Do you want to start a tow truck business and want to know the cost? If YES, here is a cost breakdown to open a tow truck business and the profit margin / ROI. A tow truck which is also known as a wrecker, a breakdown truck, recovery vehicle or a breakdown lorry is a truck that is used to move broken down, improperly parked, impounded, or otherwise indisposed motor vehicles away from to the road so as to avoid obstruction of free flow of traffic.

Companies in the Automobile Towing industry are responsible for towing light or heavy motor vehicles over short and long distances. As a way of earning additional income and improving revenue, players in this industry may also provide incidental services such as storage and emergency road repair services et al.

Starting and operating a towing truck business can be financially tasking and challenging, but the truth is that it can be rewarding at the same time. One good thing about the industry is that it is open for both big time investors who have the capacity to start the business with fleet of tow trucks and aspiring entrepreneurs who may want to start with just one tow truck.

The Estimated Cost Breakdown to Start a Tow Truck Business

When it comes to starting a standard tow truck business, one is expected to spend the bulk of the startup capital on the purchase of standard tow trucks. Please note that most towing equipment are customized to suit the needs and convenience of the end user, and the choices that you make will influence the tow truck cost.

Depending on the options you choose, the cost of a typical tow truck can be anywhere between $58,000 and $850,000. Aside from that, you are not expected to spend much except for maintenance and fueling and of course paying of your employees and utility bills. This are the key areas where you are expected to spend your startup capital on;

  • The total fee for registering the business in the united states of America – 0.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
  • Marketing promotion expenses for the grand launching of the tow truck in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
  • The cost for hiring Business Consultant (it includes writing of business plans) – $2,500.
  • Insurance (general liability, workers’ compensation and auto insurance) coverage at a total premium – $15,000.
  • The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of – $105,600.
  • The cost for parking yard / facility remodeling – $25,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500) – $3,000
  • Operational cost for the first 3 months (salaries of employees, fueling and maintenance of the truck, and payments of bills et al) – $120,000
  • The cost for office / store equipment (cash register, security, ventilation, signage) – $750
  • The cost of purchase of two 50 tons tow trucks (fairly used) – $450,000
  • The cost of launching a website – $600
  • Miscellaneous – $10,000

From the rough estimate as listed above, you would need a minimum of seven hundred and forty – three thousand five hundred and eighty USD ($743,580) to start a medium – scale but standard tow truck business in any city in the United States of America.

Please note that this amount includes the salaries of all the staff for the first three months of operation and excluding having an in-house servicing and maintenance team under your payroll. You can always contract this aspect of the business to a third – party service providers.

Conclusion,

Please note that this is a rough estimate and we usually advise our readers who are interested in starting a tow truck business to go to the market or directly contact tow truck major dealers in their city in order to get the real time prices of the types of tow trucks they want to buy, the required insurance and perhaps payment modalities et al.

The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.

Frequently Asked Questions

  1. How much can a Flatbed Tow Truck haul?

The maximum weight capacity for any flatbed truck can vary depending on several factors. But in general, you can expect the weight capacity to be somewhere around: A 24-foot, three-axle truck can give you a maximum load of 54,000 pounds. A 36-foot, four-axle truck can give you a maximum load of 66,000 pounds.

  1. What Type Of Insurance Do You Need As A Tow Truck Company?

The main areas that many tow truck plans will cover are: Auto liability insurance (including bodily injury and property damage), Medical payments insurance and Physical damages coverage.

  1. Who Is The Target Market For A Towing Business?

The business model that a tow truck business follows will partially determine its target market. A towing business that offers services to consumers for roadside assistance will target drivers, auto repair shops, car dealership shops and insurance companies within its service area.

  1. How Much Can You Potentially Make Owning A Towing Business?

The average tow truck business owner makes between $30,000 and $40,000 annually. The exact amount varies depending on the region that a business is in.

  1. What Are The Ongoing Expenses For A Towing Company?

The ongoing expenses for a towing company are salaries, fueling cost, servicing and maintenance cost and other utility cost.

