The dynamic impact of membership plans and pricing.

The dynamic impact of membership plans and pricing.

At Nexudus, we’re passionate about every aspect of how a flexible workspace is run. This includes how pricing is managed and adjusted in these spaces. It’s a subject that often does not have enough light shed on it, but is crucial to member experience and retention.

This piece will focus on the fascinating and often overlooked nuances of membership plans, with real-life examples taken from flexible workspace members, combined with insights from coworking authors. Let’s jump right in.


Pricing, deconstructed by an expert.

“I’ve never been a fan of changing prices just for the sake of it, or making arbitrary price hikes or wild promotions without a good reason - but I believe that a good pricing policy is essential for the proper functioning of a space and can obviously improve your turnover.”

• Marc Navarro, Coworking Expert, Consultant, Speaker and Writer.

In November 2022, a coworking space that Marc advises saw its membership turnover increase by 17.31%. The operators of the space had rolled out a new structure to the rates it was applying until that moment. During this process, there was neither a single downgrade nor a member leaving the space.

When updating one’s pricing, the first consideration must be the effect it will have on current members. Similarly, owners and operators of workspaces must consider how an increase in rates for new memberships will affect their conversion rates.

Let us explain, using the COVID-19 pandemic as a notable educational period for pricing. Spaces introduced massive discounts and maximum flexibility during the time, which helped them recover (and in some cases, even surpass) earnings they had seen as far back as 2013. The creation of a multitude of pay-as-you-go services helped minimise losses, with discounts of up to 85% offered, but always at discretion.

Once the crisis passed, these measures were withdrawn and flexibility was reduced, but mainly in those products or services that collided with traditional products and services that offer a higher ROI. The result was unhappier members and a higher churn rate. Marc mentions how this reminds him of a phrase he loved repeating during the early stages of the lockdown: “We are better than ever - maybe not in the short term, but in the medium term."

Why is this important? Because the pandemic actually accelerated the cycles of service creation and pricing. It sharpened the imagination of operators to offer new modalities and services that transformed current spaces into the perfect solution for many more users (who may have been reluctant to use these types of spaces before).


Can flexible pricing make a return?

Why did many spaces stop offering pay-per-use options years ago? Because flexibility has a very low return on investment: you have to do a lot of work for an average ticket that’s much lower than what a membership offers. It was once much simpler to make a greater sales effort and obtain a much higher ticket (with the assurance of recurring income), so there was no need to make a sales effort every time, and the user didn’t have to decide whether the expense was worth it.

Today, technology can automate much of the sales process, and the management of selling pay-for-use products. This saves valuable time and streamlines operations. It also has the added benefit of allowing operators to spend more time crafting a better experience for their members.

Alongside, making your space management software (with its corresponding payment gateway) work in conjunction, via APIs, with your access control system and even an ID validation system, allows the person to book, buy, pay and upload an ID into the system. This has made flexible pricing a viable option again, and, as the pandemic proved, it can be a win-win.


The good and the bad of dynamic pricing strategies.

The good.

Marc uses another example to illustrate how dynamic pricing can be applied to ‘traditional’ coworking spaces with varying results.

Marc came across one workspace with a layout that offered desks of the same dimensions to freelancers and remote workers, except for one desk that was wider, allowing two people to work at it.

In the first phase, when the performance of the space was not taken care of, this desk was marketed like any other: its user was luckier for having arrived before the rest and choosing a wider work area.

In a second phase, when vacancy began to decrease, the desk was allocated to two hot desk members by simply purchasing an additional chair. This change gave the space a 32.5% increase in turnover.

The third phase required further changes to be implemented, such as being able to use the desk in two positions, allowing it to be utilised by both hot desk members and day pass users.

Since the attendance of hot desk members was very high, the operators modified this particular membership by decreasing the price of the hot desk rate but limiting the days of access to 10 a month - in order to minimise desk occupancy and continue to offer a day pass service.

These modifications were calculated to allow the space to increase its turnover by between 86% and 104.9%. For this calculation, Marc took the average monthly turnover in day passes from the previous year and adjusted it to the remaining availability of the desks (assuming that the hot desk members would use all their available day passes) with values between 50% and 90% of this availability.


This case shows how, with practically no investment, it is possible to get the most out of the same resource (in this case a desk that can be marketed both as a membership of a different kind and on a pay-per-use basis).

Successful spaces constantly update themselves: both on a physical level, via improved facilities, and by adapting to the new needs of an increasingly demanding market.

When you listen to your customer's needs, you can provide tailor-made solutions by calculating a price for what they request. However, before rushing to publish these new rates on your website, you must analyse all the rates as a whole. The challenge is to differentiate between specific user needs and those rates that are worth making available to all members.

The bad.

In another space Marc recently visited, the introduction of a hot desk rate with too many features cannibalised the dedicated desk rate of that space. The result? Half of the members downgraded to the hot desk rate, which was 43% cheaper than the dedicated desk rate.

Owners and operators have to do their homework before adding a rate, understand their current members and know what features they can’t afford to provide at a new, lower rate - which might result in a revenue drop.

In this case, the key differences that distinguished these two rates with such different prices are:

•A dedicated desk vs hot desk format (there is a slight variation in the furniture).

•Meeting room usage being halved (although offered at x2.5 times the market standard when in hot desk mode).

•Lack of a locker in the hot desk format (although it can be hired at a very low cost).

•Dedicated desk membership members have 24/7 access while the hot desk rate schedule is from 8 am to 8 pm, Monday to Friday. There’s no limitation on the number of days per month of use.

This last of these changes had the biggest ramifications on revenue. It allowed everyone except those working on weekends or with extreme schedules (such as with a team in a different time zone) the option of saving 43% of their member costs. It is important to know your users and understand what made them choose one rate instead of another.

Setting the pricing of a space can be exciting and daunting. Marc always tells his clients: “you interact with your customers through your rates. Experiment, observe the market, listen to your customers and leads and make the best decisions for your business”.


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