329. Pricing Changes and Other End of Year Communication for your Coworking Business
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329. Pricing Changes and Other End of Year Communication for your Coworking Business
00:00:00,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how tos in Coworking. I owned and operated Coworking spaces for eight years and then served as the executive director of the Global Workspace Association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you a thought provoking operator,"
00:00:26,"case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry. Welcome to the Everything Coworking podcast. This is your host, Jamie Russo. Thank you for joining me. We are cruising into the end of the year, getting close. So I was debating what to cover on this podcast because I don't feel like you need anything new to think about."
00:00:56,"You need to think about wrapping up, feeling good about closing out the year, planning for 2024, having a little downtime, a little time away from the office, just having a little bit of a breather and then re-energizing for January. And it's funny how our brains like really respond to changes in the calendar, right? Like it's kind of arbitrary, but January is a restart,"
00:01:23,"you know, really fresh. We get excited about doing new things, kind of restarting, refreshing, all those things. So I thought what I would do today is maybe give you a, an easy button for thinking about your end of year communication. And a biggest shout out to my team member Janelle, she's a Community Manager in Alberta, Canada, and she supports our Community Manager University program."
00:01:52,"And we have already done training this month and we have a q and a call coming up, but she was like, Hey, I am working on this for my own space and I thought we should create a toolkit for our members. So she released this yesterday and it is a complete toolkit with a list of end of year communication and holiday announcement. So I thought I would just run through these and make sure you've thought of all of them and covered all of them."
00:02:20,"If you're in our Community Manager program or if your Community Manager is, then he or she would have received the toolkit, which includes email, text, and the list of communications as well as Canva templates for the relevant holiday hours, et cetera. And if your Community Manager is not in our program, oh what a great holiday gift for them to enroll them in January."
00:02:47,"So you can get all that information at Everything Coworking dot com slash Community Manager. So we're going to start with the things that are pretty easy and then I'm going to ease you into one big topic that you might not have thought of yet or wanted to deal with, which is price increases for 2024. Okay, so here is our list of communication. If you haven't done so yet,"
00:03:15,"you wanna make sure your members are super clear on your holiday schedule. So if your space is closed, what are they? You know, what are they? What's different? It's, are you unstaffed? Do they need to make their own coffee? Do they need to bring coffee? Do they need to clean up, you know, better after themselves?"
00:03:33,"Or is the space completely closed and not open? Especially to non-members. Make sure you block out dates on any of the marketplaces like desk pass or LiquidSpace that might be open for on demand business. So you don't want meeting room folks booking when your team's not gonna be in, or you aren't gonna be in, if you have mail clients, you do have to process the mail pretty regularly."
00:03:56,"So somebody has to take responsibility for processing the mail for anything you know, super important that somebody might be waiting for over the holiday season. So you cannot just avoid the mail for an entire week if you happen to be closed for the week between Christmas and New Year's, which some spaces do. We had a great discussion about that on our operator mastermind call this month."
00:04:20,"Like what do you, you know, how do you handle the holidays? Some community managers are working, some are not, and the space is totally closed. Kind of depends on the volume. Some folks are like, oh my gosh, we do tons and tons of day passes during that time. So we wanna make sure we're staffed talking about how to handle day passes without,"
00:04:43,"without having staff there. So we have some MA members. I'm gonna give a big shout out to Abigail Shilling. She is at Medford Cowork and she is the queen of automation. Some of you probably seen her in the Facebook group answering lots of questions and she has a way to totally automate day pass usage so folks can get into the space even if her team is not there or for the full day."
00:05:06,"Okay? So you wanna make sure holiday schedule announcements. So there are no surprises. Humans don't like surprises very much, I mean, unless it's a gift, right? So they don't like change, they wanna know what to expect. They don't wanna come in and think, you know, somebody's made them coffee and there's no coffee for the day and they should have brought their own Starbucks any upcoming changes in January."