  1. What Is A Rotator Tow Truck?

A rotator tow truck is one of the heaviest and the largest tow trucks available. It has several varieties. While some certain types of heavy-duty tow trucks feature a fixed boom, others have pivoting parts. The rotator tow truck is one of the pivoting varieties but it features a crane-like arm.

  1. How Much Does It Cost To Start A Tow Truck Business?

The startup cost for a tow truck business can be anywhere from $150,000 to $2,000,000. Your monthly expenses will also be higher if you choose to purchase a new truck. With that said, many towing businesses choose to finance their tow trucks through tow truck financing.

  1. Are Tow Truck Drivers Considered First Responders?

Yes, they are a group of first responders who are often overlooked. Tow truck operators are first responders.

  1. How Much Does It Cost To Build A Tow Truck Business?

The startup costs associated with opening a tow truck business are substantial, mainly because business owners must purchase a tow truck. Truck Paper lists tow trucks that are for sale, and they often sell for between $10,000 and $50,000. Licensing fees are another major startup expense.

  1. How Do I Start My Own Towing Company?
  • Choose which type of tow truck business to open
  • Calculate your expenses and purchase equipment
  • Acquire funding, choose a business entity, register your business, and obtain federal and state tax ID numbers
  • Obtain the necessary licenses and permits
  • Select a location
  • Buy insurance coverage
  • Market your tow truck business
  1. What Are The Costs Involved In Opening A Towing Company?
  • The cost of registering the business
  • The cost of acquiring the required licenses and permits
  • The cost of acquiring commercial driver’s license CDL
  • The cost of purchasing tow trucks
  • The cost of writing a business plan
  • The cost of printing publicity and marketing materials
  • The cost for the purchase of insurance cover
  • The cost of paying your employees
  • The cost of renting a parking lot and operational facility
  1. Do You Need To Purchase Or Lease A Tow Truck?

It depends on what you want and your financial capacity.

  1. How much does a 50-ton rotator tow truck cost?

The Rotator is the biggest, baddest wrecker made in America. Yates’s version cost $259,000, and the truck beneath it (a long-nose Peterbilt 379) cost $150,000-for a total of $409,000. Its boom extends 30 feet and lifts in 360 degrees-hence the Rotator moniker.

  1. Is Buying A Tow Truck A Good Investment?

Purchasing a towing license and tow truck in an urban area can cost you as much as $200,000 with no towing accounts in place. Overall, starting an automotive towing business can be a terrific and profitable business venture, providing a license can be obtained or purchased at a reasonable price.

  1. How Much Does It Cost To Hire A Tow Truck Service?

The average cost to hire a tow truck service is $75 to $125. Most towing companies have a minimum charge of $50 for the first 5 to 10 miles

  1. How Much Do Tow Lots Charge Per Day?

A daily storage charge of between $5.00 and $20 per day or part of a day for a car that is 25 feet long or less. A VSF must charge $35 per day or part of a day for a car that is longer than 25 feet.

  1. How Do Tow Trucks Make Money?

A tow truck business makes money by charging customers for tows. A typical charge will include a flat fee for the tow, a mileage fee, and a storage fee.

  1. How Much Can You Make If You Own Your Own Truck?

According to Indeed, an independent truck driver’s gross pay averages $183,000 per year, but expenses can run over 70% percent. Thus, the average owner operator pay drops to around $50,000-$60,000 take-home. Many independent truck drivers sign with a carrier to get consistent work.

  1. Does Collision Cover Towing?

If the tow truck towing your car is in an accident, the at-fault driver’s insurance will pay for damage to your vehicle, just like if you were in an accident while driving. And if you have collision coverage, you’ll likely be covered if your car is damaged while it is being towed.

  1. Is A Tow Truck a Good Investment?

The towing industry is only a good business for the owners of a tow company. An owner only makes good money if he invests into it and is smart enough to run it efficiently. Drivers of towing companies, on average, don’t make good money and are subject to being on-call 24/7.

