The greatest asset you have is your real estate, whether private offices, workstations, or both. Calculating how to value your workspace to get the highest return on your overall investment is key.
Let’s take a look at some factors that affect the price tag you put on your space.
Choose your real estate wisely. It will be the first determining factor of how you will price your space and services. If you can afford it, find a space that is remodeled and ready to go. If you’re lucky enough to find cheap real estate, the investment in fit out and improvements may put a serious toll on your ability to be profitable or even break even down the line.
In our experience, the location of your workspace will make the biggest impact on price. If you have five offices in Manhattan, there will clearly be more business potential and greater opportunity to set your prices at a premium. A city location also means a higher concentration of competitors versus being the only business center or Coworking center within a 20-mile radius in the suburbs of the city.
Consider how vibrant your neighborhood is or isn’t. If you’re in a booming and up-and-coming area with quick and easy access to shops, transportation, restaurants you’re at an advantage to charge more, and rightly so if your rent is more costly in that area.
Denisty is determined by how many people you’re trying to pack into your shared workspace. The more people in a flexible desk area or the smaller your private offices, the less you should charge. While you may be able to offer cheaper space and attract more prospects, cramming your clients into your four walls like sardines will never create a good member experience. You may run the risk of negative reviews, low customer retention and a bad reputation in the industry.
Duration of License Agreements
As a general rule of thumb, the length of a lease is typically a function of availability, lead flow, and a sense of the market. If the market is on the rise, you’ll be less inclined to write longer leases. If it’s falling, however, you’ll want to lock your tenants into longer leases (this varies based on countries and territories – be sure to check regulations per country).
High lead flow and low space availability allow operators to charge higher prices, while less incoming leads and greater space availability limits how much they can charge. Operators may need to evaluate if writing a longer-term lease is less lucrative compared to writing three short-term lease deals that can be priced higher. If you’re confident that you’ll fill the space, then you’ll take the multiple short lease deals..
The devil is in the details. Keeping your space in tip-top shape and ensuring frequent and thorough cleanings are a must. There is no room for visible dust, crumbs or dirt. It’s a given, but often operators must encourage members to treat the workspace as their own home.
Keeping an eye out for troublesome or conflictive members is imperative. Both the state of the facilities and the quality of the community are factors that contribute to greater member satisfaction, allowing operators to price their shared workspace at a premium.
Offering essential amenities such as Wi-Fi, printing, and (free!) coffee will be expected. What distinguishes your space and delivers a slicker member experience is how your members can access these services. For example, providing mobile and self-service access to their workspace – to book meeting rooms from their tablet or purchase additional bandwidth on the fly – is a premium service that is highly valued and adds to the quality of your space.
Keep it Relative
Like any company in any market, your workspace operation does not run in a vacuum, especially not in the shared workspace industry. It’s growing rapidly across the globe, with large-scale expansions and new players entering the market every week. Do your market research. Google other workspaces in your area and get an idea of what they’re charging for similar services that you’re offering. Do an honest ranking of the space, services, and amenities you offer compared to workspace operators in your region. Use that as a basis for how you will compete. If you decide to price at a higher rate, be prepared to differentiate the value you deliver over your neighbours.
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