Starting your own business can be as exciting as it is profitable. By starting an independent towing company, you can be your own boss and provide an essential service to your community. Towing services are an evergreen business. As long as there are drivers on the road, they will need someone to help them out.
So, how do you start your own towing company? You need to develop a business plan to set yourself up for success. To help you get started, we’ll review all the initial and ongoing expenses you need to know about.
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Understanding Towing Expenses in the Towing Industry
Starting a business comes with many expenses, and being aware of them beforehand will help you develop a successful business plan to turn your investments into profit. There are two types of towing expenses you will have to manage: upfront and ongoing. The first will be the base to acquire everything you need to start your business, and the latter will keep it running.
Having a clear view of your expenses is the best way to start a towing company. Expenses give you an idea of how much you should charge and what volume of work you’ll need to tackle to make your towing business profitable.
Common Upfront Towing Expenses for Business Owners
Upfront costs are the first investment you make in your business. Knowing an average for every expense is crucial for your tow truck business income, budgeting and funding in the early stages.
The Truck
The truck itself is the main initial expense when opening a tow truck business. The amount it costs to buy a tow truck depends on the kind of vehicle you want and the current market. Choosing the right truck for your towing business can significantly impact your operational efficiency and costs. For more details on suitable options, check out our guide on wheel lift compatible trucks.
A new light-duty tow truck will be on the lower end of the spectrum, although still more than many used vehicles. An ultra-heavy-duty tractor-trailer on the high-end price range can handle even the biggest towing jobs. You might choose to take out a mortgage, which lowers your initial costs and raises your monthly expenses.
You can spend significantly less if you choose a used truck, for which prices can vary considerably. A used vehicle will cost more in repairs than a new one, so you should avoid buying a rig over a few years old. To get the most accurate pricing for current and used models, look for trucks for sale in your area.
Another factor to consider is how much a tow truck costs to own. To calculate the cost of ownership, you’ll need to include the initial purchase price, ongoing expenses, financing costs and the potential return on investment (ROI).
A more affordable way to get your towing business up and running is to convert a pickup truck into a tow truck. You may already have a flatbed pickup, so you only need a wheel lift. You can add a towing rig if desired. You can also consider buying a used pickup specifically for your towing business.
Tools and Amenities
What else do you need to start a towing business? Along with the truck, you must consider what equipment and amenities you want in your cab. The more tools you have, the more customers you’ll be able to help. Some tools include a GPS, tire service tools, traffic cones, a lockout kit, a portable air compressor, booster cables, a jack, fuel tanks and floodlights.
Lisencing and Permits
Obtaining the necessary licenses and permits is crucial to start your operations and avoid fines. Costs differ for each location because state and local regulations will vary. Visit our page about the basic requirements for becoming a tow truck driver for more detailed information.
Common Ongoing Towing Expenses for Business Owners
How much you can make owning a trucking company depends on your expenses. The more you can keep your upkeep costs in check, the more you can profit. Here are some of the ongoing monthly or yearly payments to consider:
1. Insurance
You’ll need a few kinds of insurance as a tow truck operator. Besides general liability, you’ll need on-hook and cargo insurance. If you have a storage facility, you’ll need a Garage Keepers’ policy as well. According to the Specialty Equipment Market Association (SEMA) 2025 Future Trends report, auto insurance premiums have increased by 14%. So, expect to pay a high deductible for liability protection.
The cost per year for one truck can vary, depending on the kind of operation you run. Towing in a rural area can decrease costs, while getting tickets or causing accidents can significantly raise your rates. If your business mainly does repossessions, you can expect to pay more for insurance. If towing is an add-on service for another part of your business, such as auto repairs, you’ll have to add towing insurance to your current policy. Contact insurance companies to determine the exact prices and compare your options.
