Last month we talked about how to set your rates, but something that is almost as important as the rates themselves is how you communicate them to your potential users. Personally, I have always liked to keep things simple and there is nothing I hate more than a company that is not able to simplify choices for their users and is passing on complexity to them.
This dislike of complexity is not gratuitous or trivial: keeping things simple makes it easier for people to make decisions. Are you going to tell me that the time a phone company made you choose between two dozen rates was the most exciting moment of your life? Probably not. You probably had the feeling that whatever you chose you were making the wrong choice, and that's not the best feeling to start a business relationship with.
The truth is that if we had this conversation in a pre-pandemic era this article would have been very short. I would have said: publish three, maximum four rates on your website and create an internal pricing document for all those special requests that come to you, so you always calculate them in the same way. Easy, short and clear. But now things are not so simple.
With the pandemic, overall volatility has skyrocketed and the demand for flexibility has increased exponentially, turning what was a marginal demand into an important piece of the pie. The reality is that over the last 18 months our industry was impacted significantly by social distancing in particular. As companies were returning to in-person business no one was willing to commit to even a medium-term engagement and, in many cases, it was all about saving as much as possible in the face of the uncertainty of what was to come or how long the global health crisis would last.
In this context, flexible workspaces, even those that for years had ignored such products because of the increased complexity of operations (compared to stable members who pay their membership on a regular and timely basis) had to create new rates offering more flexible services to try to contain losses and regain profitability as quickly as possible. An added advantage of these rates is that they allowed spaces to maintain their standard rates to the public, and to their current or future investors, and not make worse a situation where many people outside the flexible workspace industry were only focused on the short term.
Divide your rates into product categories for increased simplicity
The result is that today it is impossible to apply the advice I would have given you before the pandemic. Spaces cannot simply publish three to four rates right now, because there is a much more diverse demand from consumers. Additionally, restrictions and an uncertain landscape make supplying this demand that much more complex. Perhaps when the situation recovers it will be possible to get rid of the more flexible options in your offer, but until then it is essential to review how you communicate your rates.
To show the number of rates you currently have, it is best to divide them into categories and within each category create the rates you need. There are different approaches to this issue but I think the simplest way is to divide the rates by the type of relationship the user wants to have with the space, i.e. having a membership or pay-per-use.
Membership implies a recurring payment, and almost certainly a contract in exchange for a more affordable service than pay-per-use. In memberships, you have much more flexibility than a regular rent contract but less than in pay-per-use. This is why the cost of pay-per-use is higher, although many customers do not understand this cause-effect relationship.
Under the umbrella of ‘Memberships’, you could include rates for: dedicated desks, hot-desking, virtual memberships etc. If you have private offices you could incorporate them into this category as well, or instead make offices a subcategory if there is too much variety to simply have a single rate on display.
The pay-per-use category encompasses all services in which the client purchases a set amount of time in which to access a space. Such services are paid for in advance and are not automatically renewed once the allotted time has been consumed. Within this category, customers can find options sold on a weekly, daily or hourly basis. Users tend to be restricted to common areas of the space, with access to private offices and meeting rooms not being included in the rate.
The last category I would include is meeting room rentals or other spaces with different functions to the standard coworking offerings mentioned above (i.e. spaces such as a terrace, auditorium, the space gym etc). The logic is that by separating them, the client has a clear vision of what they are hiring, whereas if it were mixed with the others, it could lead to confusion.
The rule of three or four rates should still be applied here, but instead of applying it to the totality of your offering, it should be applied to each category mentioned above. If this limit is not respected your offering will become too complex.
Make sure you display your rates in a way that is easy to understand and navigate
But how should you display this on the web? In fact, you may have come to a similar point yourself but let's take a quick look at how you display it on your website.
First, you should have a page where you show all the rates sorted by category. Why? Some people won't know where to look because their logic may not be the same as yours. If you force potential customers to go from one page to another, the chance of them going to a competitor's site increases with every click you force them to make.
Show all the prices in a practical way. It’s not about making the most beautiful page in the world or including dozens of photos. Here you must simply communicate your prices in a clear way that makes it easy for customers to distinguish between your various rates. Your aim is that they understand what differentiates each rate and are able to do this with a single glance, not by having to scroll up and down to compare prices.
The general features of the space should not be included in the rates and repeated over and over again, instead, group them all together in one place. If one of the rates has a differential feature you will have highlighted it in its table so you don't have to worry about it.
Once you have created the general rates page, I would recommend that you create a page for each of your main rates (what you want to sell the most). For the rest, have at least one page for each category. Here you should include all the information about the rates so that potential customers have all they need to know if this is the service they are interested in. On these types of pages you should include the general characteristics of the space as, ideally, this should be the last page they visit. From here they would move on to a mail contact form that ideally will also contain the rest of the contact methods such as phone, chat or any other tool you have to communicate with your potential clients.
Review your rates regularly to ensure they are working well for you and your customers
Remember, when someone comes to you with a special request, just go to your spreadsheet with all the possible price combinations and provide a specially tailored price for that specific need. Keep in mind these bespoke rates should not be published on your website, they are your answers to specific enquiries and publishing them will only increase the complexity of your offering.
One of the most difficult lessons to learn for managers is that a price that’s good today can be bad tomorrow. My advice is to analyse your pricing at least once a quarter: which rates are the most popular? Which ones are barely sold? What are users complaining about? What are potential clients that don’t convert asking for? Also, try to think about which bespoke pricing models you have been offering to clients and how many of them led to successful conversions.
The point of these analysis meetings is not only to get rid of rates that no one buys, but to include the ones that are frequently requested but are not listed on your website, and to evaluate your pricing in general. Pricing is alive and dynamic, for instance, a discount that was good when you were at 40% capacity can be very bad if you are 90% full.
...and remember the golden rule: keep the number of rates you offer as low as possible. Less is more and more is less.
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