How to Choose the Right Tariffs for your Coworking SpaceResource
We recently shared a guide with Six Tips for Launching a Coworking Space, but we know first hand setting up a new workspace is no easy task.
From sourcing the best location, choosing the right name, setting up your website, marketing your launch, all the way to finding the right workspace software to help run your space, there are many factors to consider.
Through our discovery calls with workspace operators, it has come to light that many workspace owners struggle to find the right balance when it comes to choosing tariffs for their workspace.
Here at Coherent, part of our mission is to provide help and support to those running a shared workspace. Together with a few of our operators, we’ve pulled together factors to consider when choosing the right tariffs for your coworking space.
What is a coworking space
Working from a coworking, shared or flexible workspace has become a popular trend over the last ten years among freelancers, homeworkers, sole traders, small businesses, and startups.
These flexible, tech-savvy individuals and small teams often collaborate over great distances while enjoying the benefits of breaking free from the classic 9 to 5 lifestyle. Coworking spaces offer these professionals an escape from all the distractions that working from home brings and eliminates the need to search for a public space such as a library or coffee shop. Not to mention is it has been proven that people are more productive when working around other workers.
One of the most significant benefits of a coworking space is its ability to connect and interact through their community. Coworking spaces give these individuals a place to interact with likeminded people, a space to meet with their clients, and endless opportunities to network.
What is a tariff
Simply put, tariffs are the pricing plan of your workspace which your members subscribe to. Most workspaces offer tariffs to be paid on a monthly or a pay as you go basis. A monthly tariff tends to be a collection of resources that members have access to for a set price and includes a notice period. In contrast, PAYG tariffs don’t tend to have a monthly commitment and are typically charged based on the member’s bookings. It is also expected that each tariff comes with T&Cs specific to each workspace.
Example: “Coworking 30 Tariff” – 30 hours of coworking desk, 1-hour meeting room for £100 per month.
“Tariff”, “plan”, “membership”, “contract”, “lease” are all somewhat interchangeable, and different spaces use different terminology. Community focussed workspaces might use “membership” whereas traditional offices might use “contract” or “lease”.
Different types of tariffs
Whether members are looking for a private studio office, a full-time or part-time coworking desk, or only a virtual membership, having various tariffs will allow them to choose the right pricing plan to suit their needs.
Examples of Tariffs:
Dedicated – If your workspace offers dedicated areas to certain members, then you will want to include a dedicated tariff. Ideal for small businesses, and startups, this tariff would accommodate Private Workspace, Full-Time Desks, Offices & Studios resources. A dedicated pricing plan could also include 24/7 Access, where access control is in place.
Shared – Depending on your space, this could be the most popular tariff, where members receive flexible access to a shared work area. Members won’t receive a designated desk, but they can often come and go as they please but will be limited to the hours set out in their membership contract. Usually, this tariff would have access to the main workspace when your hosts are available; however, this will differ from space to space.
Virtual – One of the newest tariff options for workspaces to keep members connected where meeting face-to-face is restricted. With this tariff, members commonly have access to a virtual office to stay united and motivated throughout the day while working from home. This option often includes a post box and mail handling, useful for members who need some business services but are happy working from home.
Pay As You Go – PAYG tariffs are a great option if you expect to host drop-in members. Most workspaces opt for a day pass system where people can buy singular or multiple days, with access to a set amount of resources. Some drop-in members might only need to use your space for an hour at a time to host a meeting, for example, but don’t need to commit to a full day pass. PAYG tariffs can also be used as an introductory offer to prospect members to ‘try before they buy’.
“From our perspective, being able to offer flexibility is essential, but keep it simple. Be super clear with what each tariff includes. In an ideal world, you’d just have one flat hourly rate so your community can scale as they need. Having some monthly options can build resilience into your revenue stream and help build loyalty amongst your members from a commercial perspective. Give some thought to who may want to use your space and the likely hours they’d need every month. Then use this to structure your tariffs around as a starting point.”The Cat’s Pyjamas
Factors to consider when choosing the right tariff for your space
Set simple tariffs –
When choosing the right tariffs for your workspace, the best thing you can do is keep it simple. The biggest issue we see with workspace operators is that they tend to overcomplicate their pricing plans by covering too many options.
