a single source, nothing corroborates it

Sell the membership, not the desk

Optimising for how full the physical resource is turns out to be the wrong question when a third of revenue comes from people who barely use it. Manage memberships sold against capacity instead, bundle the meterable extras in, and build the model on what makes customers feel looked after rather than on how they behave under scarcity. Define any premium tier by what it deliberately withholds so it cannot cannibalise the core, and trade access for work you would otherwise buy.

The method

1. 01

   Stop optimising a shared workspace for how full the desks are: the number to manage is memberships sold against desks available.

2. 02

   Stop designing the business around your scarcest resource: bundle the meterable extras in and build the model on what makes customers feel looked after instead of on how they behave under scarcity.

3. 03

   Watch where actual usage clusters and add a tier at that point, even when it saves the customer nothing, because it removes paperwork on both sides and fills a hole in your ladder.

4. 04

   Define a new premium tier by what it deliberately withholds so it cannot cannibalise the core product: the upgrade is a room to gather in when needed, and buyers keep their desks out in the shared space the rest of the time.

5. 05

   Swap product access for work you would otherwise pay a supplier for, such as design or running events, which holds costs down and keeps those customers involved.

What it returned

• $100

  Two years in, Indy Hall's bookkeeper noticed basic members were coming in about six times a month, so a six day tier was added at $100, now $120, with no genuine discount attached. It became the second most popular option and closed the gap between the $25 and $175 tiers.

• Hillman calls optimising for occupancy the mistake most coworking operators make, and reframes the question as a ratio of memberships to desks.

• Over a third of Indy Hall's revenue came from people who almost never used a desk, and Hillman worked out that billing separately for conference rooms, printing and the like would have produced only a small fraction of that.

• Hillman positions team rooms as private conference rooms rather than private offices, noting that Indy Hall stops being ideal for a group once it passes three people.

Sources

• Alex Hillman | better coworking, better business, and better communitiesAlex Hillman · dangerouslyawesome.com · The Magic Ratio (How many memberships vs desks?) · undated
• How Much Does It Cost To Start A Coworking SpaceAlex Hillman · dangerouslyawesome.com · 3) How much does it cost to run a coworking space · 2012-01-01
• Not a Joke: Indy Hall v3.0 - The Future of Indy HallAlex Hillman · dangerouslyawesome.com · Support for Teams · 2012-04-01
• The ultimate guide to structuring your coworking space membershipsAlex Hillman · dangerouslyawesome.com · Stop building things around your most finite resources · 2015-10-01