Ever seen a tow truck hauling a damaged vehicle away from an accident scene? 

If so, you must have pondered if a total truck business is a profitable one. Or, what would the approximate tow truck business start-up cost be? 

Well, a realistic estimate for an average towing business starting cost is around $75,000 – $130,000. This includes a down payment of $20,000 (avg) for a used tow truck, $20,000 for equipment and licenses, and $5,000 for one month of operating expenses. 

The costs are included in approximate numbers (in US dollars) from many online e-commerce sellers (like Amazon). Better logistics won’t be responsible for any qualified purchase. The information or data of any sensitive law enforcement and transportation policy comes from valid sources including FMCSA under the department of transportation USA.

How much does it cost to start a towing business

The largest chunk of expense in setting up a tow truck business is actually related to buying the tow truck itself and the approximate cost starting from 6k USD.

So, let’s see the cost breakdown for each type of tow truck:

For a better understanding, let’s take a quick glance at some realistic estimates of the costs:

It’s a significant amount of money, right? So, to make a decision to spend such an amount, you should first know the ins and outs of the breakdown of this cost.

That’s why, in this post, we’ll explore this matter in the most detail for you. So, stick around!!

1. Trucks type and its individual costing

Not all trucks cost the same, you guess it right!

The price of the best trucks varies from one truck to another. ( Know the pricing of trucks in our article: best hot shot trucking start up guide

There are 4 main types of tow trucks:

• A.Flatbed Tow Trucks
• B.Hook and Chain Tow Trucks
• C.Wheel Lift Tow Trucks
• D.Integrated Tow Trucks

A. Flatbed Tow Trucks Cost Purchasing Cost:

• A new flatbed tow truck can cost anywhere from $100,000 to $500,000, depending on the size, features, and brand.
• A used flatbed tow truck can cost between $40,000 and $100,000, depending on the condition, mileage, and age.
• A down payment for a flatbed tow truck can range from $6,000 to $40,000

B. Hook and Chain Tow Trucks Purchasing Cost

• A new hook-and-chain tow truck can cost anywhere from $50,000 to $150,000 (the average price is $75,000).

• A used hook and chain tow truck can cost between $20,000 and $80,000, depending on the condition, mileage, and age. 

• But, a down payment for a hook and chain tow truck can range from $4,000 to $30,000, depending on the financing terms and credit score. 

C. Wheel Lift Tow Trucks Purchasing Cost:

• The cost of a new wheel lift tow truck can be anywhere from $50,000 to $100,000, depending on the size, features, and brand.

• A moderately used wheel lift tow truck can cost between $15,000 and $60,000.

• A down payment for a wheel lift tow truck can range from $3,000 to $20,000. 

D. Integrated Tow Trucks Purchasing Cost:

• New integrated tow trucks can cost anywhere from $200,000 to $850,000.

• A used integrated tow truck can cost between $100,000 and $500,000, depending on the condition. 

• A down payment for an integrated tow truck can range from $40,000 to $170,000, depending on the financing terms and credit score. 

Maintenance and repair costs:

• The average cost of maintenance and repair for any type of tow truck is around $6,000 per year, depending on the usage, wear and tear, and preventive measures.

• The maintenance and repair costs include oil changes, tire rotations, brake inspections, engine tune-ups, hydraulic system checks, etc.

Other associated costs:

Other costs for an integrated tow truck include fuel consumption, tolls, parking fees, registration fees, taxes, etc.

• The average fuel consumption for an integrated tow truck is around 6 MPG, depending on the load and driving conditions. 

• The average fuel cost for an integrated tow truck is usually around $3 per gallon, depending on the location and market price. 

• Therefore, the average fuel cost for an integrated tow truck is around $9,000 per year, assuming an annual mileage of 50,000 miles.
  

2. Tow truck business equipment costs

Just like any other trucking business, such as a hot shot trucking or less-than-load (LTL) trucking, the equipment is needed for a tow truck trailer.

It is essential to perform your towing services safely and efficiently. Some of these include:

A. Dollies and Skates

Dollies and skates are devices that help you move vehicles that are stuck, damaged, or have locked wheels. How so? Well, they are placed under the tires of the vehicle and therefore, they allow you to roll or slide it onto your tow truck bed or trailer. 

Cost of purchasing dollies and skates

The cost of purchasing dolls and skates can vary depending on the quality, quantity, and features of the products. 

• A single-tire skate can cost anywhere between $15 and $75. So, a set of four tire skates can cost between $60 and $300.

