I $50 a Tow When I Started. Here's What Actually Cost Me.
The Towing Playbook — Bob Cook
When I started my first towing company, I had a theory.
I only had one truck. I worked out of my driveway. I had no employees, no yard, no office. My overhead was basically nothing, so why would I charge the same as the established companies in the area? They had all that infrastructure to support. I didn't.
So I set my rates accordingly. Fifty dollars a tow. Forty dollars for a boost, a lockout, a tire change, a fuel delivery. Whatever you needed, I was cheaper than everyone else. Significantly cheaper.
And it worked, in the way that a slow leak in a tire works. Everything seems fine right up until it isn't.
The first part felt like winning
The calls came in. Word spread fast that there was a new company in town that was cheap. Really cheap. People called me because I was cheap. They referred their friends because I was cheap. I was busy. The phone was ringing. I was doing calls every day.
From the outside it looked like a towing company that was taking off.
From the inside it was a towing company that was slowly going broke, and I didn't know it yet.
The moment I figured it out
The truck broke down.
Not catastrophically. Just a normal breakdown — the kind of thing that happens to working trucks that are putting on kilometres every day. The kind of thing every towing company budgets for because it is not a question of if, it is a question of when.
Except I had not budgeted for it. Because I had not budgeted for anything.
I looked at what it was going to cost to fix. Then I looked at my bank account. Then I sat there for a while doing the kind of math that you do not want to be doing.
Every dollar that had come in had gone back out. Not because I was spending recklessly, because the dollars coming in were not enough to cover what needed to be covered. I was paying my basic living expenses. I was covering fuel. I was covering my phone. And then the money was gone.
Insurance. Maintenance reserves. Plate renewals. Unexpected repairs. The things that feel invisible when the truck is running and become very visible the moment it isn't. I had not accounted for any of them. Not because I forgot they existed. Because at fifty dollars a tow there was nothing left over to account for them with.
I had built a customer base. I had built a reputation. I had built a business that people called and trusted.
I had also built it on a price that did not work.
What I had gotten wrong
I thought overhead was physical. A building. A yard. Employees. If I didn't have those things, I thought, I didn't have overhead.
That is not what overhead is.
Every towing company — one truck or twenty — has costs that exist before the first call of the day is ever taken. Insurance is not optional. It is the price of being in business. Plates and registration are not optional. Maintenance is not optional, you can defer it, but eventually the truck makes that decision for you, usually at the worst possible time. Fuel does not care whether you charged enough on the last call to cover it.
When I was charging fifty dollars a tow, I was not covering those costs. I was covering some of my personal expenses and creating the illusion of a functioning business. The gap between what I was charging and what it actually cost to deliver that call was being silently filled by the future — future me, future truck, future cash flow that didn't exist yet.
The other problem I hadn't considered
I had built my reputation around being cheap.
That sounds like a marketing advantage. It is not. It is a trap.
The customers who called me because I was cheap were loyal to the price, not to me. The moment I raised my rates, which I eventually had to, some of them left. They were not wrong to leave. I had trained them to expect a number I could not sustain, and when the number changed, so did their interest.
The calls I was getting were also disproportionately from people who wanted the cheapest option — which meant I was busy, but I was busy with the calls that paid the least. Higher-value customers, commercial accounts, the kind of work that builds a real business, largely went elsewhere because cheap does not signal professional. It signals something else.
I was working harder than I needed to for less than the work was worth. And I had no way to know it because the phone kept ringing.
What changed
About a year in, I sat down and actually ran the numbers.
Not what I was making. What it cost to deliver a call, really cost, including everything. Insurance prorated per call. Fuel. Maintenance reserves. My time. All of it.
The number was not what I had been charging.
It was not even close.
I raised my prices. Not all at once — gradually, and with intention. I lost some customers. The ones who were loyal to the cheap price left when the price changed. That stung at the time. Looking back, those were not the customers I needed to build a business around anyway.
What happened over the months that followed was that revenue went up, cash flow improved, and for the first time I had money left over at the end of the month. Not a lot at first. But enough to fix things when they broke. Enough to plan. Enough to breathe.
The business I had been running looked busy. The business I was running after I priced correctly actually was.
What I know now
Your price is not just a number you put on a rate sheet. It is a statement about what your business is worth and whether it can survive.
A towing company cannot run long-term on a price that does not cover its real costs. It can run for a while — long enough to build a customer base, long enough to feel like things are working — and then something breaks and the gap between what you charged and what things actually cost becomes impossible to ignore.
The calculation is not complicated. Take every cost associated with running your operation insurance, fuel, maintenance reserves, plates, equipment, your own time and divide it by your monthly call volume. That is your cost per call. Your rate needs to be higher than that number. Not a little higher. Meaningfully higher, so there is something left to reinvest, to save, to build with.
If you do not know your cost per call, you do not know whether your business is making money or just moving money around.
Module 03 of The Towing Playbook covers pricing and revenue in depth, how to calculate your actual cost per call, how to build a rate schedule that covers your costs and generates real margin, how to price commercial accounts and motor club work, and how to raise your prices without losing the customers worth keeping.
I wrote it because I lived the alternative. And the alternative costs more than the lesson is worth.
The short version
Fifty dollars a tow felt like a competitive advantage. It was a slow exit strategy.
Know your costs. Price above them. Build a business that can survive what is coming, because something is always coming, and a truck that breaks down with no repair fund is the first sign that the price was never right to begin with.
Find everything at **thetowingplaybook.com**. And if this sounds familiar, if you recognized your own first year in any of this, I would genuinely like to hear from you.
Bob Cook has 17 years of experience in the towing industry. The Towing Playbook is a business education resource built specifically for towing business owners, covering operations, dispatch, training, HR, financial management, and everything in between.
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