00:05:28,"So we'll talk about that in a minute. So making sure you briefly highlight anything new going on in the space, whether that's a new amenity or a policy update. Examples might be, I don't know, dog policies or visitor policies or day pass use policies, things like that end of year, thank you note. That's a really nice thing to do."
00:05:58,"I feel like that is one of those things that's easy to forget when we get into the hustle and bustle of kind of, you know, wrapping up the space and figuring out how to be away for a few days. So a message of gratitude to support your members for being members throughout the year. It's always nice to get a thank you, thank you for being part of the community."
00:06:15,"Maybe an extra thank you note for your folks that really contribute to the, you know, community connections, show up to events, show new members around, that kind of thing. Just a little personal thank you. Note a new year. Welcome message is awesome and you can schedule these out in your email system. You can schedule messages on Slack. That's been possible for a while,"
00:06:39,"but it's relatively new, but we love to do that. A welcome mess message to members into the new year. Talking about, again, anything that's new, don't assume your members are reading everything. And one important thing here, we always reiterate, make sure that these messages are going out across multiple channels. So some of your members are paying more attention to email,"
00:07:01,"some of them are paying more attention to your social channels and some of them are reading that the signs on the back of the bathroom stalls. We talked about that on our operator call to one of our members was like, you know what? I started hanging important messages on the signs on the back of the bathroom stalls. And believe it or not, they get read or slack."
00:07:20,"So put everything everywhere because you never know where folks are paying the most attention. And we think we're saying things over and over again, but our members do not feel that way. So just feel like if you're, if you don't feel like you're repeating yourself a a lot, then you're not saying things probably often enough. So we have Canva templates in the toolkit that we distributed and you just throw,"
00:07:45,"slap your logo on it and use it. Also, make sure you put up signage in the space around your holiday hours. Again, just kind of going back to make sure you put everything up in multiple locations. And then there's sample text in this toolkit for the new year message and the wrap up message. Okay, so let's talk about price changes."
00:08:10,"So this, I'm gonna sneak this in to what I thought was gonna be kind of a symbol podcast about communicating with your members at the end of the year. But price changes are complicated here is what I would generally say. Desk flex desk and dedicated desk prices tend to be pretty stagnant, which is a challenge with this product. If you are sort of priced correctly for your positioning in the marketplace,"
00:08:36,"those prices don't tend to budge very much. Your competition's probably not doing much with that pricing. They might be creating different packages which makes the pricing look different. Like maybe they have a five day, but you have a 10 day pass, et cetera. Or yeah, the dedicated desk usually is a pretty kind of standard offering. Although you might offer an executive desk or you might offer an option."
00:09:01,"We talked about this on a recent podcast. You might opt offer de sort of a dedicated area that has walls and some a door that's lockable but no top. So you might be premium priced in that sense, but what I really want you to watch out for is pricing on your offices because this is really where you can make an impact. And this is a major multiplier."
00:09:24,"So I work with a lot of folks who are opening new spaces and I work with folks who have existing spaces and they wanna optimize their revenue and their profit. And so I look at lots and lots of proformas and we have some great pro forma models that we use that really highlight the impact of your price per seat. So it's, you know, when you're modeling,"
00:09:47,"this is especially clear, like if you're modeling a new location, the price per seat has a giant multiplier on the profitability of the space. And if you don't increase that price over time, but your expenses increase and they do and they have been, everything is really, you know, expensive these days. Groceries have gone up, gas has gone up and it kind of hasn't really stopped."
00:10:13,"So most places in the country are experience, sorry, in the world are experiencing levels of inflation that are pretty challenging to deal with. So you are probably getting lots of notices from your vendors about price increases, both from a personal perspective and a professional ex perspective. And so you wanna be thinking about how you maintain your own margin. And if you're not super on top of your numbers,"
00:10:38,"if you're an existing operator, you want to get into those numbers at the end of this year and take a look at your margin and you want, it's really important for you to maintain your margin. Is your rent going up next year? Probably. Because usually if you are not a building owner and you pay rent, then you have a built in two to 5% increase in your rent."
