Marina Dock Age, September/October 1995

Three Dimensions of Establishing Dry Storage Rates
by Dennis P. Kissman

Although boats are three-dimensional objects, most marinas limit themselves to using only length as the determining factor when establishing rental rates.  

A dry rack marina is much more restricted in its ability to change rates based on boat length because the structure itself limits the length of boats that can be stored. Although boat length is one of the important elements in establishing rates in a wet slip marina, it should have little or no bearing on dry rack marina rate structuring.  

Picture a dry rack marina structure. It resembles a bank vault without the safety deposit box doors. The amount of revenue that a bank can generate from its safety deposit boxes is directly proportional to the number of drawers. But the number of drawers is limited by the amount of square footage on the walls surface. The price of each safety deposit box is equated to the height, width and depth of the openings the individual safety boxes fit into. Setting the rate structure can be simplified by eliminating the depth from the calculation because the maximum depth is fixed by the size of the structure. Setting rental rates for the individual safety deposit boxes becomes a mathematical formula.

If we assume that each unit of measure (i.e. square inches, square feet or square meters) is valued at $1 and the wall can accommodate 100 boxes that measure 2 units high and 5 units wide, then the rental rate is $10 for a specified period of time (2x5x$1=$10). The maximum amount of revenue that can be produced during this specified period in this example is $1,000 ($10x100=$1,000), representing 1,000 units (100x2x5=1,000). Assume the demand is for a variety of safety deposit box sizes. Our limiting factor is still the 1,000 units because the size of the surface has not changed. Therefore, any combination of box sizes cannot exceed 1,000 units. The following table represents how a mix of boxes may appear:

You can see how the total number of boxes changed, but the total number of units must always remain at 1,000. We stated our per unit price is $1, giving us a maximum revenue of $1,000, except now the boxes would be priced according to the opening size, or $10, $20 and $60, respectively for the specified period of time.

When you rent a safety deposit box, the bank does not care how much you put into it as long as it fits. Similarly, as long as a boat can fit into the opening and the marina has the capacity to lift the boat, length should become a secondary consideration when structuring your rental rates.

Let’s see the impact on revenues when all boats in your marina do not have the same height and width. Most marinas charge about a 25 percent premium for excessive height or beam. The problem with this approach is that in most instances the increased size equates to something other than a 25 percent increase in value. Continue »