Price Increases - Notice Given? Grandfather Members? Other advice?

[pa...@soarco-working.com]

I am looking for advice from Operators who have experienced a couple of years open.  I'm approaching my first anniversary (yipee!!!), and am trying to come up with a good price increase strategy.

1.  How old was your space before you increased your prices?

2.  Do you grandfather current members?  Permanently?  For a time period?

3.  How much notice do you give prior to the increase?

4.  What do you want me to know that I'm not asking?

5.  I also have private offices I (month-by-month...no leases).  If your answers above are different for this situation, please share your expertise.

Thank you so much!  The increase is needed to help close the income to expense gap, but I have a concern about continuing to grow the base with a new price structure.

Paula

[Angel Kwiatkowski]

1.  How old was your space before you increased your prices?

I have changed my 3 times in 8 years. Mainly due to my own lease rates going up.

2.  Do you grandfather current members?  Permanently?  For a time period?

No. 

3.  How much notice do you give prior to the increase?

 I give current members about 3 months notice before I price increase.

4.  What do you want me to know that I'm not asking?

You can do it!

5.  I also have private offices I (month-by-month...no leases).  If your answers above are different for this situation, please share your expertise.

Month to month means they have no security to get the same rate over the long term. I make sure my offices are slightly above market rate b/c they are month to month.

[pa...@soarco-working.com]

Thanks so much for the reply Angel!

 

Best Regards,

Paula Blair

17401 Commerce Park Blvd., Suite 103

Tampa, FL 33647

813-498-1932

SOARco-working.com

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[Garrett Tichy]

Hey Paula, Garrett here!

I own and operate Hygge. We're coming up on 3 years now. See below for my answers/experiences. Hopefully this helps a bit as you continue to grow! Congrats on the one year and success :) 

1. We've never increased the pricing for flex membership. We've been $124/month since the day we opened and have no plans for the remainder of our lease terms to increase our prices. We did a pre-open $99/month founders discount to raise awareness. Otherwise, pricing has not fluctuated.

For offices. We are also month to month with no leases. Everything is membership based. If someone stays in an office forever their price will NEVER increase. I believe that's what separates us from the rest of the market. No typical leases. No escalation. 

If an office opens we raise the price to market. We've been able to do this over and over. Example. Day one offices were $600 are now right around $850. We've been mostly able to stay at 100% occupancy with these increases when there's a change in occupant.

2. Members are grandfathered. I believe in rewarding those that are loyal and stay with you a long time. There's no need to risk alienating people for small incremental growth in my opinion.

3. So with all that said... We did acquire a coworking space that was extremely undercharging their members... like $5/month for Nonprofit organizations for full flex benefits. This was insane. We gave them a 3 month heads up that we would be bringing them up to the $124/month flex pricing. We lost all 10 organizations. This was fine. They were heavy meeting space users and had absolutely no appreciation. 

4. I'd be curious what kind of increases you're looking to make.

5. See answer #1

[Jeannine van der Linden]

Congratulations and happy birthday!

1.  How old was your space before you increased your prices?

Three years.

 

2.  Do you grandfather current members?  Permanently?  For a time period?

I grandfathered folks who had already been there a year and who either would 1) pay a year in advance for the lower price or 2) had gone a year never being late with the rent.  

 

3.  How much notice do you give prior to the increase?

Three months

 

4.  What do you want me to know that I'm not asking?

About half my coworkers reacted by saying, "you should have done it sooner".  

Make sure you raise the rent enough that you wil not have to do it again in the short term.  Nickel and diming people is not a good business strategy.

 

5.  I also have private offices I (month-by-month...no leases).  If your answers above are different for this situation, please share your expertise.

It really depends:  we raised the rent for our basic membership, because it was breaking even but not making money.  I told the coworkers that and explained that this means having them in the space is a hobby and not a business, which is not sustainable. 

The other memberships were making money so I left them alone.

Thank you so much!  The increase is needed to help close the income to expense gap, but I have a concern about continuing to grow the base with a new price structure.

You cannot grow your business with the existing price structure if there is an income to expense gap.  This is the reality and your coworkers should know this. A profitable coworking space is free to make choices and that is important for them also. 

 

 

[Felicity Maxwell]

Just wanted to add that when you are looking to close a shortfall, you may also want to look at increasing revenue by changing your pricing structure (vs. pricing). 

 

We have a WeWork coming in nearby, so in December (3.5 year after opening) we let our members know that we would be switching to a recurring monthly membership model. 

Previously we had let folks buy day passes in packs of 5 or 10 with out a monthly commitment - everyone loved the flexibility, but it made income projections impossible, since we had no idea when our day pass users would buy additional passes.  

