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Three-time cancer survivor is doing what he loves
App, web-based service provides lien-holder contact information
Digital Recognition Network CEO lays out company's vision
Unit designed to bring greater awareness to Move Over law
Buddy's gets farmer's tractor with corn silage in open field
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American Towman Magazine Presents the Week in TowingAugust 23 - August 29, 2017

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Pricing Your Services for Profit

blogprofit 0df9cBy Don Archer

Recently, I received an email from a tower named William who is fed up with his business and said he was about ready to park his truck and look for a job. He complained about the competition, the economy and said he wasn't even making enough money to pay for insurance.

Obviously exasperated, he asked, "How should I price my services?"—what he believed was the problem.

I responded with words of encouragement, telling him to price his services so that he always made a profit and stop letting fear be his guide.

Towers often believe that pricing their services properly is the hardest part. Some think they have to be the low-price leader, others ride the middle, while others charge what they're worth and are able to grow their businesses.

But how does this last group do it? What is it that these guys understand that the rest don't?

They understand that charging less than what you're worth is caused by fear; and fear is a poison that will ultimately kill your business. They know that using fear as a factor in determining rates causes you to shoot too low and miss.

If fear of losing a tow causes you to price your services too low to pay the bills, you need to change your strategy. Instead of focusing on not losing, focus on winning by charging rates that get you excited to get in your truck and get going.

There are four factors that determine your success in the marketplace: supply, demand, quality and quantity.

Many towers believe they don't have any control over the first two, and each firmly believes that they've got "quality service" wrapped-up.

What many fail to understand is the last one, quantity, and how it can help you to compete while increasing your bottom line.

Here's a simple and practical pricing strategy to help you to understand. Use this only as a framework from which to begin. You must determine your rates based on the service provided. Just be sure to consider all the costs.

• Cost of Doing Business: Add up all of last year's expenses, everything that's considered a cost of doing business. Fuel, rent, advertising, insurance, repairs and maintenance, tires, employee expense, damages, office supplies, utilities and phones. Add in the interest paid on trucks and real estate. Then divide that number by the number of calls you did that year. For example: If the total cost was $100,000 and you ran 4,000 calls, then your cost per call would be $25.

• Determine your expected Return On Investment: Add up the value of your trucks and equipment and real estate, or a percentage of real estate that's used solely for the purposes of conducting business. Include taxes paid on both. For our example we'll assume it all comes to $500,000. After you know what your investment is you need to then decide what kind of return you want. If you want a 10-percent ROI then multiply that number by 10 percent (.10), ($500,000 x .10 = $50,000) then divide the result by the number of calls you did last year ($50,000/4,000=$12.50)

• Trucks and Equipment Replacement: Your truck is considered an asset and it will have value when you trade or sell, but it must also be considered an expense. This is hard for many to wrap their heads around. Each mile you put on your trucks and every time you use your equipment, you lose value. It's also slowly becoming obsolete. As better, more technologically advanced trucks and equipment become available, yours are becoming less and less sought after.

Think about it like a carpenter replacing a table saw. Eight hours per day for 500 days can take its toll. When it's time to replace it he'll be looking for something that'll hold up better, not something that's already worn out. So you must work the cost of replacing this stuff into your cost per call. To cover the cost of replacement, I suggest you go by the $1 per mile rule. In other words if you drive 60,000 miles in one year then you need to collect $60,000 from the 4,000 calls that you did. ($60,000/4,000=$15)

• Add these three numbers together and you have a good starting point. Some calls will be higher, some will be lower; this is an average to shoot for.
(Cost of Doing Business + ROI + Truck Replacement = Starting point)
So where does quantity come into the equation?

Once you've considered all the costs and know that your rates allow you to make a profit you'll become more confident and your fear will all but disappear. The residual effect will be that you'll get more customers. No longer will you be that scared guy cold-calling repair shops begging for work. You'll be happy and helpful in all areas because you know your numbers. And because positivity attracts, you'll get more work.

But that's not even the best part.

When you increase the number of customers you're serving, you can revisit your pricing strategy. Then, if you choose to, you'll be able to lower your rates while still maintaining your desired profit. With lower rates you'll be more competitive and have the opportunity to help more people, creating a snowball effect. Of course some of your variable costs will increase, but so will your income. You'll drive more miles, but you'll still be capturing replacement costs.

Whatever method you use to determine your rates, remember to never let fear play a part.

Don G. Archer and his wife, Brenda, own and operate Broadway Wrecker in Jefferson City, MO. Don is also multi-published author, educator and speaker helping others to build and start successful towing businesses around the country at Want to learn more email him direct at

Managing Time-Off Requests

timeoff dcf66By Randall C. Resch

Today's work schedules are oftentimes difficult where it seems you're at work more than at home. If you're a tow company employee, children may suffer because you're forced to work odd hours only to bring home the bacon. Parents ultimately feel guilty because they can't arrange time to participate in their child's activities because they have to work.

Unless you're the company owner, reporting to work is a fact of life and limits your ability to be with your children as much as you'd like. Although you're doing everything you can to provide for your family, balancing work-home life can be difficult.

Although your kids come first, employees have a responsibility to the employer not to abuse time-off requests.

From the onset of your employment with the company, negotiate reasonable agreements with your employer that enable you time off. When you're aware of school activities, make every attempt to ask for time off well in advance or get approval to have another employee cover your shift. Most bosses will authorize requests in advance when they are not abused.

Spending time with your kids takes extra effort on your part as well as planning with your significant other. For single parents, the process may be even more difficult to find babysitters or daycare.

Be sure you're doing everything you can to be involved in their lives as much as possible. As your child grows towards teenage years, there may be resentment for parents who work too much or don't seem to care about the child's growth, self-esteem or their ever-changing set of hormones and confidences.

What does your company's policy manual say? Looking at this topic from both sides, I've found that the following practices work well:

• Bosses should be understanding when considering reasonable time-off requests for unforeseen situations like illnesses, emergencies or immediate school incidents.

• Owners have to stay within the boundaries of law enforcement or contract stipulation for minimum staffing.

• Contract requirements may not allow ride-alongs of family members; kids generally are not allowed to ride on calls.

• Consistency is mandatory when balancing kids and schedules to work around inconveniences.

• For employer and employee, it's a give-and-take situation.

There's another side of this coin where there are parents that abuse the system using their kids' activities for an excessive amount of time away. Because every employee's presence is important to the company's smooth operations and productivity, parents shouldn't abuse time off.

While no boss wants to be the "hard ass" and deny time-off requests, someone has to cover all aspects of field and office operations. Accordingly, time off requests should be authorized if there's ample time to cover an employee's absence. That also means what goes around comes around: when others need time off for justifiable reasons, everyone should step-up to cover time-off requests. It's a shared responsibility.

A well-balanced plan that allows you to spend as much time as possible with your child is healthy. There's no doubt that being a tow company employee means that there will be long, long hours away from the kids. It's what you do to make time off quality time when you're together that matters.

Randall Resch is American Towman's and Tow Industry Week's Operations Editor, a former California police officer, tow business owner and retired civilian off-road instructor for Navy Special Warfare. Randall is an approved instructor for towers serving the California Highway Patrol's rotation contract. His course is approved by the California law enforcement community. He has written over 500 industry-related articles for print and online, and is a member of the International Towing & Recovery Hall of Fame.
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