A common mistake is thinking that lots of “upgrade” options turns into more money. I hope to break that opinion for you today
In fact, lots of upgrade options creates a paralyzing collection of options and a fear of being nickled and dimed. People hesitate to join because they’re confused by how they’re going to budget for all of the things they MIGHT need…even if they don’t actually need them yet.
And limiting access by the hour means record keeping for you, record keeping for them, and worrying about “staying longer and going over”. Especially when your hourly limits don’t coincide with hours in an ‘average’ work day, people feel like you’re a phone company keeping track of their minutes instead of a cozy place to go and get productive when they need it.
**So with that in mind, in my experience, you’d be able to make more money with LESS options…but better ones. **
When we launched, we had three membership levels, all inclusive:
Basic membership. $25/month (now $30/month). Includes one drop-in day per month. Additional days $15/day a la carte.
Lite membership. $175/month (now $200/month). Includes 3 days a week, or 12 days a month.
Full time membership, $275/month (now $300/month). Your own desk where you can leave your stuff. No extra charges.
And about 3 years in, our book keeper pointed out that we had a lot of basic members coming in roughly 6 times a month. We could create a 6 day/month membership and save everyone a bunch of book keeping on the extra $15/day drop in rates. So we did that and added:
- Six-pack membership: $100/month (now $120/month). Includes six drop-in days a month. Additional $15/day. (note that there’s no actual savings…just less paperwork).
Six-pack membership quickly became our second most popular membership. Go figure.
The lower levels are often overlooked because the assumption is “more money from bigger memberships, right?”
Except…a LOT of people just need to get out of the house or office once a week or once a month. Far more than need a dedicated space. And for people who don’t NEED to commute, there’s not a lot of incentive to work from the same place every day. Finally, not every kind of work makes sense in a coworking space. Having strong and easy to choose flex options makes coworking attractive to more people, including the ones who only come in once or twice a month.
All levels of membership are valuable, but basic membership and six pack membership make coworking feel less like “an office I use” and more like “a place where I can go when I need a change of scenery” which we’ve found resonates with a LOT more people.
The other benefit of having basic and six pack memberships is that over 1/3rd of our revenue comes from people who *almost never use a desk. *
We’ve done the math and if we charged for some of the things we include in all memberships (member conf room usage, printing, etc) it’d come out to a small fraction of that same amount of revenue. And best of all, we get to tell all of our members, “don’t worry, that’s included in your membership.”
That makes them feel awesome.
Last thing we added was in 2014 as an experiment. The source of the experiment was that we noticed two trends:
1 - more people were saying “I’ll join Indy Hall when I quit my job/need a place to work”
2 - more people who joined Indy Hall later cancelling, saying “I’m not using it enough”
Both of these were relatively new patterns. Prior to that, people happily joined with Basic membership just to be a card-carrying member. But as coworking mainstreamed, more people started to see coworking as “something I’ll buy when I need an office, but better”. This also explained our new cancellation reason. “I’m not using it enough” signaled that they viewed it as a thing to consume vs a thing to belong to.
That’s a problem we can fix.
So we added a new membership, the **Community Membership. $20/month or $200/year prepaid. NO coworking days included. **
Just online community (we use a power-combo of GroupBuzz and Slack, as I’ve mentioned in other posts) which are amazingly vibrant, plus they can come to our free events without feeling like a freeloader.
And we made it our FLAGSHIP membership. All of our coworking memberships came with community membership included. There wasn’t a way to join Indy Hall without having a community membership.
Crazy? Well, the language and positioning worked amazingly.
We started to see a reversal in BOTH trends I mentioned above:
For the people who said “I’ll join Indy Hall when…” we had a way of saying “there’s a way to start getting to know community members now…a lot of them were in the same position as you, before they left their jobs or found one that let them choose where they work. They can probably help you!”
And here’s my favorite: now we have people who email us to reluctantly cancel their membership because they’re moving away, or took a new job, but they know that they’ll miss the community. So we can offer them the Community membership for $20/month (or $200/year prepaid). And they’re THRILLED. We just turned someone who was about to leave into a member for life, no matter where they go they can stay connected. Bam.
The beautiful thing about this membership is it allows us to create value for one kind of member, and it improves our long term member retention and overall member lifetime value (which is easy to overlook in favor of “getting more members”). *Of course it’s good to get more members, but it’s even better to keep a larger % of the members you already have *
Last thought on pricing - it’s a big mistake to anchor your pricing to other options, even in the same city. **Anchor prices to the VALUE that people get. **
Your members are professionals. I’d be willing to bet that many of them earn more per day than you charge per month. Think about that!
Here’s something that we’ve done ourselves and we’ve heard others do successfully: ask your CURRENT paying members if they feel like they get more or less value than they pay out of their membership. If you’re doing even a halfway decent job, most paying members will say that they’re getting a steal of a deal. *Which means…you’re not charging enough. *
When we raised our rates, we did it with 6 months notice and offered a grandfather option for prepaying, which people found MORE than generous. I included a note saying that if someone felt that the price increase would impact their ability to be a member, to come talk to me and we’d figure out a solution.
When we announced the price increase, the #1 thing we heard was “It’s about time!” And only 1 person (out of nearly 200) came to me to say anything about the price increase being a potential burden - but that she was still happy to pay it because we’d been so considerate of the potential situation.
11,000 square feet is a lot of space, but more importantly, you can do a bit of work now to start making sure that people see the value in your community BEFORE and AFTER they need the space…and streamline everything from sales to billing along the way.
Hope this helps you get past the trough you’re in!
The #1 mistake in community building is doing it by yourself.
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On Wed, Sep 30, 2015 at 5:02 PM, Aloma Loren [email protected] wrote:
I just posted about corporate membership structures but I’m curious about pricing and basic individual membership structures as well.
Currently our prices appear to be well below most of what I’ve seen by researching online but we are still the highest priced coworking space in our city (Eugene, Oregon).
We are struggling with making things pencil out and so I’m exploring options to bring in some more revenue.
I’m curious what options other spaces offer, how you structure pricing, what extra add ons you offer, etc.
Here is what we have right now:
Part time flex desk $85/month includes 4 hours per month of conference room time
Full time flex desk $125/month includes 6 hours per month of conference room time
Private offices start at $450 and include 8 hours conference room time per month.
Add ons include:
Desk and chair for private office $100 annual
Suite number for mailing purposes $10/month
Reserved locker $5/month
Parking pass $15/month
Additional private office member $15/month
We have a steady influx of new members and have almost filled the private offices we have. We have just over 50 members. We have three conference rooms, a lunch room, printer, free coffee… We have over 11,000 square feet right down town.
We have a great mix of freelancer/solo entrepreneurs and small companies in our space.
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