• A hydraulic positioning jack, which can lift and move a vehicle by its tires, will cost between $200 and $400 per unit. 

• A car dolly, which has wheels and can be attached to your tow truck for towing vehicles, can cost between $1,000 and $3,000 per unit (source).

B. Chains, Straps, and Hooks

Chains, straps, and hooks are used to secure vehicles to your tow truck or trailer during towing. They are essential for preventing damage, injury, or accidents caused by loose or falling vehicles. 

Cost of purchasing chains, straps, and hooks

The cost of purchasing chains, straps, and hooks can vary depending on the quality, quantity, and features of the products. 

• A single chain can cost anywhere between $10 and $100. That means a set of four chains can cost between $40 and $400.

• A piece of the strap can cost anywhere between $5 and $50, while a set of four straps can cost between $20 and $200.

• A hook can cost anywhere between $5 and $50.

C. Safety Equipment

Safety equipment is vital for protecting yourself and your customer’s vehicle. This equipment includes items such as:

• Reflective vests, jackets, or clothing
• Gloves, boots, helmets, and eye protection
• Flashlights, flares, or cones
• Fire extinguishers, first aid kits, or spill kits
• Tow truck lights, sirens, or signs

There are some lighting requirements on behalf of FMCSA which are required to be fulfilled by a tow truck driver

Cost of purchasing safety equipment

• A reflective vest can cost anywhere between $5 and $50. 

• Two pieces of gloves can be worth $5 and $50.

• A helmet can cost anywhere between $20 and $200, and a pair of goggles can cost between $5 and $50. 

• Flashlights can cost anywhere between $10 and $100 for a single unit. 

• A cone can cost anywhere between $5 and $50, while a fire extinguisher can cost between $20 and $100.

• A first aid kit can be worth $10 to $100.

• A piece of truck light bar can cost anywhere between $100 and $1,000.

• Lastly, a siren can cost between $50 and $500. A tow truck sign can cost anywhere between $10 and $100.

Tow truck Licenses and Permit Costs

Before legally operating a towing company, you must obtain several licenses and permits. 

Cost of obtaining licenses and permits

Business License: This is a standard requirement for any business to operate legally. 

The cost of obtaining a business license can vary depending on the state and city but typically ranges from $50 to $400.

A business License is not given if a tow truck company hires tow trucks.

A “trailer for hire” shall not be approved for listing as a Class A tow truck

Towing License: You’ll need a towing license to operate a tow truck and transport vehicles. The cost of a towing license can vary widely, from $100 to $1,000, depending on the state.

Federal Motor Carrier Authority asked for CDL License so it is required too! For CDL purposes, the tow truck and its towed vehicle are treated the same as any other powered unit towing

Vehicle Registration: Your tow trucks must be registered with the state and have the proper license plates.

In general, you can expect to pay between $150 and $500 per vehicle.

Other associated costs

• Legal Fees: If you’re unfamiliar with obtaining licenses and permits, you may need to hire a lawyer to help you navigate the requirements. 

The cost of legal fees can range from $500 to $5,000.

Note: This cost is not applicable to everybody.

Download the Tow truck License application form

Insurance Cost of a Tow Trucking Business 

Insurances help protect your business and your customers in case of any accidents or damages that may occur during towing operations. So, you need to take into account these costs as well. 

A. Liability Insurance

Liability insurance is perhaps the most important type of insurance for a towing company. It covers damages to third parties in case of accidents or injuries caused by your tow truck. 

• On average, liability insurance for a towing company can cost anywhere from $5,000 to $20,000 per year.

In some cases, you may also need to pay for legal fees and settlements in case of lawsuits filed against your towing company. 

B. Collision Insurance

Collision insurance covers damages to your tow truck in case of collisions with other vehicles or objects. 

• In general, collision insurance for a tow truck can cost between $2,000 and $5,000 per year.

C. Comprehensive Insurance

Comprehensive insurance covers damages to your tow truck in case of non-collision events, such as theft, vandalism, or natural disasters. 

• Generally, comprehensive insurance for a tow truck can cost between $1,000 and $3,000 per year.

Marketing and Advertising Cost Of A Tow Trucking Business 

If you want to set up a tow truck business based on Power only trucking business model then heavy hauling would be must. Here are some of the idea of the cost below:

Cost of marketing and advertising

Did you know that marketing and advertising can be a game-changer for your tow truck business? 