  1. Are Tow Trucks Allowed To Speed?

Yes, they can speed as long as they have the emergency equipment (lights and siren) activated and they can run red lights with emergency.

  1. What Services Do Car Towing Companies Offer To Customers?

These are the core services car towing companies offer to their customers;

  • Heavy Duty Towing
  • Big Rig Towing
  • Exotic & Classic Car Towing
  • Limo Towing
  • Long Distance Towing
  • On & Off road Vehicle Recovery
  • 24/7 Roadside Assistance.
  1. Can You Start A Truck Business Without Having To Drive It?

Yes, it is possible to start a trucking company without actually having trucks or driving the truck. You can simply become a broker.

  1. Why Are Tow Trucks So Expensive?

Tow trucks are so expensive because they offer rescue services. Also, remember, tow trucks have to pay for their gas in their truck (which isn’t cheap), they have that extra load (your vehicle) which is using even more gas, it is straining the drivetrain of their truck so the possibility of them having to soon replace a transmission ($1800+ easily) or so is much higher.

  1. What Happens During A Typical Day At A Towing Company?
  • Inspecting and warming the tow trucks upon resumption
  • Cleaning the tow trucks and topping waters and other fluids that is needed to keep the tow truck functional and in good shape
  • Fueling the tow trucks
  • Ensuring that all towing hook and accessories are in order
  • Open the phone line for customers
  • Once the service is requested, negotiate the fee
  • Go to the location to tow the vehicle from one point to another
  • Return back to base
  1. What Do You Think Will Be Required To Open Up A New Tow Truck Business?
  • Get a Commercial Driver’s License
  • Apply for Your Federal DOT and Motor Carrier Authority Numbers
  • Complete Your Unified Carrier Registration (UCR)
  • Get an International Registration Plan (IRP) Tag
  • Understand Heavy Use Tax Regulations
  • Obtain an International Fuel Tax Agreement (IFTA) Decal
  • File a BOC-3 Form
  • Get A Standard Carrier Alpha Code (SCAC)
  1. What Are The Laws On A Tow Truck Damaging A Vehicle While Towing?

In any accident towing scenario, whether the towed vehicle or tow truck causes damage, the driver is often held responsible for any damages sustained. A number of factors come into play. One critical aspect is if your car was subjected to unprofessional or improper towing that led to the damages.

  1. Is A Tow Truck A Good Investment?

Yes of course a tow truck is a good investment. This is so because the average tow truck business owner makes between $30,000 and $40,000 annually. The exact amount varies depending on the region that a business is in.

  1. How do I become a Tow Truck Driver in California?

Pass the pre-trip inspection which tests your knowledge of the vehicle and its operation, and the driving test to complete the licensing process. You have three chances to pass both. Once you pass all required tests, you will be issued a Class B driver’s license, which allows you to operate a tow truck legally.

  1. Do You Need A CDL To Drive A Tow Truck In Texas?

If the GCWR of the tow truck is 26,001 pounds or more and the towed vehicle alone exceeds 10,000 pounds GVWR, then the driver needs a Class A CDL.

  1. How Do I Register A Tow Truck In Texas?

To be eligible, you must:

  • Complete the online application
  • Hold a valid driver’s license issued by a state in the United States
  • Pass a background check; and
  • Pay the consent tow operator license fee of $100
  1. Is Driving A Tow Truck Dangerous?

Tow truck drivers have one of the most dangerous jobs out there. A 2019 study by the National Occupational Injury Research Symposium found a risk of being killed on the job of 15 times higher than other occupations. The risk of injury for tow truck drivers is more than double that of other jobs.

  1. How Much Does a Tow Truck Driver Make?

The tow truck driver salary according to Salary.com, as of May 2020, in the U.S. is $53,471. The reported median hourly wage is $26.

