With the remote working population growing rapidly, the need for non-traditional workspace has also increased. Working outside of your home with like-minded professionals cultivates a motivating community. From independent creatives to corporates, anyone can benefit from a coworking space.
Coworking space business has been around for a very long time, but in recent years, it has been experiencing rapid industry growth. More than just a passing trend, coworking space business continues to expand and grow itself as a buzzing real estate segment. With shared office spaces high on technology and popularity, coworking is no longer the go-to option for new businesses and freelancers alone- It has now expanded its reach to big corporates as well. The coworking market has grown by leaps and bounds and is a lucrative business in 2020.
What are coworking spaces?
A coworking space essentially is a shared office space that features the flexibility and new opportunities to connect with professionals. Coworking has become popular hubs of social buzz and activities that can generate significant sources of revenue. As a business that incorporates the shared economy concept, it can grow as a profitable business model. Like Airbnb that offers a platform to rent homes and apartments, you can build a coworking space management software that allows people to book meeting spaces, private offices, hot desks, etc. Can coworking spaces be profitable? Absolutely yes! In this blog post, we will cover different aspects of profitability in the coworking space business. Let’s get started.
Popular revenue streams of coworking space business
The most profitable business model of generating revenue from a coworking space is the Airbnb model where you create a platform that makes it easy for people to list and book coworking spaces effortlessly. In that way, you don’t have to own any property and can monetize your services with less or no investment. On the other hand, if you own coworking spaces, you can build your business on the same model where you list your space and invite listings from other businesses as well.
Here are some of the ways to make money with your coworking space platform.
Variety of membership options
One way by which you can generate revenue with your coworking space is offering a variety of membership options to your customers. The money will come from dedicated desks and from those members who choose to rent out private office space or meeting rooms. You can price these desks at a much higher price than hot desks. Consider offering membership packages to your customers where they can choose to tailor packages that fit their business requirements. Membership packages can also include benefits and discounts with outdoor activities, transportation services, food spots, gyms, medical facilities, etc.
Amenities
The right amenities for members will be one of the major reasons why they choose your platform to book coworking spaces. If you want to own properties on your own, it can be a large investment initially, but the returns would be worth the cost. Some of the amenities that members will seek out include, 24/7 accessibility of the shared office space, fast and reliable Internet connection, modern furniture, common areas to work, soundproof conference rooms, reliable troubleshooting, and support.
Service fee and transaction fee
If you follow Airbnb’s business model to build our coworking space business, your primary source of revenue would be the service fee that comes from coworking space bookings. Depending on the size of the booking, renters are required to pay a 6-12% service fee. With every completed booking they also charge a 3% transaction fee to cover payment processing. You can also deduct a flat 10% commission from coworking space owners for each successful booking.
Different ways to increase your coworking space revenue
Although the market is thriving with opportunities, do you know that only 40% of coworking businesses are profitable? Some coworking space business dissolves after a short time and are no longer existent. Operational costs and other significant factors can greatly affect the business adversely. The key to getting things right is to choose the right business model. Build a coworking management software that is based on a peer-peer rental platform model which involves less investment and operational costs. In addition, focus on providing the best user experience to your customers as the value you provide is directly proportional to the revenue you generate. So how can you maximize the profitability of your coworking space business? Here are some of the effective ways to increase your revenue.
Your business model serves as a foundation
Even though money is not the only reason to enter into the coworking business. If your business is not turning out profitable, scaling up becomes very difficult. This is why it is important to choose the best revenue model for your business. If you want to run your business without any huge investment, it is recommended to choose an Airbnb-like peer-peer business model that is efficient and cost-effective.
Attract higher spending customers
While coworking spaces are geared toward independent creators, they might not be the highest paying customers you can get. While you offer services to freelancers, try attracting higher spending customers like big companies and corporates who would spend on monthly memberships. You can reach out to such companies to see if they would like to set up a satellite office in your coworking space.
Increase the value of your membership
This might sound obvious, but this is one of the important things to follow when running a coworking space business. Increase the value of your services so that revenue will follow. Incorporate more amenities and unique services to improve the value of your membership. With increasing competition in the market where almost every workspace offers a cheaper price, how can you truly stand out? Even if your services are of a slightly higher price side, if the value is more, customers would definitely be willing to pay.
Additional services
So you have spent countless hours building a community of professionals and they pay for access to the community. However, if you want to level up your revenue generation channels, consider offering in-house services to your members at a discount. By offering complimentary services to your customers, you add far more value to the members at your coworking space along while generating more revenue.
You might also try offering outside services in your shared office space. For example, try offering fitness to childcare to retain more customers. This will help to increase the number of transactions per member and compete in the market more aggressively.
Conclusion
As coworking spaces have been proven to improve productivity, the modern workforce absolutely loves them. Unquestionably, the coworking business is effortlessly lucrative by its very own concept and there are hundreds of ways you can make your coworking space business a profitable one. You just need to find revenue channels that support your business model.
Author bio:
Shirley C. Stewart
Business Consultant & Marketing Head at RentCubo
Helping brands to build their web products that people love using.
Interested in growth hacking & startups.
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