The annual budget in categories, and what actually drives each one.
The categories
Every operating budget is built from the same lines. What varies between two apparently similar yachts is the weight of each line, which is why percentage rules of thumb mislead more often than they help.
- Crew — salaries, rotation, travel, training, uniforms, medical and repatriation
- Maintenance — planned servicing and unplanned repair
- Refit reserve — set aside annually against a multi-year cycle
- Insurance — hull and machinery, protection and indemnity, crew cover
- Berthing — home port, seasonal and winter
- Fuel and lubricants for the yacht and her tenders
- Compliance — class, flag, survey, certification and audits
- Management, accounting, legal and administration
What drives the figure
Size drives crew number, berth cost and yard cost simultaneously, which is why cost does not rise smoothly with length. Age drives maintenance and refit. Flag and commercial status drive crew levels, certification and audit burden. Usage drives fuel, wear and crew overtime. Home port drives berthing and labour rates.
Why percentages are unreliable
The widely repeated claim that running costs equal a fixed share of purchase price fails in both directions: a keenly bought older yacht can be expensive to run, and a well-specified modern one can be comparatively efficient. Budgets are built line by line for the specific yacht, her crew, her flag and her programme.
The refit reserve
The most frequently underfunded line. Major works — paint, machinery overhaul, interior refresh, class special survey — arrive on a cycle and are far cheaper to fund annually than to find at short notice. A deferred refit becomes a larger refit.
Where we help
Before a purchase we build the annual budget with the management team for the actual yacht under consideration, including a refit reserve and a realistic view of the intended programme.
Questions
- Do running costs really come to a fixed percentage of the price?
- No. That rule of thumb is widely quoted and unreliable. Budgets should be built line by line for the specific yacht.
- Which line is largest?
- Crew, in most cases, followed by maintenance and refit reserve.
This guide is general information about how the yacht market conventionally works. It is not legal, tax or financial advice, and it does not describe the terms of any specific yacht. Rates, prices, availability and access are confirmed in writing before anything is committed.