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Old 11-01-2022, 23:10   #1
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How does Sea Tow operators make money?

Got my first Seat Tow cause a bad transmission. Was thinking of risking it and making a run for the boat yard with the malfunctioning tranny and was super stressed. I had to be out of the marina in 24 hours with no idea how I was gonna make it. Decided to call Sea Tow and have them pull me over there. Best decision and $175 investment I ever made. Took 100% the stress off me. I was bow into a tight slip in a tight marina and he got me out no problem and into the tight boat yard into the haulout sling no problem and no stress at all. I just sat there and he did 95% of the work. I just had to steer a little on the way over.

He said that 40 minute tow without the membership would have cost me almost $800. Got me thinking. Do they just make money on people without the membership? They're a franchisee as I understand. Surely Sea Tow is not giving them anything. Great kid, and I gave him a $100 tip. As good as he was, I felt a little bad and was not sure what to tip him or if that was too low.
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Old 11-01-2022, 23:13   #2
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Re: How does Sea Tow operators make money?

Good question, id like to know aswell. Been paying that $179 for years...worth every penny for that piece of mind.
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Old 11-01-2022, 23:35   #3
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Re: How does Sea Tow operators make money?

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Originally Posted by BouyCall View Post
Good question, id like to know aswell. Been paying that $179 for years...worth every penny for that piece of mind.

Will gladly pay that $175 every year now and not blink twice about it.
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Old 12-01-2022, 02:31   #4
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Re: How does Sea Tow operators make money?

I expect the income opportunities, of a Sea Tow Franchise, might be covered in the Franchise Disclosure Document [FDD].
Sea Tow Franchise Costs:
The capital of the business varies on Area Of Responsibility (AOR)
1) Franchise Fee: From $5,500 to $35,000
2) Initial Start Up Investment: Between $125,000 and $275,000
3) Liquid Capital: $50,000
4) Minimum Net Worth: $200,000
https://www.seatow.com/about/franchise-ownership
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Old 12-01-2022, 02:41   #5
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Re: How does Sea Tow operators make money?

Glad we have Marine Rescue in NSW (and Coast Guard etc in other states), all tows for breakdowns are free. If they cannot do, Water Police or Maritime will do it, also for free. However, being towed from one marina to another is not covered.
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Old 12-01-2022, 03:03   #6
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Re: How does Sea Tow operators make money?

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Good question, id like to know aswell. Been paying that $179 for years...worth every penny for that piece of mind.
That’s how.

The average person never needs a tow at all.

After approximately 4.5 years, every person with a membership has paid for their $800 tow and the vast majority never even use it.

I don’t subscribe to these services and never will given I have a sailboat.

2 forms of propulsion on a monohull plus a dinghy.

On my catamaran, 3 forms of propulsion plus a dinghy.

I’ve had 2 different “call Sea Tow” events in the past decade. One was on the monohull I had for a bit. My hydraulic steering unexpectedly got too low to work and I didn’t have enough replacement fluid aboard. This happened with a ferry bearing down on me of course with all sails up. I found out I had no steering when I went to make a manual helm correction to avoid the ferry. Had to call a securite to avoid getting hit. The hydraulic pump of the autopilot was able to control the boat to a degree on what fluid was left and I balanced the sails to make my way to a spot that was reasonable to anchor about an hour and a half away. Dropped anchor and took the dinghy in to secure some fluid. Poured it in, bled the system and went on my way the next day.

The other was a fuel pump that went bad on my catamaran. I did not have a spare aboard and didn’t know this was an unreliable model. This killed the engines in the ICW around Galilee in Florida if I remember correctly. No rig on the boat yet, so that was that. However, it was a very windy day and (get this) we did 3-4 knots with no rig and no engines, just steering the boat downwind through all the bridges until we got to a suitable anchorage an hour or so later. My boat has very little resistance in the water with the engines withdrawn into the hull. It was hard to “sail” over to the side of the icw with the spot I wanted to anchor, so I launched the dinghy and pushed the boat over to where I wanted it to be for anchoring. Went ashore and got a new fuel pump.

Sea tow? No thanks.

Unless you have a single engine powerboat, there is always a way.

PS: sea tow isn’t in the towing business. It’s in the insurance business.
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Old 12-01-2022, 08:51   #7
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Re: How does Sea Tow operators make money?

I cruise the east coast and gulf coast. Not only do I have a total membership with SeaTow (Highest level) but also have one with Tow Boat US. I have 2 because the service level is very dependent on where the towboat might be. Could be the difference between a 20 minute wait and 3 hours.

Unfortunately I am way ahead of the game. The ledger is in my favor as I have had a good amount of assistance over the years.

Both services have been excellent.

How they make money was the question? It's true they are in the insurance business. I'm cruising about 3-400 hours/year. Many friends are at 50 hrs and never venture into water they don't know. The light users pay the same annual fee and subsidizes my services.
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Old 12-01-2022, 09:14   #8
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Re: How does Sea Tow operators make money?

25 years ago I had a 42 foot ChrisCraft and I ran it on a sand bank on the ICW in Daytona Beach. It was 9pm and I was as dumb and inexperienced as a rock. I called Sea Tow and was told the tide would be up at 5 am. Stay on the boat. By midnight it was like the Sahara Desert. At 5 am two guys arrived in an inflatable, backed up to me several times to churn up the sand, and had me off in 20 minutes. They asked about my insurance and I got a bill for $8,000. When I questioned it,I was told in Florida they could charge me a percentage of the boatís value. My insurance company settled for $2,000 which was my deductible.
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Old 12-01-2022, 09:22   #9
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Re: How does Sea Tow operators make money?