2. Fuel
Fuel costs vary depending on your mileage, the fuel efficiency of your truck and the current fuel prices. Most tow trucks run on diesel, which is more expensive than gasoline. Let’s assume the average cost of diesel is $3.53, you take 220 calls a month at 20 miles each, and you get 13 miles per gallon. Under those circumstances, your fill-up costs would total around $1,194 per month. Of course, your rates should cover these fuel costs.
You can check the current average diesel fuel prices from the U.S. Energy Information Administration. You can also save some money with a light-duty truck that takes gasoline.
3. Repairs
Repairs can vary from month to month. You will have months when your truck requires few repairs and others when the costs will be higher. Still, you should budget money each month for repairs and preventive maintenance. Reserve a certain amount each month and save any leftover for more extensive repairs. To have an idea of how much to earmark, contact some local repair shops to get current estimates for the most common repairs. You can reduce repair costs by buying a newer truck with fewer miles on it.
Some factors that will influence your average repair costs include:
- Truck type: Every type of tow truck has different maintenance and repair needs. Some models need specialized parts that can increase the replacement costs.
- Age: Older tow trucks can be more prone to breakdowns and require more repairs. Part availability for older models may also be lower, resulting in downtime and higher expenses.
- Usage: Wear and tear from constant use is a given in this industry. Using your truck more frequently and for longer periods may result in more frequent repairs.
- Preventive measures: Maintenance is key to reducing repair costs and expanding the lifespan of your truck and equipment. Regular maintenance helps prevent damage and detect issues before they become costly repairs.
4. Marketing
You’ll need to invest in marketing to maintain a steady stream of customers from month to month. Customers find towing services in four major ways: law enforcement, referrals, motor clubs and Google. You can gain some customers by networking with local law enforcement, motor clubs and repair shops, which costs relatively little. Still, you should expect to invest heavily in internet marketing to take advantage of customers who search for towing services online.
While the amount can vary, your monthly marketing spending can help you maintain a strong presence on search engines and bring in steady business. If done right, marketing should cover itself and then some by bringing in new customers. Contact some marketers to see what kind of marketing investment you should make.
How Much Money Can You Expect to Make?
After understanding your expenses, you’re probably wondering how much revenue and profits you can expect to earn. As with any business, you’ll have to work hard to make a profit. However, understanding your expenses and the average rates for towing services can help you understand the returns you can expect. So, how much does a tow truck owner-operator make?
According to the U.S. Bureau of Labor Statistics, a light truck driver’s average annual salary in 2024 was $44,140 and a crane and tower operator’s was $68,040 in 2023. However, these are the salaries of drivers who work for another company. If you own your own business, you’ll keep all your profits, so you can make more or less depending on how you run your business. It all depends on the hard work you put in, a solid business strategy and a little luck.
Most tow truck companies charge by the mile with a base hookup fee. The average cost for towing services can vary by the company and the region. Many towing companies charge a base rate for the first few miles, then charge an additional cost per mile after that. You can also charge for roadside services like jumpstarts and tire services, which may vary depending on your area.
There are many ways you can increase your profits. One way is to build your business over time, in which you begin making more money after you pay off any loans or truck mortgages and grow your customer base. You can justify charging higher rates as you gain a reputation within your market and earn great reviews online. You might also be able to hire employees, allowing you to serve more customers each month. Diversifying your business to include emergency roadside assistance or impound services can also generate more income.
Another way to increase your profits is to diversify your services to include repossession. By doing so, you can tap in to a broader market and provide essential services to local businesses. Learn more about the repo industry and how to get involved by visiting our page on the repo industry.
Learn How To Start A Towing Business With Lift and Tow
If you need a way to keep your tow truck business startup costs low, check out our tow systems. Our wheel lifts allow you to convert a pickup truck into a light-duty tow truck. We offer a variety of products made in the USA, including the Z Series hidden wheel lift, which is self-loading to complete towing or repo jobs without getting out of your car. We also offer expert installation and affordable financing to help tow truck business owners like you get started.
Check out our products to buy your hidden wheel lift today.