How to determine your rates a huge part of owning a successful towing business of setting your basic towing service call rates most new tours are so excited to be in business that they lose their heads when the phone rings.
They’re never to run every call they will do and say anything to make the sale and practically give their towing services away in the process before you can properly charge for your Towing services you need to know what it costs to be in business.
There are two types of costs in any business fixed costs and variable costs fixed costs are what you pay whether or not you turn a wheel they include your tow truck payment rent or mortgage telephone utilities bookkeeping uniforms advertising insurance other annual expenses like licensing and registering your tow truck business.
And Merchants licenses association dues subscriptions and ongoing education variable costs vary with the amount of work performance they include fuel repairs tires towing servicing parts windshield washer fluid miscellaneous expenses like damages office supplies the shrinkage.
Rates For Basic Towing Service
What we’re doing here is determining what radial charge not setting up your books for accounting purposes your truck in any real estate owned or assets but for the purposes of setting your rates.
They’re considered liabilities the four steps for determining your rates for basic Towing services are one identify and enumerate both fixed and variable costs to determine how many calls you will run monthly use the profit calculator to find your desired rate for basic Towing services.
And for test it in the market and consult your competition identifying innumerate costs when you’re just starting off you won’t have most of the information you need to complete the list.
This leads many new tours to take the easy route and fall in line with the lowest competitors rates or even worse they’ll come in a few dollars under it’s a bit harder but instead of suggest you take the time to make some calls and gather the average costs assume.
You’re replacing tires annually and for repairs and parts take the cost of replacing an engine and divided by months it won’t be completely accurate but you will have a conservative starting point to determine how many calls you’ll run monthly use a conservative number.
I suggest eight calls per day x workdays per month weekends off which comes out to calls per month if you work eight hours per day you should easily be able to run one call per hour you can adjust this as needed three find your desired rate for basic Towing services.
Plug all the numbers into the profit calculator fixed costs variable costs and days work per month then multiply the number of calls you believe you’ll be able to run by an average sale per call trial rate this gives you your average monthly sales subtract your cost from that number.
And you’ll have the before-tax monthly profit adjust the average sale per call until you have a monthly profit amount that you can live with for consult the competition and perform a market test now that you have your average sale per call trial rate the rate at which you should receive the desired month of profit with everything being equal.
You need to test it but before you do that make a few calls to your competition to see what their race for similar towing services are call a couple of repair shops and inquiries to the rates they pay and then allow the market to help you decide.
If what you’re charging for basic towing services is reasonable and somewhere between the highest competitor and the lowest competitors rates you should be fine within a short time you’ll know and can adjust accordingly if necessary.