One of my friends owns the local Sea Tow franchise. Their biggest revenue stream (read- profit) comes from membership dues which, statistically, most people never use or need.



For far less money, boaters can simply add a tow premium for a nominal additional fee onto existing insurance which covers 100% of the tow cost from ANY service provider regardless of where you are. As such, you aren't dependent on one single tow company and any claims don't result in a subsequent premium increase.


It is the proverbial "no brainer" but some seem content with the tow company marketing. PT Barnum was correct.
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Old 12-01-2022, 09:24   #10
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Re: How does Sea Tow operators make money?

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Originally Posted by S/V Illusion View Post
One of my friends owns the local Sea Tow franchise. Their biggest revenue stream (read- profit) comes from membership dues which, statistically, most people never use or need.



For far less money, boaters can simply add a tow premium for a nominal additional fee onto existing insurance which covers 100% of the tow cost from ANY service provider regardless of where you are. As such, you aren't dependent on one single tow company and any claims don't result in a subsequent premium increase.


It is the proverbial "no brainer" but some seem content with the tow company marketing. PT Barnum was correct.

Not all insurance offers unlimited cost tow coverage. Many will only cover up to a certain amount. Plus, that extra coverage costs money, so it's not necessarily all that much cheaper (if any) than a membership. In some cases, members may get preferential dispatch as well. And some places give discounts to either BoatUS or SeaTow members (which may or may not be all that useful depending on where you are and what the discounts are).
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Old 12-01-2022, 09:39   #11
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Re: How does Sea Tow operators make money?

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Originally Posted by rslifkin View Post
Not all insurance offers unlimited cost tow coverage. Many will only cover up to a certain amount. Plus, that extra coverage costs money, so it's not necessarily all that much cheaper (if any) than a membership. In some cases, members may get preferential dispatch as well. And some places give discounts to either BoatUS or SeaTow members (which may or may not be all that useful depending on where you are and what the discounts are).
I am not aware of any underwriter which doesn't offer tow insurance. Regardless, the typical additional premium for those which do is trivial compared with a Sea Tow contract rate for 100% reimbursement with no deductible. My underwriter charges $31/year additional. You can also buy insurance riders for an even smaller premium which cover only a portion of any tow claim ( variable deductibles) should you choose to do so.


It's a satisfying feeling when you do call for assistance to know every tow service will be rushing to your aid to be the first one there. And if you cruise into different service areas, you aren't 'locked into' one tow service which might not even cover the area.


Your boat, your choice.
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Old 12-01-2022, 10:10   #12
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Re: How does Sea Tow operators make money?

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Originally Posted by S/V Illusion View Post
I am not aware of any underwriter which doesn't offer tow insurance. Regardless, the typical additional premium for those which do is trivial compared with a Sea Tow contract rate for 100% reimbursement with no deductible. My underwriter charges $31/year additional. You can also buy insurance riders for an even smaller premium which cover only a portion of any tow claim ( variable deductibles) should you choose to do so.


It's a satisfying feeling when you do call for assistance to know every tow service will be rushing to your aid to be the first one there. And if you cruise into different service areas, you aren't 'locked into' one tow service which might not even cover the area.


Your boat, your choice.


Typically, non-emergency tow service does not have a deductible but is capped. You would likely find yourself still owing hundreds (plus) for a non-emergency tow. Which can easily be insured against for $180 a year and would not involve any insurance company paperwork/hassles or fine print surprises.
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Old 12-01-2022, 10:21   #13
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Re: How does Sea Tow operators make money?

Quote:
Originally Posted by S/V Illusion View Post
One of my friends owns the local Sea Tow franchise. Their biggest revenue stream (read- profit) comes from membership dues which, statistically, most people never use or need.



For far less money, boaters can simply add a tow premium for a nominal additional fee onto existing insurance which covers 100% of the tow cost from ANY service provider regardless of where you are. As such, you aren't dependent on one single tow company and any claims don't result in a subsequent premium increase.


It is the proverbial "no brainer" but some seem content with the tow company marketing. PT Barnum was correct.

You get what you paid fir. at 500 plus hours a year operation, it is cheap organized insurance. no fuss
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Old 12-01-2022, 10:23   #14
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Re: How does Sea Tow operators make money?

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Originally Posted by nextis12 View Post
Typically, non-emergency tow service does not have a deductible but is capped. You would likely find yourself still owing hundreds (plus) for a non-emergency tow. Which can easily be insured against for $180 a year and would not involve any insurance company paperwork/hassles or fine print surprises.
If one does their due diligence when adding tow insurance to the typical boat policy, you will generally find a menu of options for both deductible and cap amounts from which you can select. Even the most expansive rider Iíve seen costs less than $50/ year for our boat; likely less for smaller boats.

In my limited experience over the years when we required assistance for groundings, the paperwork effort was painless.
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Old 12-01-2022, 11:44   #15
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Re: How does Sea Tow operators make money?

I worked for a franchise for 15 years.

Best advice I can give...make an appointment with the local owners of the franchises in your home boating area and get their input.

Just the other day I had some guys arguing over membership towing. He was wrong about national membership rules...but if the local franchise goes beyond them to attract members...great...but get it in writing and don't expect it in a different franchise area.

After the owners...talk to the captain that would be in your normal operations area...and then talk to random boaters and their experiences.

You will get a much better picture than off the internet...there is already enough bad info here that my fingers would hurt just looking up the facts and posting them so you don't even have to believe me.
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