Cool Money

[jo...@mckerrell.net]

I just posted a new blog post about Money, it invites conversation here on the mailing list so I thought I should start off the conversation by posting it here too. It talks about prices so I should probably have linked to our current prices, you can find those here: https://doesliverpool.com/services/

And here’s the post:

Unfortunately this isn’t going to be one of those posts where I show you lots of graphs telling you how the DoES finances are doing, it is going to be a post where I talk about money though. Overall the DoES finances are doing ok but they could certainly be healthier. This time last year we had about £16,849.84 in total assets. At the end of April that figure is £10,194.39. We’ve not actually had any big unusual or unexpected expenditure over the last year, looking at payments of over £300 it’s mostly rent, service charge, business rates, salary, electricity and water bills. We’ve had a few one-off expenses such as 3D printer parts, buying the laser filtration machine, accountancy fees and insurance but only the laser filtration machine was particularly expensive or unusual, and you couldn’t really call it unexpected given we got a grant of £1000 for it in 2022!

Regular Expenses

Regarding the regular expenses, all of those did go up over the last year. Our business rates valuation nearly doubled from the ridiculous £21,250 to the utterly outrageous £38,750 (remember we are expected to pay about half that figure). Fortunately we were automatically entitled to transitional relief which means the increase in what we paid was less, but that relief reduces each year so what we pay will be going up again this financial year. It’s actually the same scenario regarding our rent. Our initial lease of 5 years ended last year and with the new lease came a new rent. This also is tiered to reduce the impact but again, we’re a year in so it has increased again. Service charge went up because of the various lift issues we had in the previous year and continues to rise to cover the cost of the new lift being installed. The one bright spot now is the electricity bill which, while high over the last year, will now be lower as a 1 year fixed price contract came to an end in early 2024 and the new contract was for a lower amount.

Turnover and VAT

You can probably see where I’m going with all this, but before I say it out loud I have something else to mention. Our turnover in the last year was £73,977.00. We’ve started tracking this because we were concerned that we might hit the threshold where we’re legally required to register for VAT. In the past that threshold was £85,000 but in fact this has recently been increased to £90,000. Right now we’re still a way off hitting that but it’s still something to be aware of.

We can register for VAT at any point and doing so would allow us to claim relief of the VAT on our outgoings; most of those are VATable, including rent and utilities, but wouldn’t include rates or Sean’s salary. We would of course have to charge VAT on our “sales”, although we can choose how much of that (including “all”) to absorb into our current prices.

Upcoming Expense

The final thing to mention is that we do have a large expense that we’re going to need to make in the next few months. The air conditioning units that we use in the main workshop to heat and cool the space have always been rubbish, but now one of the units has broken down and we have been told that it’s not going to be possible to fix this, and that we would be better off getting a new pair of units which should actually provide useful heating and cooling of the space. The cost of this is £5153.55+VAT (£6,184.26 total) plus some electrical work, and we need to cover it entirely ourselves.

What should we do?

Well the obvious thing to do when your costs go up is to raise your own prices. We’d really prefer not to do this as providing low cost access to our equipment and space is our entire reason for existing. That said it does look unavoidable at the moment. If we’re going to change our pricing though it would make sense to have a discussion around whether to register for VAT at the same time. It’s unlikely to save us money but it makes sense to make changes to the prices once, rather than change them now and introduce VAT related changes in 6 months time.

The alternative to raising our prices would be to reduce our costs. Right now we’re somewhat limited in how we can do this. Even as it increases our current rent is actually pretty reasonable. Finding an alternative or additional space has long been a consideration but unfortunately we’re struggling to make any progress on this front (or even find time to try). There could even be an option around restructuring the company that is Does Liverpool CIC, splitting into multiple parts that run different areas, maybe one of which would be a charity, all of which would have different business rates liabilities (and relief). We are very proud of running DoES Liverpool as a sustainable business (in terms of it sustains itself through it’s operations rather than being reliant on external funding) so machinations like that don’t feel like the ideal way or a particularly long term solution.

Let’s talk

So what should we do. Answers on a post card? This blog post is really intended as the start of a conversation, if you have thoughts please post them on our mailing list, or if you want to get in touch more privately you’re always welcome to email he...@doesliverpool.com instead. What do people think about raising our prices? How about registering for VAT? Do you have any bright ideas for reducing costs? We welcome your ideas! Specific suggestions (e.g., “Are you aware of this particular option that could benefit you?”) are especially helpful compared to general suggestions (e.g., “Have you considered seeking funding?”). We look forward to hearing from you!

[Mark Hemming]

From the view of someone who comes in to work 3/4 times a month, I really wouldn't object to a price increase, and have been expecting one for a long time. I get the impression co-working is a lot more expensive elsewhere (there's a place in Prescot that charges £20 per full day walk-in or £15 if you book online).

