Do you know that only 40% of coworking spaces are profitable? Real-estate, leases, and operational costs can greatly affect your model and bottom line. So what are you to do? Easy, jack up the costs of your membership and start charging for every amenity you can think of! I’m being facetious of course. At DropDesk, we believe that the value you provide is directly proportional to the money you generate. So how can you maximize your coworking spaces profit? Scroll down and we will show you.
Your Financial Model Serves As The Foundation To Your Coworking Space Design
It’s important to note that I am not saying money is the only reason to get involved in coworking. There are many elements as to why operators want to start a coworking space. At the end of the day, if your space is not turning out a profit, it is going to be very difficult to scale it up. Below, I have outlined a few ways you can think about how to model your coworking concept.
The Basics: Coworking Space, Business Center or Incubator?
There are a few different ways to market your coworking space and target your demographic. It all depends on what type of model you want to operate. Coworking spaces and incubators usually target a younger demographic while business centers usually attract a more mature crowd. For obvious reasons, the type of space you operate, location and niche work together to dictate how
Whether it is private offices, meeting rooms, open spaces, event areas, phone-booths or cafes, the frequency of use, price per head, member capacities and amenity spaces (indirectly related to revenue) all need to be taken into account. Workspaces that double down on their team rooms and dedicated offices tend to have higher margins. While meeting rooms and monetizing underutilized space can be much trickier, but if done correctly, can sell many times over.
Do your research on where you want to operate a coworking space. There are many benefits to operating in high traffic areas (major cities) like New York City. Large populations of professionals hedge your risk, but there is high competition between workspaces, not to mention escalating real-estate prices. On the contrary, if you operate in the suburbs, competition and lease rates are far lower- but is there enough volume of local remote workers to fill your space?
Exclusive or Niche
There are many spaces that cater to a more exclusive demographic, for example, an application only membership, only allowing a specific gender, industry, or company size. Unless your workspace offers specific services that correlate with the type of industry that would be using your space, I would steer clear of this. For example, operating a workspace that offers high-quality media, photography and editing studios would clearly cater to creative companies.
Break up your membership tiers to be able to capture as many customer levels as possible. Offering a $25 day pass or affordable coworking day rate would allow the smallest of companies or freelancers to experience your space. Set up access tiers that grant users anywhere from an hour to 24/7 access. This will not only allow you to target a broad market but up-sell memberships to customers who need a lot more space and usage. Another way you can do this would be to offer an enterprise or team plan. In a nutshell, the plan would allow a larger company to delegate credits or hours to their remote employees. By capturing both individuals and enterprise clients your space will have much more opportunities.
Here Are Some Ways To Increase Coworking Space Revenue
If you are operating a specific type of coworking space or incubator, a great idea to offer additional services to further add value to your coworking community.
- Create a system where you can track meeting rooms usage allowing users to book from your website or mobile app.
- Add a “virtual” membership granting users access to a virtual address, mailbox, and limited access.
- Offer affiliate deals with local vendors or companies that would benefit from having access to your users.
- Sell workshops and events to non-members (and reinforcing current membership by offering it as an amenity).
- Prior to opening your space, try preselling memberships or offering exclusive deals.
- Partner With A Coworking Network.
- Attract corporate sponsors allowing them to offer discounts/advertise to members.
Increase The Value Of Your Membership & Revenue Will Follow
Sounds like an easy fix. Add more amenities and services and your membership value will increase. With increasing competition, how can you truly stand out from other workspaces that have more locations, cheaper prices, or more offerings? Every space can give out free coffee.
Partner With A Coworking Network
If you are an independent coworking space or only have a few locations, explore partnering with other workspaces to increase convenience and accessibility to professional workspaces. This may seem counterintuitive. Why would I send my members or potential members to other competing spaces? The fact is many coworking spaces are geographically isolated, meaning unless you have a competing space a few blocks away, other brands in different cities and towns are truly not your competition. With this being the case, why not offer it as a further benefit to members under YOUR membership?
How it Works
- Visit Drop-Desk’s Coworking Network page.
- DropDesk will provide you with an account, allowing your current members access to our partner network of spaces.
- Your members will book from your branded portal and you get paid additional recurring revenue for spaces that your members use.
Additional Services & Sponsorships
So you have spent countless hours attracting professionals to your workspace. The community you build can be your greatest asset. Many companies would pay for access to the community you have built. This can range from companies devoting time to consult with your members for free, pay to attend or sponsor events, and even potentially contribute to some of the lease costs – if you provide introductions to members who would benefit from their services. It is also not uncommon for a coworking space to provide in-house services to members at a discount. By resolving the day-to-day pain points of your customers, you add far more value to