Monetizing a Coworking Space
Coworking spaces, like other businesses operating on margins, usually start operations “in the red”. It then becomes vital for the health and longevity of the space to reach capacity as soon as possible. Coworking memberships seem to be the primary source of income for most coworking spaces, but what a battle-tested coworking manager will tell you is that is actually not usually the case.
Coworking managers are always hard at work trying to find other ways of creating and monetizing value for the members of the space as well as the surrounding community. In this post, I will outline the key sources of revenue for spaces (in order of percentage of revenue).
Suites, which are dedicated space for one or more members of a team, usually make up a sizeable chunk of the revenue of a coworking space. While the most predictable, it is also the least scalable because once you “sell that space,” you usually can’t use it for other things. It’s dedicated to the team that pays for it. Suites usually have a longer-term engagement than your standard month-month membership. As a coworking space, it is important to have suites because it allows for budgeting and covers a lot of the cost of the building itself. They are often referred to as anchor tenants because of the predictability.
2. Coworking memberships
Coworking memberships, the staple of coworking, are your typical run-of-the-mill memberships. Sometimes served up with a twist, these agreements are usually between individual freelancers, small businesses, or other business professionals looking for a great community and some freedom. Usually, these memberships operate month-to-month and make up a large part of the revenue. This type of membership is the most “scalable” for a coworking space because they often operate using the shared areas. It is smart to “oversell” your building capacity because members come and go and usually aren’t in at the same time.
3. Event rentals
Event rentals are often overlooked as some coworking spaces don’t hold events for their members, but are important pieces of the monthly revenue. Since coworking spaces are built to hold people and are usually equipped with kitchens, they become great venues after business hours for revenue. Unlike the next type of revenue model, event rentals are usually a bit more hands-on by the staff of the space. They often require staff to be present and provide services for the guests.
4. Hot desk and external room bookings
Hot desk and external room bookings are slightly different, but I’m lumping them into the same section because they are similar in the interaction between the guest and the space operators.
Usually, software like Coworks is used to automate the interaction of taking payment and resource management. Hot desks, which are a guest-like help-yourself to an area to work kind of membership, usually are the drop-in type where it serves guests from out of town or someone just looking for a change of pace. While not usually making up a significant part of the revenue, they are still ample opportunity to make ends meet.
The last type of “revenue” is the amenity type of product or service. Things like internal (members) conference room rentals, parking, merchandise, snacks, and other paid-services make up the rest of the revenue of a space. It is also worth mentioning that not all coworking spaces operate the same. Notably, spaces like Loading Dock Raleigh offer a shared warehouse model for small retail shops. Spaces like Switchyards in Atlanta, GA are positioned more like a club for the small culture pockets in Atlanta. There are many different coworking models, but at the end of the day, it’s important to find your niche!
Whether you are creating dedicated suites, scalable memberships, rental spaces, hot desk areas, or amenities, it is always important to think about the needs of your members. These are just a few ways to help monetize your coworking space, but there are plenty more. Often times managers find creative ways to make revenue by seeing what their members want or need. If you create a space to fill a need, then the revenue will follow suit.