At Dockwa, we work with and speak to many marinas – thousands since we started the company last year. A common theme that we've discovered...
There's a smarter way to set your dockage rates.
Post by Katharine Kirk - Published on 08/14/20 1:19 AM
Setting your dockage rates each year has an enormous impact on the success of your season; it's possible you are setting them too low.
As we noted in our webinar on Optimizing for Occupancy, reducing rates is one of the simplest ways to increase the number of boats in your marina at any given time. Similarly, raising rates can be an effective way to increase profits at your marina, particularly if you keep a waitlist.
Speaking in economic terms, if you are a marina with a waitlist, there are more boaters that want to pay for your dockage at its current price than is available - your demand exceeds your supply.
In this scenario, the best way to meet the needs of both your marina and your boaters, is not to keep a waitlist but to increase your prices. Excess demand, while flattering, is a signal that you could and should be earning more. As demonstrated in the image above, when you increase your prices to where your fixed supply of dockage meets your variable demand for dockage, you increase your revenue.
Worried about alienating current customers? Totally understandable. In the long term, you could likely meet excess demand by increasing your supply. However, this typically requires a significant investment of time and capital. We think it's helpful to think of it this way: in addition to increasing your revenue, raising your prices creates opportunities for other marinas to delight boaters at a lower price point, and for more boaters overall have access to dockage that fits their lifestyle.
As boat registrations boom in a world newly characterized by social distance, more and more of you may start seeing demand for your dockage rise and your waitlists grow; feel empowered to adjust your rates accordingly.
Setting the right price is hard to do. We can help.
It's easy to agree on the stipulation that the best price for dockage at your marina is a price where supply meets demand. Where the real challenge lies is figuring out what exactly that price should be. Do you increase by a fixed percent each year? Do you adjust for inflation? Do you look to colleague in the marina industry and see what rates they are setting?
There's likely no "right" way to figure out what prices satisfy supply and demand at your marina. We think that understanding the average rates near your marina can help make your rate-setting better-informed. However, up 'til this point, no one has gone through the process of compiling this data and finding these averages. That's why we're here!
Below, we've compiled averages for nightly rates, by state. We also have compiled average rates by harbor, but that info couldn't fit on this here page! If you're interested in the more specific (and in our opinion, more relevant) harbor data, give us a shout!
Alright, so you're looking at the average nightly rate in your state - what does that mean for your marina? Well, that depends on two things:
- Your nightly rate
- Your occupancy
NB: We know that not all marinas take nightly guests and thus not all marinas have nightly rates. So this analysis may not be the most helpful tool for everyone. Stay tuned for a future analysis where we share average monthly, seasonal, and annual rates!
If you are a marina in all but one of the above quadrants, adjusting rates is a useful tactic to increase revenue, either by increasing rates to meet excess demand or reducing rates to increase demand.
The exception lies in Quadrant III., where both rates and occupancy are low. If you fall into this category, it may take more than low prices to draw boaters to your marina. Luckily, there are a number of different tactics you can pursue to increase revenue and occupancy, that don't involve adjusting your rates. We detail these tactics - dubbed "The Four Ps" - in our webinar on Optimizing for Occupancy.