  1. Is Tow Trucking A Good Business?

Purchasing a towing license and tow truck in an urban area can cost you as much as $200,000 with no towing accounts in place. Overall, starting an automotive towing business can be a terrific and profitable business venture, providing a license can be obtained or purchased at a reasonable price.

  1. How Is Towing Price Calculated?

The average cost to hire a tow truck service is $75 to $125. Most towing companies have a minimum charge of $50 for the first 5 to 10 miles, then $2 to $4 per mile after.

  1. Can You Negotiate Towing Fees?

You can negotiate a towing with a company according to the laws of your state. If a towing company violates your right, you can request for tow hearing at the peace court, dispute towing charges, or even have the tow company pay for damages.

  1. What Is The Biggest Tow Truck In The World?

The Rotator is the biggest, baddest wrecker made in America.

  1. How Much Does It Cost To Tow A 18 Wheeler?

It would probably cost anywhere from $500 to $25,000 or more to upright and tow away an 18-wheeler.

  1. How Much Does Off Road Towing Cost?

If you have driven along spaces like hiking trails not designed for vehicles, the costs to get you out of a tight spot could skyrocket to several thousand dollars, depending on the work involved. On average, though, a typical recovery like sliding off a nearby wet forest road will cost about $300 to $500

  1. How Do You Negotiate A Towing Fee?

You can negotiate a towing fee by following these steps;

  • Pay the Fine and Seek Reduction/Refund
  • Use the Towing Sign
  • Dispute the Drop Fee Instantly
  • Buy Back as Auction
  • Appeal the Original Ticket
  1. How Much Do Tow Truck Operators Make An Hour?

A tow truck operator make an average of $20 to $30 per hour.

  1. How Do I Start A Successful Towing Business?

7 tips for running a successful tow truck business are;

  • Put safety first. Always.
  • Have safety policies.
  • Be careful when you’re hiring tow truck drivers.
  • Train your drivers.
  • Set up a pre-trip vehicle inspection procedure
  • Establish a preventive maintenance program.
  • Get the right tow truck insurance for your business.
  1. Does Car Insurance Include Roadside Assistance?

Usually, if you want to purchase a roadside assistance rider through your auto insurance company, you will need collision and comprehensive coverage. Roadside assistance coverage is often a benefit that you can add on to your current auto insurance policy.

  1. How Much Do Heavy Duty Tow Truck Operator Jobs Pay A Year?

The average annual pay for a Heavy Duty Tow Truck Operator Job in the US is $58,798 a year.

  1. How Much Do Wreckers Charge Per Mile?

Most towing companies have a minimum charge of $50 for the first 5 to 10 miles, then $2 to $4 per mile after. Factors to consider in towing a car are distance, type of vehicle, and the time of day.

  1. What is a Heavy Wrecker?

An employee in this class operates a heavy duty wrecker capable of towing a variety of large automotive equipment such as tractor trailers, compactors, and heavy duty dump trucks and performs light maintenance on downed vehicles.

  1. What Is The Difference Between A Tow Truck And A Wrecker?

The major differences between a wrecker driver and a tow truck driver are their employers and the scope of their duties. While both positions require you to tow cars, a tow truck driver typically only tows vehicles. They do not generally perform repair or maintenance work, while a wrecker driver is authorized to do so.

  1. Does Insurance Cover Towing Fees?

For the most part, towing is not covered if you only have liability. Expect to pay out of pocket for any roadside assistance, including towing. If there was an accident and you were not at fault, the other driver’s insurance will pay for damages incurred to your car, as well as any towing expenses, too.

  1. How Do You Start A Tow Truck Business In California?
  • Get the required trainings and experience
  • Choose a name and register the business (Preferably DBA)
  • Draft a detailed Business Plan and market strategy
  • Secure the needed licenses and permits (commercial driver’s license CDL important)
  • Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
  • Open a corporate bank account
  • Acquire your tow trucks
  • Hire employees
  • Promote and Market your business
Solomon. O'Chucks
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