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American Towman Magazine Presents the Week in TowingAugust 23 - August 29, 2017

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Bronx, NY
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Light-Duty nonconsensual tow rates as provided by Police Towers of America.

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

Is Good Enough Good Enough

2 71fd1By Don G. Archer

We heat our home with propane gas. The local gas company drops by and fills our tank a couple times per year. The process is simple: the truck driver pulls into the driveway and runs a 4' hose to the tank. He then lifts the round metal helmet that covers the gauge and fill nozzle, secures the hose to the nozzle and begins pumping in the gas. Once completed, he removes the hose and closes the helmet thus protecting the gauge and fill nozzle from the harsh elements.

Recently, a bush that had grown up next to the tank encroached too far into the tank's space. When the last driver attempted to close the helmet over the gauge, a small limb prevented it from latching properly.

About two months later during a snowstorm, I noticed the obstruction. I removed the 1/2"-diameter limb and secured the helmet properly. Later that week I grabbed my pruning shears and remedied the problem for good.

While I understand that pruning the bush is my responsibility, I want to make one, seemingly small point about the driver's behavior and my interpretation of it. It would have been just as easy for him to take two seconds more and move the limb to the side, so that he could properly secure the latch ... but he failed to do it. It may have been a passive-aggressive attempt to get me to trim the bush or it could have been because he just didn't care.

When given the opportunity to respond to a questionnaire, leave a review or make a choice about future purchases, customers may not remember all the good things you did for them; but you can bet they'll remember if you didn't care.

As an employer how do you get your employees to care?

You already know that for your business to grow and thrive you need to impress upon your employees the need to provide exceptional customer service. When on the phone you want smiling, empathetic voices talking to your customers, not grouchy, detached people who would rather be texting or looking at Facebook. At the point of sale, such as roadside or at one of the local repair shops, you want tucked-in shirts and clean-shaven faces—not renegades who do their own thing when you're not watching.

If you're like most of us, you've made many attempts to inject caring into your employees but have missed the mark—many times. After doing so you've indulged in excuses to make yourself feel better. The reason you can't find or nurture exceptional, caring employees is because "these young kids just don't care anymore," or "their parents must have spoiled them."

The truth is caring starts at the top.

The real reason why employers have a hard time finding quality employees is because we're not looking for individuals we can bring into the fold. We've been jaded so many times by what we term as bad seeds so we hold employees at arm's length. Rather than being full of potential, we see them as future ex-employees.

Think about when you are with your friends. You talk about stuff that not only matters to you, but you also listen to what matters to them and you truly care about how they are doing in their lives. In the role of employer we fail to care as much, even though we spend more time with our employees than with our friends.

If the propane delivery driver felt that his employer truly cared about him and his life, maybe he would care more about the people he serves. In turn, those people would remain loyal customers, helping the company to grow. This is neither a transactional, or reciprocal relationship, it's a caring relationship; it starts at the top.

American Towman Field Editor-Midwest Don G. Archer is also a multi-published author, educator and speaker helping others to build and start successful towing businesses around the country at Don and his wife, Brenda, formerly owned and operated Broadway Wrecker in Jefferson City, Mo. E-mail him direct at
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