The best advice is to sell to value, but be careful that you know what the value is, and what the opportunity cost is to them. I first worked out what our potential members were doing before we were around and how much that was costing them. In our case they tended to be working in coffee shops, spending about £2 an hour.
From this base I knew that if I sold hourly based packages and priced up based on £2 an hour I’d get no resistance and we’d fill up.
But I know that this isn’t the aim of a business, and what was more important was the additional value I could demonstrate for every extra cost per hour over and above each member invested. Yes we could offer the same coffee and internet speed as the coffee shop, but then we’d be a pay per hour coffee shop (nothing wrong with that, but that’s not my business). So I worked out all the benefits being a member would add to the experience, and priced accordingly. First few people through the door said we were too expensive (some said shockingly so), and why shouldn’t they work from the coffee shop. I’ve got a sales background so this wasn’t new to me- when I worked for the Mars corporation selling coffee machines, my machines were the most expensive on the market by a long way. Handling objections was a way of life. In this case all I did was offer to give the people a tour, and let them give me a chance to prove the value to them. Once they’d met some other people, used the ultra fast internet, the bike lockup etc etc they understood the benefits and they often signed up there and then. If they didn’t then no worries, they could go back to the coffee shop. (Many came back a few weeks later after having convinced themselves, by which time we’d raised the prices, but that’s a different story!)
Point to all this is to share my view, which is to price for value. If you open your space and it starts filling up insanely quick and people just want to sign up, with no objections, no claims you are too expensive, no doubts, then you are too cheap. How you do this without scaring people off, and while being able to test for value? Well what we did was a ‘founder membership’ (at £200/month) during our soft launch- which was ‘priced lower than the membership cost will be when we open’ (£300), and marketed as ‘please come and help test all this out’. We really had no idea what our final price would be, but we at least we had an anchor price (£300) and a special offer. We knew that we’d be able to tempt our very first customers with the special offer, but we didn’t devalue ourselves and gave ourselves wriggle room if we were too cheap at £200 or too expensive at £300. It turned out that memberships flew off the shelf at £200, didn’t sell at all even with the best objection handling at £300, so we ended up launching at £250 and quietly forgot about the £300 claim. It’s not like our founder members complained saying they felt mislead because their founder membership didn’t revert to £300!
We’ve tweaked the pricing over time, and now have the luxury of being so busy and so well known that we can price significantly above the alternatives.
Hope that’s useful
On Monday, 18 April 2016 23:06:07 UTC+1, Ehmandah R. wrote:
Hello All! I’m getting close to opening up my CoWorking space in the suburbs (Southern California) about 75,000 population. My space is about 8 minutes away from a cluster of top liberal arts colleges. I’m working on my membership pricing.
My space is 1200 sqft. I have 8 designed desks, 14 flex/open spaces, conference, and a shared kitchen.
Would love to hear some guidance.
Thanks in Advance.