If your workspace offers hot desks and you want to provide different levels of usages, keep things simple with a tiered model such as a 30/60/90/120/unlimited hours per month.
“Consider what will be included in your tariffs in terms of print, meeting room, tea and coffee and any other allowances,” says Distil. “Aim to provide a clear package with each tariff, rather than billing people separately for add-ons.”
Make tariffs obvious –
The main aim here is to ensure that your members can see what they will receive with each tariff from a glance. Figure out the core elements of your pricing plan and make them consistent across each tier, so it’s easy for members to compare tariffs against each other.
“Keep tariffs as simple as possible when you present them to your potential members, even if your behind-the-scenes calculations are more complicated,” says Distil.
By keeping your tariffs simple, members will understand clearly from your website what they should expect to receive from each membership. Not only that, but hosts will be able to explain tariffs clearly when giving a tour of your workspace.
Keep your members in mind –
“Consider who your target market is and what they are likely to be able to afford. Conduct a bit of research,” says Distil, “talk to people from the relevant sector(s), look at the prices of desks in coworking spaces that target the same sector(s), even if they are in different cities”.
Who uses your space? What resources do they need to do their job? Small businesses and startups might require dedicated desks and frequent access to a meeting room. Tariffs for these professionals could include a discounted meeting room rate or access to a private office. Freelancers, homeworkers, and solopreneurs might use the space differently and look for a tariff that includes desk time, access to a phonebooth, and only a couple of hours of meeting room time.
“If you have a big enough space, then you could host members in a lounge area or similar at a cheaper rate and offer your main coworking space at a more expensive rate, with different day rates for hot desking, dedicated desks and private office space”, suggests Distil.
Keeping your space and prospect members in mind is a great way to help you form the core element of your workspace’s tariffs.
Review your tariffs –
Frequently review your tariff performance to ensure you are offering the best deals to current and prospect members. Consider which memberships are most popular and which ones are underperforming. You can improve tariff performance by tweaking the options you have, by adding in perks or other resources, or by creating new tariffs. When adding new tariffs, remember to keep payment plans simple and straightforward for your members by removing any unneeded options to keep things clear.
If you notice you have a tariff that isn’t as popular, perhaps a higher tier option, consider creating a choice between the most popular and the next tier up. For example, if you find that many people want more than 30 but less than 60 hours per month, introduce a 45-hour tariff and consider removing the 60-hour option. Review this new option’s performance and edit where needed after a few months.
“Create a tariff structure,” says Distil. “Think about scaling your tariffs so, per day, five days a week is cheaper than one day a week, for instance. If you’re charging by the hour, then you can also scale your hourly, half-day and daily rates in the same way.”
Don’t forget to include extra perks beyond just desk time, where possible. Adding incentives to your memberships is a great way to encourage people to level up and commit to a higher tariff.
For example: 1 hour per month free meeting room time on the 30-hour tariff, 3 hours meeting room time on the 60-hour, etc. Providing incentives like this might encourage someone to move up to the next tier.
“Remember to scope out your competition. Look at what they offer and at what price. You can build a custom map in Google Maps to help visualise where your competitors are in relation to your space. Be clear about your position in the market. Don’t just consider geographic location, but also the aesthetics of the building you’re in, the quality of interior design, your community offering and your package of services. Be clear about what makes you stand out from other spaces.”Distil Coworking
Choosing the right workspace management software can help you handle your tariffs efficiently. Coherent software allows you to simplify your daily admin tasks and supports you by assigning the right tariff to the right members.
Give your members dedicated or shared access to your desks, studios, meeting rooms and other resources. Choose how many hours they get per month and what discount rate they receive for extra bookings.
For more casual visitors, use the Pay As You Go membership to charge members for one-off bookings. With hidden memberships, you can create individual memberships for each of your members. Add T&Cs or House Rules for your members to accept before they sign up.