00:11:00,"So if you're not passing that along, then that's eating into your margin. So if your margin is 25% but your rent is going up 5%, then that has a big impact in what your margin is going to be. So you can't maintain margin if your expenses are going up and your revenue and your pricing is not going up. And maybe you can make up with it through volume."
00:11:23,"So you might say, okay, well I'll just sell more meeting room hours next year or sell more event spaces. That might be possible. You have to kind of know your own situation or you might have to increase your prices. So if you're not at full capacity, you might feel like that's challenging. It is challenging. There is, you know,"
00:11:40,"price elasticity in this market. It tends to be that if you have an office that's not moving, if you drop the price enough, someone will take it eventually. But you really wanna be careful and try to maintain margin as much as you can get creative with that space. We've talked about that on a recent podcast, how you optimize revenue for spaces that are tricky to move or aren't moving as much as you've hoped."
00:12:05,"But pricing is different and especially if you're in a market where you have pretty high occupancy, meaning 85% or more, then you want to take a look at increasing your pricing. And one big thing that I recommend, and I probably mentioned this once a year and so it doesn't hurt to mention it again on this podcast, is make sure that you have an automatic increase on your offices."
00:12:29,"So those should go up by 5% every year. It should just be in your agreement. You don't have to big have a big discussion about it with your members. You are just doing business and you are just maintaining your margin and your members should be doing the same thing. Think if you're having a hard time with this sort of philosophically think about what if you were coaching your member."
00:12:49,"You know what if your member says, well I can't afford my office anymore because my margin decreased so much 'cause my expenses have gone up. You'd say, well charge your customers more so that you can stay here and afford to be a member, right? You would coach them to make sure they're paying attention to their margin and pricing accordingly. So they would expect you to do the same."
00:13:11,"You are also in business and if you put it in your agreement, and this is a good time of year to review those things, then you don't have to have a big talk with every one of your members about a price increase. It's just automatic. So if they renewal just rolls over and if you're using a system like an office r and d,"
00:13:28,"then it can just be an automatic renewal and the price goes up, done and done takes the emotion out of it. That is one important thing to have in place because then you're, you're kind of good if you're going up by 5% every year on your offices when they renew. Now if you have folks who are on month to month agreements, then you probably have to make a manual price change and you have to just send out a reminder and say,"
00:13:51,"Hey, this is what your agreement says, you know, every 12 months your, you know, our rates go up on our offices. This is super important. And I had, you know, made this mistake myself. We were operating in a market where real estate prices were going up and the market rates were going up and we were kind of not paying attention."
00:14:10,"We had office folks who'd been in there for years. We had, when we closed after seven years, which was the term of our lease, we had folks who'd been there the whole time. And taking price increases when you've never done so can be really challenging. And when you're way under the market, when you realize, oh, I need to take a significant price in increase to line up with what other spaces are charging,"
00:14:34,"that's really hard to do on an existing member. So you wanna make sure you just do it gradually and consistently. And then again, you don't have to have the big talk. It doesn't have to be a big notification, it's just happening. So make sure you have a system in place in your agreement and in the management system that you're using to bill folks."
00:14:54,"So just think about that now, if you don't have that in place, go and put that in place and January's a great time of year. You might have to give a little bit of notice if you've never done it before then 30 days, 60 days, just, you know, let people know this is happening. And if you need somebody to hold your hand while you hit send,"
00:15:11,"then call a friend and do that because I totally get it that sometimes these things are hard to do, but you have to protect your margin and your business. So make sure you're taking price increases and doing market surveys. We do market surveys all the time when we help folks launch a new locations. So know, you know, are you priced at the top of the market?"
00:15:32,"Are you priced in the middle? You know, what are other folks selling offices for? Make sure you kind of know what's happening in your marketplace and when you model again. So I'll just, you know, give a quick example. Think about if you are charging, you know, $500 a seat, but you should be charging $600 a seat. So that's an extra $100 per seat per month."