Mark 

[Mark Hemming]

As an addition (and after discussion with Jackie) the virtual office address service price is very, very competitive. I recently looked at trying to get a second address in another UK city and it was fairly standard to see £80+VAT per month (or higher) as a price, so could be worth promoting as a great value service or increasing price for higher revenue.

Mark

[Alex J Lennon]

Thanks John. Useful stuff. A couple of thoughts from me...

- I generally expect businesses to be VAT registered and don't inherently see this as a problem although it's a pain to track.

- Perhaps we would expect DoES to go for the flat rate scheme to avoid lots of admin? If so what would the VAT percentage be?

- It feels like it would be helpful to know for the last financial period what DoES would have been able to claim back on VAT rated purchases to have a base line for the P/L changes we'd expect to see?

- Nobody likes a price increase but I suspect what we all really want is for DoES to be financially secure moving into the future. 

- So for me I would suggest that if we were to take a view on the financial commitments coming up in years 1, 2, 3 then we should be putting in pricing today to reflect what we think we need to have in the bank as a buffer for the future. I understand we don't want to limit access to the space based on price but perhaps there's something else that can be done there?

Cheers,

Alex

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[Snoof Kattekop]

How is our membership trending? It feels like it's going down, but I don't know if that's accurate or just how it feels when I'm in. If so, I'd be very wary of raising prices - if we're having issues attracting/retaining members at current prices, then raising them will exacerbate that and we'd be better off addressing whatever is causing the drop.

Op wo 19 jun. 2024 10:41 schreef Alex J Lennon <ajle...@dynamicdevices.co.uk>:

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[Alex Lennon]

Fair comment Snoof. I’m not aware we do anything much in the way of pro-active marketing? (Could be wrong or out of date). Is that something worthy of discussion? 

On 19 Jun 2024, at 17:42, Snoof Kattekop <snoo...@gmail.com> wrote:



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[Sean Gleeson]

Pro-active marketing, we're quite bad at. Individual members are very good at mentioning us on their social media posts, and, in fact, our own social media is very good and active too, but obviously those only go out to a self selecting audience that are likely to be aware of us anywhere.

We do quite a lot of more passive marketing just by being involved in the Maker community, so appearing at Makefests, having members be sought out to be involved in bigger events like the Netball World Cup, Tate Takeover, etc, but how much of that rams DoES down people's throats, I don't know.

With regards to memberships, we currently have 13 permanent desks (which is pretty much the same, give or take one or two either way, as it's been in the nigh on decade that I've been here), 8 full time workshop members (which, again, isn't really any different than it's been for years, but it always feels like there should be more!), and at least 21 out of hours members (I say 'at least' because I've noticed a strange trend recently where people will pay for OoH membership without having a recurring invoice, which is the only way I can really track it. It seems like those may be project based, as they tend to be one and done). We also have over a hundred mailboxes, with requests for new ones coming in regularly - it's at the point where I'm actively seeking out and pruning those who are late on payment to fit new ones in, lest I end up having boxes from floor to ceiling.

So that's where we're at with regards to the questions from Snoof and Alex, as I see it.

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[Sean Smith]

I first became aware of my (at the time) local markerspace when they ran an introduction to Arduino workshop one weekend which got me started with MCUs. They used this to generate funds as well. Maybe that could simultaneously help with funding and give something to advertise to the local educational institutions.

Incidentally, is it out of the question to relocate to a cheaper (rent and business rates) space outside the city centre?

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[Zarino Zappia]

I don’t know whether it’s “out of the question” but, speaking only for myself, I’d likely cancel my DoES permie desk membership if it moved more than a half hour walk from the Pier Head (where I live) – I like my walk into work, and my desk membership would have to be really cheap to compensate for the hassle and cost of a bike or bus every day.

Z

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[Mike Gorman]

Thanks John,

One thing I would like to ask is when was the last price rise for DoES membership?  I suspect not in recent years, possibly not even before our move into the Tapestry building.

Given the significant rise in energy costs and overall inflation in recent years, then a general price rise is far from unreasonable. The more difficult calculation is how much of a price rise and where this places the business accounts VAT wise.

It might be worth doing some “what if” type calculations at various price points to see what level of increase gets us closer to our longer term goals, as well as being able to cover the expected increases is rent and rates whilst still running at an overall surplus to provide for future capital costs. I suspect you have thoughts on this already, as say a 10% price rise would likely take the accounts closer to the mandatory VAT threshold, which would then make the overall increase closer to 30% once VAT is added.

Another thought on the question of VAT is whether we need to budget for additional admin work to cover the management of the VAT accounting. 

One last thought, have we done any comparisons with co-working costs in comparable co-working spaces in the area recently?  This might be a useful exercise as well.

One more suggestion is to look at doing a mailshot to all members of DoES regarding these potential changes, as I suspect there are members of DoES who are not on the Google Groups who should be informed at least, but hopefully brought in to the discussion.

Regards

Mike Gorman

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[Zarino Zappia]

+1 on doing a comparison exercise. There’s no shortage of coworking spaces in Liverpool these days, and a handful of alternatives for workshops/equipment spaces nearby too, I think? So we should really see what we’re competing against.