Now we have everyone on a recurring monthly membership for 1, 5, or 10 passes.  Its not quite as flexible as before, but we have lost maybe 2 members?  As soon as we explained that we needed more of a commitment to ensure our long term success, everyone who valued our space made the switch.  And I think it has really helped with community building and retention as well - now even if you are not a full time member of our space, you are committed (financially anyway) to come in and use our space for a certain number of days per month.  

We made this switch on the advice of our virtual CFO, who really helped us figure out a long term plan for success.  If you are struggling with income / expense issues, I totally recommend finding an expert - business coach, finance person, etc who can bring fresh eyes to your coworking space.  Some of their suggestions might seem counter intuitive but ultimately they might be changes you need to make in order to thrive.  

HTH

-Felicity 

[pa...@soarco-working.com]

Thanks so much for taking the time to reply!  I appreciate your input.

 

Best Regards,

Paula Blair

17401 Commerce Park Blvd., Suite 103

Tampa, FL 33647

813-498-1932

SOARco-working.com

 

From: cowo...@googlegroups.com <cowo...@googlegroups.com> On Behalf Of Angel Kwiatkowski
Sent: Tuesday, May 29, 2018 5:05 PM
To: Coworking <cowo...@googlegroups.com>
Subject: [Coworking] Re: Price Increases - Notice Given? Grandfather Members? Other advice?

 

1.  How old was your space before you increased your prices?

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[pa...@soarco-working.com]

Thank you so much for taking the time to respond!  I appreciate your input.

 

Best Regards,

Paula Blair

17401 Commerce Park Blvd., Suite 103

Tampa, FL 33647

813-498-1932

SOARco-working.com

 

From: cowo...@googlegroups.com <cowo...@googlegroups.com> On Behalf Of Felicity Maxwell
Sent: Wednesday, May 30, 2018 10:03 AM
To: Coworking <cowo...@googlegroups.com>
Subject: [Coworking] Re: Price Increases - Notice Given? Grandfather Members? Other advice?

 

Just wanted to add that when you are looking to close a shortfall, you may also want to look at increasing revenue by changing your pricing structure (vs. pricing). 

--

[Alex Hillman]

Lotsa good advice in here!

A few notes from an old head:

If you're considering raising your rates, do it. Don't wait for someone else to give you permission, or for the time to be "right." 

We give everyone a generous window of being grandfathered in the old rates. 3 months is good. 6 months is generous. We give them the option to keep their existing rates beyond the grandfather window by pre-paying their membership. This helps with our cashflow, and gives them an incentive of keeping the olde rate.

It's also VERY important to communicate how the increase is going to benefit them! In your case, since this is closing a financial shortfall, don't be shy about letting people know that this will ensure that you can keep the lights on and start to have resources to reinvest, allowing you to say "yes" to more things that will improve the experience for them. 

We've never had private offices - but the advice I've given many others has been to adjust them appropriately as well along with everyone else to keep things equitable. Unless your contracts specify differently I can't come up with a reason that a private office would be treated differently. 

-Alex

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[pa...@soarco-working.com]

Thanks so much for taking the time to reply Alex.  I appreciate your wisdom!

 

Best Regards,

Paula Blair

17401 Commerce Park Blvd., Suite 103

Tampa, FL 33647

813-498-1932

SOARco-working.com

 

From: cowo...@googlegroups.com <cowo...@googlegroups.com> On Behalf Of Alex Hillman
Sent: Friday, June 1, 2018 11:24 AM
To: Coworking <cowo...@googlegroups.com>
Subject: Re: [Coworking] Re: Price Increases - Notice Given? Grandfather Members? Other advice?

 

Lotsa good advice in here!

 

A few notes from an old head:

 

If you're considering raising your rates, do it. Don't wait for someone else to give you permission, or for the time to be "right." 

 

We give everyone a generous window of being grandfathered in the old rates. 3 months is good. 6 months is generous. We give them the option to keep their existing rates beyond the grandfather window by pre-paying their membership. This helps with our cashflow, and gives them an incentive of keeping the olde rate.

 

It's also VERY important to communicate how the increase is going to benefit them! In your case, since this is closing a financial shortfall, don't be shy about letting people know that this will ensure that you can keep the lights on and start to have resources to reinvest, allowing you to say "yes" to more things that will improve the experience for them. 

 

We've never had private offices - but the advice I've given many others has been to adjust them appropriately as well along with everyone else to keep things equitable. Unless your contracts specify differently I can't come up with a reason that a private office would be treated differently. 

 

-Alex

 

 

On Wed, May 30, 2018 at 10:33 AM <pa...@soarco-working.com> wrote:

Thank you so much for taking the time to respond!  I appreciate your input.

 

Best Regards,

Paula Blair

17401 Commerce Park Blvd., Suite 103