-top displays and smiling faces soon separate you from your better judgment. Long before the elements that entice, this beauty was a beast. She was as rough as 50-grit and she had more issues than a desperate housewife. She was a model in the making, but she was dusty, dirty, barely built and most of her parts were lying on the floor. And guess what… this is exactly where you want to meet her. At this stage, you can see her foundation, her lamination and the calcium in her bones. You get to see how she’s wired and why her plumbing is so complicated.

    Ahem... getting back to boats - attention to detail, passion and purpose are the building blocks of success, but what worked yesterday is not necessarily competitive today. Complacency and arrogance are the hallmarks of certain names held in high esteem. We, as consumers are guilty of heralding this history. Today, we have better choices available if we look beyond a name and embrace who’s behind the build. I’ve said this before and it bares repeating… boats are made from the same materials, but the people who build them are very different.
  10. K1W1, Aug 12, 2009
    #10
    K1W1

    K1W1 Senior Member

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    Hi,

    You have obviously seen one in build that used a different Paint Subbie to the mob I am burdened with now.

    I don't think they have anything in their box below 240 and there are only limited supplies of that available!
  11. revdcs, Aug 13, 2009
    #11
    revdcs

    revdcs Senior Member

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    Hear,hear.

    And one of the best pieces of writing I've seen in a long time.
    Thanks Carl. You should do this more often....;)