Post Author: Craig Baute.
As space owners and coworking catalyst we work hard to create a culture and community that we view best fits the individuals in the neighborhood and our current members. We take careful considerations of the design of the space, the amenities, and events that will be held there. But do we think about how the pricing structure affects the culture?
Sure we think about price points and do a break-even analysis, but most spaces do not consider how it will affect the culture of the community. After rereading Freakonomics I wanted to put on my investigative economist hat on and explore how the different coworking pricing models that have emerged – flat monthly pricing, tiered monthly pricing, and punch cards – attract certain people and influence the coworking culture.
It is important to remember this is just one of many ingredients that create a coworking culture.
FLAT MONTHLY PRICING
Having one plan certainly makes life easier for the space owner and has proven popular in some coworking spaces. A lot of the spaces that do a flat monthly membership have settled around $250 – $400 for an unlimited use of the space and might offer a ‘lite’ package that doesn’t include any regular use of the space.
So what type of culture does this create?
High Community Involvement, Experienced Workers / Lower Diversity
With a flat fee the price is higher than the most popular plans I’ve noticed from my members at Creative Density in Denver(3 days/week for $175) but lower than the normal unlimited plans that cost $350.
The higher price point compared to the most popular plan for $175 means that it will attract members that have the revenue and might be further along in their career as a mobile professional. This doesn’t mean ‘older’ but most likely someone that has been a freelancer for two years or so and has a stable client base or a remote worker with an employer that will pay for the membership. This also means that the space will attract people that see a greater need for a coworking space because of the higher price and thus also has more invested in the space and the community.
Since the membership package is unlimited it is more likely that the member will use the space three to five days a week. Overall, this is great for the community and has a profound impact on the culture with a shared sense of camaraderie among everyone.
What the higher price flat-rate membership prevents is for people curious about coworking or can’t work full-time out of space to join the community. At Creative Density we have people on the one day per week plan traveling up to 45 minutes to join us, and one single flat-rate plan would make it impractical for them to join us. The higher price flat-fee also discourages small startups without funding or new freelancers to join while they develop revenue. The single higher price thus reduces diversity of geography and experience.
TIERED MONTHLY MEMBERSHIP
The tiered monthly membership plans is the most popular form of price structure in the coworking community and is the one I’ve used in Toronto and in Denver. The plans are usually set for 1, 3 and unlimited days per week and have a scaled pricing plan. For example, the plans at Creative Density are $75, $175, and $250 accordingly.
So what type of culture does this create?
Medium to High Community Involvement, High Diversity of Workers
The tiered pricing allows for a diverse set of members ranging from new startups that don’t have a lot of money or workers that just want to get out of the house once in a while to full-time experienced mobile pros and teams. The increase diversity allows for people from a variety of industries to join the community and from a larger geographic reach because people that have too long of a commute for a daily drive might be willing to do it once a week.
At Creative Density, most of our members on the one day a week plan are further than 30 minutes away but have clients in Denver or don’t have a closer coworking community to be part of. We highly value their perspective and allow for the other members to develop connections in other parts of the Denver metro area.
The downside is that the different tiered plans also means that all of the members might not cross paths that often and won’t get to know each other as well as the flat unlimited plan. From my experience most members grab the 3 day/week plan, which allows for plenty of overlap of members to create a community but allows the energy to change everyday with a slightly different group. I love the rotation of members but there are many times when I want to connect two people but soon realize they are rarely coworking at the same time.
Overall, the tiered package allows for a more diverse set of members compared to the flat monthly plan but might not develop as strong sense of community because everyone may not know each other as well. The community can be larger than a flat plan because the desks can be oversold more easily, which is a benefit. For tiered pricing coworking spaces I believe a dedicated community manager is required in order to nurture the community and to get everyone involved and introduced.
Update: To try and solve the ‘never cross paths’ problem I have started to have a free day each month so members can all come not count against their membership. So this has been working and the sense of community is growing because of it.
PUNCH CARD ONLY MEMBERSHIPS
The punch card memberships are the least popular forms of plans in the coworking world, but I’ve come across them enough that I thought it was important to include. The punch card plans sell membership as a set number of visits, often 10 for $200 to $300, for people to use them whenever they’d like. This offers the most flexibility for the members but has the potential for low community involvement.
So what type of culture does this potentially create?
Low Community Involvement, High Diversity of Workers
A punch card membership allows for members to buy a card and visit the space 10 times in the next 3 months, a single month, or in two weeks. This can cause difficulties when a new space opens because the extreme flexibility might cause many members not to build coworking into their routine and have minimal investment in the community. However, it’s not an impossible hump to get over by developing community events that ecourages people to come together.
The downside to the punch cards is that the members that do cowork regularly will use their punch card up quickly and may end up paying excessive amounts because of the need to constantly buy cards compared to other pricing models (of course this depends on your pricing but punch cards are often more expensive plans). The regular members may also develop their own community while other infrequent members that come sporadically could feel out of place and not returning as frequently or leaving all together.
The benefit to the punch card is that the flexibility does allow for an incredibly diverse community of members. Sales people that may be traveling a lot that need to cowork in a location in chunks or young freelancers just starting up might find the flexibility the most attractive part. The set of diverse workers brings in a breath of knowledge and connections that the flat tier plan simply does not offer.
Overall, the ability to have a diverse membership base and flexible memberships allows for the community to be broad but lacking ‘soul’ and cohesion without careful guidance from the community manager. I think the culture created would appeal to more traditional business individuals that are looking for a place to work versus a community to be involved in as actively as the other plans. This is not a bad thing and shows the potential reach for coworking spaces and alternative models.
If you are about to start a coworking space make sure to think about the people you want to attract, the community culture you want to develop, and the pricing structure. They are closing linked and should be talked about with potential members before starting the space. Please remember that pricing structure is only one element that creates a space, but it does have an influence and that there are many other pricing models that have been developed.
Other pricing models that have been developed but not discussed: Free, time donation, incubation with ownership exchange, long-term lease.
Diversity of Members
Flat Monthly Pricing
Punch Card Plans
*This post is just an educated hunch of pricing and its effect on people. I will be thinking about this further in the future as I gather more data.