What is Opportunity Cost?

I once I received a 5:00 am phone call from a distant relative begging for help. Now, we’re distant for reasons I won’t go into, but this morning the distance was measured in miles, 700 miles to be more accurate.

The Problem:

“I’m stranded somewhere in Tennessee because my boat trailer’s axle is broken.” He said.

My first thought was, “You have a boat?” “When did you buy a boat?”

Last I knew, he was still looking for a job.

Then it all came out in a rush. He only had $150 to his name, he needed that for gas, but the recovery and tow bill came to $220.

The boat was a 90’s model fiberglass number he’d traded a shotgun for while living in Alabama, and now since he had planned a surprise visit to me… with his boat?… he thought I’d be able to help him out.

I did. I told him to cut his losses, work out something with the towing company and continue his trip. It wasn’t the answer he wanted, but if there’s one thing I’ve learned over the years in the wrecker business, it is the ability to discern between an emergency and an inconvenience.

Their Emergency is Your Opportunity Cost

Most folks, relatives included, assume that since they are having an emergency, we should provide our towing at rates that accommodate their idea of what’s fair. Unfortunately, their idea of what’s fair usually doesn’t even come close to the reality of the costs involved in providing those services, let alone allow for profit.

This disconnect is understandable since the spike in fuel has affected all segments of the economy. It’s hard to swallow increases in price across the board while wages just don’t seem to keep pace. Regardless, towers need to have the ability to recoup expenses and make a profit whether or not a motorist is experiencing an emergency.

One thing that motorists don’t understand, and most towers fail to take into consideration, is opportunity cost. If I’m helping you for little to nothing, I’m losing more than what I’m NOT charging you. I’m losing the opportunity to help someone else at a more reasonable rate.

Avoid Opportunity Cost To Ensure Profitability

If you’ve been in the towing business for any time at all, you know you’re guilty of what I’m talking about.

You’ve caved to a voice over the phone wanting a lower price because you were sick of watching our hourly-wage tow truck operators clean their trucks while scrolling social media. You needed the work!

So, a job that usually goes for $400 is done for $300 just to bring some money in the door. But as soon as we take that low-paying job, the phone rings. Usually, it’s a call from somebody with a true emergency who’s willing to pay our regular rates. Of course, now we don’t have a truck available since we took the other, lower-paying job.

Of all the excuses I tell myself to allay my guilt for not towing my cousin’s boat that day, the one that resurfaces over and over is the inability to help others if I’d chosen to take that trip.