Economics of CoWorking: Why There is Value in Each of the Pricing Model

07 Apr, 2024

Coworking spaces have emerged as a popular alternative to traditional office environments, offering flexibility, community, and shared resources to a diverse range of professionals. As these spaces continue to proliferate, understanding the economics behind them becomes increasingly important. In this article, we delve into the various pricing models and revenue streams that underpin the operation of coworking spaces.

How does the Pricing work in Coworking Spaces

Most frequently asked question by the customers is about pricing, (1) because there are still many first time users of coworking (2) Pricing is the major factor in deciding whether to opt for coworking or traditional offices. Let’s discuss some of the major pricing models:

1. Membership-Based Pricing: Many coworking spaces offer membership plans that grant access to the facilities and amenities for a monthly or yearly fee. These memberships often come with varying levels of access, such as hot desks, dedicated desks, or private offices.

2. Day Passes and Hourly Rates: Some coworking spaces allow individuals to pay for access on a daily or hourly basis, catering to those who only need occasional workspace.

3. Tiered Pricing: Coworking spaces may offer tiered pricing structures, with higher-priced tiers providing additional perks or access to premium amenities such as meeting rooms, event spaces, or specialized equipment.

4. Customized Packages: Larger coworking spaces may offer customized packages for corporate clients or teams, tailored to their specific needs and requirements.

Why does Pricing seem too varied

Apparently, customers feel that the pricing varies a lot between different coworking spaces and different plans e.g. flexi desk and private cabins. Over the years, industry has learned its cost weightage, controllables and even the opportunities. Some of the major factors which affect the pricing are:

Location / Area

Every Indian city has got areas divided into different classes based on economic strata, development, demographics, culture etc. Hence, every area has got different price bands for commercial real estate, as well as some amenities. At times, the lease or rental pricings differ as much as 30-40% between two areas of the same city e.g. in Ahmedabad. This is a major factor.

Quality of Buildings and Space

Quality comes at cost and there are no two opinions about it. Spacious buildings, good parking space, amenities, quality of construction, maintenance, age or the design of the building plays a huge role in fundamental cost of the space. On top of that, the quality of interiors, spaciousness or design matters when it comes to the desk or cabin pricing in a coworking space.

Amenities & Inclusions

Providing bare minimum amenities like electricity, internet, tea/coffee, printing is the essential objective of providing ready-to-use flexible coworking spaces in Ahmedabad. But at times, these inclusions can be unlimited-ness to it or there could be more amenities like conference rooms, meeting rooms, game rooms, gym, cafe, courier services and more. All of these will affect the overall pricing. 

Flexibility vs Long Term Commitments 

Every business would like their customer to stay with them for the longest period of time and as much as you do, businesses are ready to share the bit of cream with the customers too. तुम मुझे वादा दो, में तुम्हें ज़्यादा दूँगा। So at times, customers can gain on pricing with giving long term commitments.

And there are some reasons which are trade secrets, and not to be divulged further! :) 

The economics of coworking spaces are multifaceted, with diverse pricing models contributing to their sustainability and growth. By understanding these dynamics, coworking space operators can effectively manage their finances and continue to provide valuable services to their members. As the demand for flexible workspaces continues to rise, the economics of coworking spaces will remain a topic of interest and importance in the evolving landscape of modern work environments.