The Major Expenses Your Towing Business Needs To Consider

The Major Expenses Your Towing Business Needs To Consider

Is starting a tow truck business a good idea? With the number of registered cars in the U.S. continuing to grow, the need for towing services has never been greater. When sitting down to figure out which towing business expenses your start up needs to consider, it may surprise you many expenses there are. From purchasing the right equipment to maintaining your vehicles over time, it is not cheap to run a towing business.

While some may try and cut corners, it’s best to operate your business in as professional a manner as possible. This will ensure better results not only for your business but for other towers hitting the roads as well. Here’s what you’ll need to keep in mind if you’re wondering how to make money in the towing business.

Tow Trucks: How Much Do They Cost?


The most important centerpiece of your tow business expenses will unsurprisingly be your truck. In today’s competitive industry, it’s important to make sure you find the right trucks to provide your customers with the best service. Without the proper equipment, your towing operation will lag behind the competition. But how much does a tow truck cost? The first thing to consider is which type you’d like to purchase. While the most common type of tow truck is the carrier, there are other options available, such as wreckers for recovery jobs. It all depends on the size and scope of your business’ operations.

New Vs. Used


With prices continuing to rise, towers have had to get creative with how they go about purchasing their desired tow trucks. Jeff Poquette, Heavy Duty Operations Director at Southside Wrecker Service, spoke about the challenges that our current economic climate offers. As tow truck business start up costs go up, the strain placed on the industry is felt in all corners of the country.

“Three months ago, my company bought a new carrier for $125,000. At pickup, we were told to expect a price tag of $145,000 the next time we decided to order,” he said. “Manufacturers are saying these prices may never go back down.”

While the price for used trucks may be lower, the costs to maintain may become unpredictable, especially if the used truck is not protected by manufacturer warranties.

Repairs, Maintenance, And Parts


In addition to the price you pay to secure your truck, you’ll need to factor in maintenance and repairs when determining your tow truck business’ start up costs. To keep your fleet performing at its absolute best, upkeep is a necessary cost that can add up if you buy too many vehicles at one time. Costs can vary, but it’s important to create a monthly budget for these costs. You never know when something could go wrong with your tow truck.

Accessories and rigging tools may also present towers with a hefty cost. Hooks, chains, straps, lighting, and safety toolkits, including ANSI class 3 vests and dollies, are just a few. There are also critical parts that will require additional maintenance. Take wreckers, for example. Their anatomy includes booms, winches, tow bars, wheel lifts, underlifts, and even outriggers. Some of these parts can be customized to better suit the jobs your business performs.

Why Insurance Coverage Matters


Because tow trucks are not safe from accidents and damage on the roads, it’s also crucial to make sure each vehicle and part is properly insured. There is a misconception that cutting back on insurance coverage can save money. While technically true, insurance can save your business when accidents occur.

Insurance is something we all dread. It’s a tow truck business start up cost that always seems to be on the expensive side. Get caught with inadequate coverage, however, and your business may go under. Customer lawsuits and vehicle accidents are more or less impossible to avoid in the towing world. Because of this, insurance represents an essential tow truck business start-up cost that every tower should understand before entering the industry. From on-hook coverage to workers’ compensation, there are many plans that go into insuring a towing business. Now, how can you get the best rates for your company?

To start, having good credit will go a long way. The lower your credit score is, the higher the rates could become as your business grows. Andrew Meinster is the Senior Risk Advisor at Nottingham Insurance. In a recent interview for our insurance blog, he spoke about the importance of credit.

“One bad claim can completely destroy a business,” he said. “I would say that credit is the biggest cost factor for those coming into the industry. A lot of insurance carriers that handle towing calculate their rates based on the owner’s credit score.”

Other tips to follow include maintaining a clean driving record and calculating what your business may be able to afford out-of-pocket in the event of any damages. Make sure you check out that blog to learn more about the types of insurance coverage and what they could cost your business.

Operator Training


Training can go a long way in keeping your insurance rates and other tow business expenses down. The better your operators are able to perform on the job, the better your reputation will be. We mentioned the importance of not cutting corners when starting your business and training goes a long way.

The skills required to be a tow truck operator go a lot further than just being able to drive. There are so many unique parts and situations towers need to be aware of.  Hence, putting together the right training program for your new hires is crucial. Take it from Ford Wagner, Chief Operating Officer at Texas Auto Carriers in San Antonio. Ford has seen it all and is a driving force in the training world.

“There is so much responsibility in today’s world. The amount of knowledge and training required to operate a tow truck is huge,” he said. “Think of your training as both an investment in yourself and the industry as well.

To say there are numerous training programs would be a massive understatement. From company training to certifications towers can receive at tow shows, there are many ways towers can develop their skills.

There are so many different vehicles on the road now. We have electric vehicles, all-wheel drive SUVs, and more. Investing in the proper training will go a long way toward providing customers with the best service.

Tow Truck Software


Our world is defined more and more each day by the advances in technology. For the towing industry, around 50% of operators still use pen and paper. Therefore, investing in the right software can help you manage the job to completion. When calculating your tow truck business start-up costs, keep software in your mind.

From dispatch and driver management to simplified payment processing, TRAXERO’S software is designed to help you efficiently manage your towing operations. Our full fleet of products can help your business deliver better results and increase revenue.

TRAXERO brings more than 300 years of collective experience to the table. Our dedicated team is driven by the mission to make a powerful shift in the towing industry.

Contact us to learn more about how our industry-leading software can take your tow truck business income to the next level.

Staff Expenses


If there is one thing that continues to define the American job market, you could make the argument that it has been “The Great Resignation.” Fewer drivers these days have CDLs, which has presented towing companies with a major challenge. This reinforces the need to take care of the employees you have.

When determining your tow truck business start-up costs, take into consideration how much you’re willing to pay employees to incentivize them. The average annual salary of a tow truck operator ranges from $50,000 to a little over $65,000. The actual salary could be higher or lower than those numbers, depending on driver experience, certifications, and even regional salary ranges.

There are so many moving parts when it comes to creating your tow truck business. If done properly, you’ll become a part of a true family of professionals that shares a passion for towing and recovery.

TRAXERO is here to help you run your business with ease. Learn more about our products here. And make sure to catch up on the latest industry news and trends by reading our blog.