The Types Of Tow Trucks And Expenses Every Tower Needs To Understand
November 2, 2022
Starting a tow truck business means you’d join an incredible community of professionals. Before you and your employees can take to the road, it is important to understand a few things. Mainly, different types of tow trucks, purchasing costs for new or used trucks, and expenses.
To better understand this topic, we spoke to two industry experts. Jeff Poquette, Heavy Duty Operations Director at Southside Wrecker Service, and Shelli Hawkins, Director of Market Engagement at TRAXERO.
Types Of Tow Trucks
When deciding on which type of tow truck to purchase, you must ask yourself what services you would like to provide your customers. Choosing the right truck becomes easier when you establish your goals.
Carriers vs. Wreckers
The most common type of tow truck is the carrier. There are a number of reasons that factor into this, including the variety of cars on the road.
“A big reason carriers are so popular now is because many vehicles are coming with all-wheel drive,” Poquette said. “Those cars typically need to be off the ground when you are towing them.”
Whether you need to haul an all-wheel drive SUV or a Tesla, a carrier can get the job done.
Wreckers and heavies handle more serious recovery and lifting. If you’re looking to get into the recovery side of the business, you’ll need a wrecker. Class B (medium duty) and A (heavy duty) wreckers can tow larger vehicles.
The past few years have been quite challenging for the towing industry, especially rising tow truck prices.
“To put into perspective what we’ve gone through, my company was able to buy a new carrier for $105,000 a year ago,” Poquette said. “Three months ago, we bought an identical one for $125,000 and were told at pickup to expect a price tag of $145,000 the next time we decide to order another. And manufacturers are saying these prices may never go back down.”
Poquette said that he is still waiting on an order that was placed in April 2020. As Hawkins explained, the number of parts that go into manufacturing each type of tow truck plays a major role in the delays.
“There are so many moving parts and components,” Hawkins said. “Before COVID, towers could be very specific about which parts, tools, and even colors they preferred. Gone are the days of being able to be specific, though. If you can find the right truck available, you take it.”
Although certain types of tow trucks could run over $850,000, there are entry-level options out there. In some cases, they only require a regular driver’s license.
“You can drive any light-duty tow truck with a GVWR under 26,001 with a regular driver’s license,” Poquette said. “Anything 26,001 or over requires a Class A or Class B license.”
Tow Truck Expenses
Apart from gas, tires, supplies for your truck, and routine maintenance, you’ll find there are quite a few outside costs that go into any towing operation.
New vs. Used
This is a big decision that towers must weigh when deciding which type of tow truck to purchase. While a new truck may cost more upfront, it may help prevent unexpected repair costs down the road.
“As a wise tower, Lee Roberts once told me,” Hawkins said. “‘Shelli, you will always have a payment when it comes to trucks on the new side, but it will be predictable. If you decide to go the used truck route, you will also have a payment, but will not know what or when that payment will be.'”
Used tow trucks can save you some cash in the short term. However, manufacturer warranties cover the costs of major engine and mechanical issues on new tow trucks. This is important to keep in mind.
Getting A License
While you can operate a light-duty truck with a normal driver’s license, any truck with a GVWR, or gross vehicle weight rating, of over 26,000 will require a commercial driver’s license, commonly referred to as a CDL.
“It used to be very cheap, but there is now a training class requirement from the federal level,” Poquette said. “I’ve heard of guys spending up to $10,000 to send their guys through fast-tracked versions of the course, but the price is lower if you choose to go through community colleges that offer the program.”
Insurance tends to be one of the largest costs per year for towers. It all starts with liability coverage, which can add up when formulating a tow truck’s price.
“Everybody has to have liability insurance. If you’re running anything less than a $1 million liability policy on your tow truck, that would be risky,” Poquette said. “Most people today are going up to the $3 million mark, but some municipalities in the metro Atlanta area require $5 million.”
In 2008, Poquette’s company paid around $65,000 per year in liability insurance. Today, the costs have risen to almost $265,000. That price does not factor in the additional coverage plans for physical damage, anything on-hook (what’s being towed), and environmental regulations. Poquette even pays to cover potential damage to underground utilities, such as exposed fiber optic cables on roadsides during recovery operations.
“If you’re looking to save money on insurance, you need to re-think your rates,” Poquette said.
Determining Your Rates
Once towers begin to get leads, establishing the proper rates is crucial to hitting profit goals and affording yearly expenses.
“The biggest thing I try to get across to towers online is to know your costs. My philosophy is costs plus profit equals your rates,” Poquette said. “It’s amazing how many guys will scrape the money together for a truck only to have the cost of insurance and equipment blow them away. ”
For Hawkins, the lack of industry knowledge that hurts certain towers is frustrating to encounter.
“If you and I went into partnership on a flower store, we could calculate the going rate for a dozen roses and work with that,” she said. “Or, we could set ourselves apart with service, design, and quality. Our roses would cost more because customers get more value.”
Tow Truck Software
Once you’ve found the perfect type of tow truck for your business and factored in the expenses, you’ll also need the right software to streamline your business needs. That’s where TRAXERO comes in.
Our cost-efficient suite of products is great for any tower, especially those just starting out.
Contact us today to learn more!
What is the most common tow truck?
The most common type of tow truck is the carrier, also referred to as a rollback.
What is a rollback truck?
Also referred to as carriers, rollback trucks feature a hydraulic flatbed system that allows towers to transport a much wider range of vehicles, such as all-wheel drives.
What is the difference between a tow truck and a wrecker?
While tow trucks are mainly used to transport smaller and lighter vehicles that are broken down or damaged, wreckers are able to assist in recovery, repossession, and heavy-duty operations thanks to booms and rotators.
What is a Class B wrecker?
A Class B wrecker is a medium-duty truck that can lift and tow medium-sized trucks and larger passenger vehicles, like buses.