Are we charging too much or not enough?
By Richard Wolfe
In my years of towing, I have heard that companies are known for charging too much. Is it really possible to charge too much for your services? Well, I think that is possible, and some companies are accused of being too high, when in fact their prices are in line with the services that are rendered.
Let’s look at this and see if we can make heads or takes of it. If a company runs modern equipment, is fully insured, has trained drivers, and desires to make a small profit, then why is it that they charge too much?
I work for a company that is accused of being too high priced. But we are charging less than some other companies that I have worked over the years. Of course the market area is different also.
Our rates for towing semis for normal breakdowns is less than companies that I have worked at which impound cards from private parking lots. Is this overcharging or not: The value of the tow truck is four to five times higher for towing big trucks than cars.
We all know the dramatic increased in insurance costs and fuel prices are what caused us to raise our rates. And trucks are not cheap either. The growing requirements of vehicle manufacturers’ requirements to use flatbeds for towing means companies must upgrade their fleets. Now a lot of companies use older equipment, but is this profitable? There are no truck payments, but the driver is slowed down when using older equipment on newer vehicles. We need to project a professional image. I know that older equipment works great, and I have used lots of it. But new equipment makes the job go much faster.
Is it insurance costs that dictate the rates we charge? You bet it’s tied in. Expenses go up, rates go up. It is simple business. Spend more than you make and the result is bankruptcy.
And can anyone afford to not have the proper insurance coverage today in the face of huge settlements in the courts” We are in a business where we are exposed and lots of risk is taken on our part. Make one small mistake and it can cost you’re your company. Look at the fast food restaurants that have been sued for hot liquids that cause injuries. Lots of money is involved over something that everyone knows is hot and dangerous.
The nation is very lawsuit happy thanks to lawyers. I think that we know some of the risks involved, but there is someone who desires to make money on the backs of anyone they can.
Another area to explore is the rates we give to repair shops and dealerships. Is it profitable to tow a car 30 miles for $50 I know we do tows for motor clubs for rates that would equal this, or be close to it? But most all of the motor clubs set the rates; we are setting the rates we charge to the shops. I have no problem ging a discount to the shops, but a lot of dealerships mark the bills up anywhere from 20 to 50 percent on top of the discounts that we give them. And guess who is accused of being high priced. Not the dealership, it is the tow company. Does the dealership offer you a discount on repairs of your truck? I bet not.
I was told of a tow we did several years ago for a dealership were the tow bill on a four-axle dump truck towed 160 miles and from another state, where the bill was $800 I went back to the office and looked up the bill. We charged $520 for the tow. The service manager said this is why we do not tow for him, we are to high prices. But for them to add $280.00 to the bill is a bit steep. But they say this is a handling fee for doing the phone call and the related paperwork to pay our bill.
If you just fell out of your chair I do not blame you, I would really like to be in business where I can make that much money to make a phone call and write a check.
I have talked to several shops about towing for them, and they all have said we are too high in the price we charge. So I offered to let them set the price to tow for, and they were ready to do so, but I told them that in exchange I get to set the price for them to work on our trucks.
I was told that is not possible. They have set expenses to cover. When I countered with my expenses, they said that was not a good reason to charge what I do. Now there are the same shops that charge $60 plus per hour to work on vehicles. Who thinks that a car tow for $40 which takes an hour or more is too high? Heck, to have a mechanic plug a car into a computer brings a $45 charge as a minimum. I bet the mechanic who has to supply his own tools does not get much more than the tow truck drivers do for towing the car.
So I guess the question is what is too high and what is fair price? This is something we as towers have to decide and no one can tell you what you need to be in business tomorrow. After all, you are in business to support your family, and drivers are working to support their families.