00:15:56,"So if your pricing is off by, that's just kind of a significant amount, but just for easy math, if you have a three person office and everybody's paying 500, but they should be paying 600, that's a difference of $300 a month. And if that office is there for 12 months, that's $3,600 a year. If you have 10 of those offices,"
00:16:19,"that's $36,000 a year that you're missing out on because you are mispriced. It adds up really quickly if you think of it on a per seat basis and you multiply across the number of seats that you have in your space, especially those of you operating larger spaces, that multiplier effect is incredible because it's a monthly recurring revenue piece. So it multiplies and adds up to a lot over the course of a year."
00:16:47,"So every month that you spend that you're not priced appropriately, if you should be priced higher, has a very significant impact on your bottom line. Even if you have a smaller space, those dollar amounts are what cover your costs, right? So you wanna make sure that you are priced appropriately and you're not underpriced. All those pricing I get has a lot of baggage that comes with it."
00:17:09,"But you're running a business, you gotta cover your cause, you gotta be able to support your members. You wanna be able to, you know, have member events and have budgets for things that make it pleasant to be in the space. You wanna have budgets for updating your space. You know, do you need a refresh on your space? That's another thing to think about at the beginning of the year."
00:17:28,"I'm doing that, you know, in my house time to like clean, you know, early spring cleaning and updates and you know what needs to be freshened up because your members come in every day and static spaces are, you know, not nearly as compelling as things that get changed and refreshed, whether that's, you know, new pillows or a new rug or new accessories in the kitchen,"
00:17:50,"things like that. That's a little bit of a tangent. We'll talk about that on another podcast. Okay, so pricing is a thing I really wanted to cover and have you think about that again, if your, let's assume your rent is going up every year, and if you're not keeping pace with that, if you were to model out your pro forma over 10 years,"
00:18:10,"then what's gonna happen is your expenses are gonna keep going up. Your revenue may not increase or go down and your margin is going to decrease significantly. When I model, I always model revenue increases over a year, whether that's coming from selling more product or events or mail memberships, and it assumes price increases. And if you don't model that in, it's pretty incredible what it looks like in a pro forma over the course of 10 years."
00:18:36,"If you don't model in the revenue increases, but you do model in the rent increases and other expense increases, your coffee will get more expensive, your internet might not go up, but other services like you know, handyman services, any lots of other things that you're paying for, those things are gonna increase the cost of, you know, food and beverage for your members."
00:19:00,"That's all you know, continues to be higher than ever before. So you wanna make sure you're managing that. And if you need help with that, join our operator mastermind. We're happy to help you talk through that. We may also start to offer some individual coaching to help with things like this. So we're thinking about what we're doing in the new year."
00:19:20,"Okay, so I'm gonna wrap this up because my goal is not to overwhelm you with things to do at the end of the year and just make sure you're thinking about all the right things before you take a little break. So make sure you're communicating early and often with your members about closures, anything that's changing policy, changing changes, pricing changes if you need to communicate,"
00:19:45,"if that's not happening kind of on an automated basis, make sure you're sending member thank you notes, new messages. And if you don't wanna send a full email, you know, just make sure you're doing it on your socials, in your Slack channels, signage in the space. So again, our Community Manager program got this toolkit, easy button. We're trying to make it faster for folks to do the things that they want to do should be doing in their roles."
00:20:13,"So sample text, sample Canva templates, et cetera. No need to reinvent the wheel and frankly, these kinds of things pay for the membership. So if you're saving your Community Manager time done paid for the membership, and they also get monthly training and monthly q and a calls and a rocking slap slack group. Okay, happy holidays. We have one more week,"
00:20:35,"I think before, well, a couple weeks before the official end of the year. So we'll see you same time, same place next year. Thank you for listening to today's episode. If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review. It makes a huge difference in helping others like you find us."
00:20:57,"If you'd like to learn more about our education and coaching programs, head over to Everything Coworking dot com. We'll see you next week."
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