So, you’ll need to allocate funds for online advertising, such as social media ads and search engine marketing, as well as traditional advertising mediums like print, radio, and even billboards. 

• For a new tow truck business, expect to spend between $2,000 to $5,000 or more per year, depending on your market size and competition. 

Other Associated Costs

Along with marketing and advertising costs, there are other associated costs as well that you should be mindful of. 

For example, you’ll need to create a unique and professional brand identity, which might require the help of a graphic designer. And let’s not forget the importance of a user-friendly website to make your business accessible online. 

• Website design and development costs can range from $200 to $500 or more, depending on your needs.

Legal and Accounting Fees Of A Tow Trucking Business 

In the tow truck business, one area of expense that you must not afford to overlook is legal and accounting fees. These ensure your business runs smoothly and stays in compliance with the law. 

Cost of Legal and Accounting Fees

• Legal Consultation: Having an attorney at your disposal is important. Why? An attorney can help you navigate the legal landscape, set up your business structure, and draft important documents like contracts and agreements. 

Legal consultation fees can range from $150 to $400 per hour.

• Accounting Services: Sometimes it’s two we’re going to keep track of the accounts yourself. So, you might need an accountant who can do that for you.

The cost of hiring an accountant, on average, can range from $100 to $300 per hour.

Pros And Cons Of Owning A Towing Company (Must Know Before Starting)

Starting a towing company may seem like an attractive business idea, just like any other trucking venture. But it comes with its own set of pros and cons. 

Pros Of Owning A Towing Company:

• Sufficient demand: Vehicles break down or get into accidents all the time, and people need reliable towing services to get them out of trouble. 

This means that owning a towing company is always going to be a profitable business. 

• Recession-proof business: Even in tough economic times, people still need their cars towed. This means that your business will be relatively immune to economic fluctuations.

• Easy to wrap up: Towing is a business you can sell instantly if you decide to retire or move on to something else. 

If you ever decide to sell your towing business, you can expect to get a good return on your investment. How? It’s because towing businesses are in high demand.

• Small or no-team operation: This is a business that you can operate with a small or no team. 

You do not need a large staff to operate a towing business. You can start with a small team of tow truck drivers and dispatchers, or you can just start by yourself. 

• Flexible work schedule: As a towing business owner, you have the freedom to set your own schedule and work when it’s most convenient for you. 

For example, you can also choose to work on-call or 24/7, whatever suits your desires.

• Multiple revenue streams: In addition to towing services, you can offer roadside assistance, vehicle recovery, and other related services. 

These can make way for generating additional income for your business.

• Experience in the industry: If you own a towing company, you will gain experience in the transportation industry. 

This experience can help you transition into even more lucrative trucking businesses such as hot shot trucking or LTL trucking more easily.

• Use of existing equipment in other businesses: Owning a towing company means you likely already have a truck and trailer that can be used for other transportation businesses.

For example, this can save you the expense of purchasing new equipment for starting a side business in hot shot trucking.

• Minimal Overhead Costs: Compared to other businesses, owning a towing company requires minimal overhead costs. 

How so? You don’t need a physical storefront or office; your equipment can be stored in a garage or warehouse.

• Opportunity for Gradual Growth: Over time, your business will expand, and you will gain more clients. 

So, you can invest in additional equipment and hire more staff to increase your revenue and gradually grow your business.

• Can be a family business: Towing is a business that can be run as a family business. How? You can involve your family members in the day-to-day operations and build a legacy for future generations.

Cons Of Owning A Towing Company:

• High Startup Costs: In a towing business, the initial investment required to purchase tow trucks and equipment can be substantial. 

You’ll need to have adequate financing or investors to cover the startup costs.

• Intense Physical Labor: Towing is a physically demanding job that requires lifting heavy equipment and being on-call for long hours. 

• Liability Risks: Towing vehicles involves risks such as damaging the vehicle, causing accidents, or injuring people. 

• So, you’ll need to have adequate insurance coverage and follow safety regulations to avoid legal liabilities.

Conclusion

In essence, starting a towing truck business is surely a rewarding venture. However, the costs and challenges involved in the process are huge. 

But, with the right approach, determination, and hard work, you can build a successful towing business that will stand the test of time. 

Lastly, here are the key takeaways to remember when setting up this business:

• The overall cost of starting a towing truck business starts from $45,000, which includes a down payment for a tow truck, equipment, licenses, and initial operating expenses.

• Miscellaneous equipment and supplies are essential for efficient and safe towing operations. So, don’t forget to spend some bucks on these as well.