How to Price a Coworking Space
When deciding how to price your coworking space, it’s important to know what the going rates are in your area. This will help you determine if you’re charging too much or too little. Keep in mind that there are many factors that go into pricing a coworking space, such as location, size, amenities, and more. With all of these factors considered, what is the normal price for a coworking space?
Account for Different Types of Costs
When pricing a coworking space, you’ll want to look at your cost. The costs of starting a business can vary significantly depending on a number of factors. Location is one of them. For example, a coworking space in New York City will cost more than one in Birmingham or Minneapolis.
The physical space is the first thing you’ll want to price because it’s the largest portion of the expense and is primarily unchangeable.
A building’s age, renovations, and size will affect the cost of the physical space that you’re looking into. It will also vary depending on location and whether you’re looking to rent or purchase.
In addition to the physical space, you’ll need to consider furnishings. You may find a space pre-furnished or need to furnish yourself. Either way, it’s a cost you should include in your pricing roundup. Many coworking spaces come furnished, but you’ll want to consider upgrades to your unique space that might improve your team’s experience. Check out this blog for interior design elements that you can include in your space.
To name a few, here are some ideas:
- Furniture (desks, chairs, tables, etc.)
- Art, signs, posters, etc.
This list is not exhaustive, so it’s best to walk through your space to see what you’d like it to look like to ensure you’ve covered your bases.
When pricing a coworking space, you’ll want to consider hidden costs, such as insurance. It depends on where you’re looking for space, though, as some areas require insurance for coworking spaces, and some do not. You’ll want to check on this to ensure you include all necessary costs.
Utilities are also something to consider. If you’re leasing a coworking space within a building that includes others, the company’s fee may include the cost of utilities. If you’re the only tenant, it may not be covered.
Regardless, make sure you include the following costs in your pricing:
Whether you choose these services or have them included with your lease, this is not an area to skimp. Ensure the internet is high quality (great question to ask BEFORE signing the lease agreement!).
You’ll want to factor overhead costs into your pricing figure. Recurring costs should be factored into your startup capital for about six months to a year unless your company is already up and running.
You’ll want to include these:
- Website hosting and other costs
- Coworking management software
This category depends on your industry, of course. For example, an IT company will need different business resources than a group of graphic designers or a PR team.
Amenities and Services Offered
What types of amenities do you want to offer? There are many choices, and it sometimes depends on your field. Think about what your team may want. Do they work long hours? Does their work require a lot of focus? Are their hands overworked?
When pricing your coworking space, keep these choices in mind as you tour different buildings to find the right fit for your budget and your team.
Here are some considerations:
- Office Supplies
- Security system
- Computer security
- Sit-to-stand desks
- Nap pods
- Yoga (or even a full gym)
- Access control system
- Video conferencing tools (webcam, speakers, etc.)
- Mail service
In addition to these amenities, focus on the important things your team would like included in their workspace. For example, employees often want to have flexible workspaces. When pricing a coworking space, include estimates for these items that will lure the best people to your space.
- Fast internet (both wifi & wired)
- Ergonomic seating (a variety would be good)
- Private areas for phone calls
- A community manager
- High-quality electronics (computers, printers, etc.)
If you already have an existing company, it would be a good idea to poll your team to get a sense of what they may seek in a functional, productive coworking space. If you’re a startup and don’t have a team yet, look at your target persona for the ideal team member and go from there.
Differences Between Coworking and Traditional Office Costs
Coworking spaces and traditional offices vary in many ways, and their pricing structures are no exception. Traditional office leases are typically more long-term and complicated compared to simpler coworking prices.
Here are a few key differences:
1. The average coworking space lease term is six months compared to several years for traditional office spaces.
2. Coworking spaces sometimes provide wifi, furnishings, beverages, and other amenities.
3. Traditional leases often carry termination penalties, but coworking space leases usually don’t.
4. It’s common for coworking spaces to be custom-built or at least have custom components; this is uncommon for traditional offices.
There are also differences in the ambiance of the space. Coworking spaces tend to feel more like a community, more creative, and more comfortable than traditional office spaces.
What’s normal when pricing a coworking space? Certain categories are most important in choosing a suitable space, many of which don’t have anything to do with the price. That said, your bottom line is key to staying in business; it’s all about balance.
Here are the most important factors to consider when looking at prices:
Location: Is the space priced well for the area?
Atmosphere: Will you and your team feel at home there?
Amenities: Do the included services indicate a potential higher level of productivity?
Safety: This includes both physical safety and data safety
Scalability: Can this space grow with your team
These are not the only factors to consider, but they’re a good foundation to weed out any spaces that won’t work for your team. Once you narrow your list based on these factors, you can get more granular about your wants and needs.
By now, you may be thinking, wow, that’s a lot of expenses! That’s where tradeoffs come into play. You won’t want to cut back on things like Wi-Fi because your customers need it to do their jobs. At the same time, the coworking software you use as you’re starting out does not have to be the most sophisticated. Your bookings and payments must be streamlined just enough to protect member experience and improve staff productivity.
When you put together all these factors for pricing a coworking space, you’ll have a better idea of how to design your pricing model in a way that’s competitive and profitable. With these estimates, you’ll be able to choose a space that will allow you and your team to truly shine.