My instinct is we’ll find DoES coworking space massively under-priced. But, then again, most co-working spaces don’t expect their paying customers to answer the phones, handle post-box visitors, and take out the bins ;-) So we might find it hard to compare like for like.

As you say, Mike, does is a CIC not a charity, so at least an inflationary price increase seems impossible to argue against. It’d be good to also think, though, about how we ensure the prices are still approachable for exactly the sorts of users who deserve a safe, reliable, private work space but are currently priced out of the “trendy” options in the business district and Baltic Triangle.

Z

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[Andy Green]

Yes, the current location is definitely one major attraction for me (and probably others from Peninsular Merseyside), as it's close enough to Lime Street to walk. If DoES were out at e.g. Wavertree or other non-central places, it would make access much harder.

Re. pro-active marketing, I'm just wondering about the potential for cross-marketing with other local/regional entities. As a community enterprise based on shared resources and knowledge, obviously we're close to the library sector, and it's interesting to see how some libraries (e.g. Camden) are creeping into the library of things and potentially makerspaces in their own right. We already have good links with Liverpool Libraries, so there's one possibility. Then the DIY sector (Wickes, B&Q, ScrewFix...) have a clientele who might be predisposed to DoES. I'm not sure how much autonomy local branches have, but there might be CSR boxes they can tick by engaging with and promoting DoES. And the same might be true for completely unrelated sectors, such as supermarkets. (M&S were trying to do some 'locally made' events a few years ago, presumably for CSR reasons).

Andy 

 

 

Andy  

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[Zarino Zappia]

Sorry for spamming this thread this morning (!!) but one point on marketing… don’t forget the other community businesses / non-profits in the area with a similar ethos – Liverpool Tool Library (Aspen Yard, Toxteth, pay-what-you-can with a suggestion of £30/yr) and Kitties Launderette (an actual launderette in Everton, but also a social and events space) come to mind – whether in terms of cross-promotion, or even some form of discount / integrated membership pricing.

Ultimately, as with all these things, coming up with the ideas is easy. The hard part is actually finding time to do it when we’re all busy with our actual jobs :-(

Z

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[Mark Hemming]

Hey all!

I've tried to call round a couple of 'competitors' this morning and only got through to two - here are the prices I found:

Space	Perm Desk	Flexi	Full Day	Half Day
Avenue HQ Mann Island	210+VAT	110+VAT	20+VAT	N-
Spaces - Ropewalks	155+VAT	-	25+VAT	-

If needed, I can continue researching.

Interestingly, DoES does not appear in the map pack on Google when you search for 'coworking in Liverpool' - if you haven't done so, leave a Google review as this is a really easy way to increase rankings, and therefore business.

Mark

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[Alex J Lennon]

fwiw you might add Fact?

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[jo...@mckerrell.net]

Mike - well ChatGPT tells me "DoES Liverpool last raised their prices in April 2018 when they moved to their current location at The Tapestry building" which sounds about right as I think that’s when we really leant into the “membership gives you a discounted price” thing. Also regarding the extra admin for VAT, that’s one of the things FreeAgent does really well. We’d need to make sure that anything we added had the correct VAT status but apart from that I think it would even do the submission to HMRC for us so shouldn’t be too much overhead.

Doing a mailshot is an interesting idea, on the one hand I felt like it would be better to do that when we know the prices but then yes it would be good to let people be more involved. Maybe we could let people know about Makefest and also parties that surround it in the same email?

Andy - some good ideas there, I’m sure I’ve seen a DoES Liverpool logo in the Tool Library but they’ve been running courses and being a bit more active in their own marketing recently so maybe we can coordinate with them somehow.

And as Zarino says the trickiest part is finding time to do all this given we’re mostly doing it as volunteers. To try to coordinate things a bit better I’ve started a list on the issue tracker, although really when people start working on them I think the best thing would be to break them out into separate tasks.

https://github.com/DoESLiverpool/somebody-should/issues/1919

So.. Mark, are you on GitHub? Would you be able to add that to https://github.com/DoESLiverpool/somebody-should/issues/1920 ? :-)

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[Mark Hemming]

Alex - Thanks, I'll try to get the numbers from FACT.

John - I think I've added the info on GitHub, although I'm a bit new to it so hope I've done what you wanted.

M

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[jo...@mckerrell.net]

You have indeed, thanks Mark! 

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[jo...@mckerrell.net]

Finally dug it out, we announced new prices when we announced the move (November 2017), and implemented them when we actually moved (April 2018) (I don’t see the discussion, that probably happened here on the mailing list?)

https://doesliverpool.com/co-working/announcing-our-new-home-and-does-membership/

https://doesliverpool.com/business/does-liverpool-has-moved/

And for completeness the previous price rise was in October 2014

https://doesliverpool.com/business/finances-update-and-price-rises/

John

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