Free e-Guide for CloudVO Partners! How To Build a Healthy Virtual Office Business: A Guide for Workspace Operators

While at the recent Global Workspace Association conference in Washington, D.C., Keith Warner, with Pacific Workplaces (Pac), mentioned in one of the interactive sessions that his Cupertino, California location supported 400 Virtual Office Plans that collectively generated enough revenue to pay the (high) rent for his entire 18,000 square foot flexible office location. This comment attracted a lot of attention and questions from new coworking operators who asked how they could also build a healthy virtual office business. This article is our attempt to answer those questions.

Tell us a bit about yourself before downloading a copy of this e-Guide to keep as a resource.

Step 1: Set up a Mail Service Business

A mail plan is the first step for a client to set up a business identity at your location. This means they can use your coworking location address to receive mail, use it on their web site and other marketing collateral.

The motivations can be multifold. Many people working from home do not want to use a home address as their main business address. Some businesses located remotely may want to show geographical coverage of multiple locations. For example, this may be in response to the requirements of cities and counties to work with contractors that have a local presence.

In this case, the minimum you need to do is to receive their mail and store it in a location they can retrieve. Some operators store mail in a file cabinet and rely on the front desk person for the mail client to retrieve their mail during business hours. Others may use mailboxes, which may or may not be available to clients outside of business hours.

Virtual Office Mail Plan | CloudVO partner Pacific Workplaces San Mateo

What’s good about a new VO mail business is that it happens incrementally – say a couple to a handful of new clients every month, and can be supported without additional resources than those necessary to run the coworking operation.  In fact, with the proper organization, a location can support over 100 VO mail clients without additional staff than is necessary to support most standard coworking operations.

You can also list your mail plan on a web site like CloudVO.com and leverage its marketing capabilities without investing a penny in any digital VO advertising. This is a great way to get started. There is no cost to list, only a 25% discount provided on the plans purchased by CloudVO.

Mail service is your first and easiest step to be in the VO business.

Step 2: Provide Phone Answering Services

While a mail plan is the first necessary step for your clients to establish a local business identity, adding a local phone number and live phone answering to that plan helps them project a much stronger image, particularly when it is a remote company that needs to show it operates in your local market.

Does this mean you need to plan for additional staffing resources answering the phone from the front desk? No. It is not best practice to answer your clients’ incoming phone calls from the front desk. In fact, doing so can lead to poor customer service. For example, if a member comes to you with a question while you are on the phone in an involved conversation, who do you put on hold, the person on the phone or your member in the lobby? Either way, the quality of service provided to one will make the other suffer, as one of the two will have to wait. The best practice is for the front desk person to focus on member management, operations, and perhaps providing tours, not answering calls.

If you don’t have the scale to build your own answering center (and most operators don’t), there is an easier, more cost-effective solution to that quandary: outsource your phone answering to the CloudAnswering services of CloudVO.  It’s easy, does not involve upfront costs, and provides very good margins.

In this case, your VO member is provided a local phone number of any area code they choose, CloudVO does the installation of the number, sets up their voicemail and call patching, configures your member’s email or text notification of messages and even automatic voice-to-text transcription, if they choose.  All of this is done off-site and you are just billed per user (much less than hiring, training and managing your own answering staff).

Step 3: Add Meeting Room Hours

While the opportunity cost of idle meeting rooms can be expensive, the unavailability or difficulty of booking can be equally detrimental.  Members must have the ability to book a meeting room easily online, and preferably have a variety of choices to meet their needs.

The ease and availability of booking will impact (positively or negatively) your ability to sell and retain virtual office members even more than private office and coworking members, but those other member types are also a big consideration in the type and number of meeting rooms one provides.  Any member that can’t get the room they want, when they want it, just a couple of times in a row, will start to look for alternative space (and probably not even mention to you why they are leaving).

A minimum of 2 meeting rooms and 1 day office is recommended, but keep in mind, any vacant private office should be made available as a temporary day office.

It’s important to constantly monitor the usage to determine whether you need to add additional meeting rooms.  Pacific Workplaces has found that once a room is accommodating 100 hours or more of reservations, it starts to feel “full.” In other words, at 100+ hours per month per room, the members will start to have trouble easily booking times they need and you’ll start to get complaints.  If you have 3 meeting rooms and you are consistently booking 350 hours per month, it’s time to start looking for a full-time office you can pull out of inventory and convert to your next meeting room.

Eliminating a full-time office and the consistent revenue associated with it may seem unwise at first, but Pac has found that each meeting room typically provides 125-300% of the revenue that same room would generate if it were left as a private office.  In fact, each added meeting room can easily support an additional 20-25 VO members (at $200-350 each).

While large boardrooms are nice to accommodate meetings of 14-18 people, you’ll probably find over time there aren’t very many meetings of that size, so that huge beautiful room is mostly wasted.  Pac has found most demand to be in the 4-6 seat range, and 30-40% to just be for 1-on-1 meetings. 

But keep in mind, if your plans include a number of HOURS in any room, your members will gladly book the 18 seat boardroom for their 1-on-1 meetings – this is why some shared workspaces have switched to a CREDIT system.  Workspaces using credits, like Pac, include a number of meeting room credits in their plans, and then assign a number of credits per hour to each room. Day offices are always 1 credit per hour, but members are “charged” 2 or 3, sometimes up to 5 credits per hour for the larger rooms.  This new system assigns a proper value to each room and provides incentive for members to book appropriately sized rooms, thus leaving the larger rooms for those that actually need them (and are willing to spend the necessary credits).

Step 4: Market your plans locally and beyond

Include virtual office solutions in all your marketing efforts.  It’s even more important than marketing private offices – you’re going to fill up the offices, but you’ll never run out of VO capacity!

Of utmost importance is the optimization of your website for virtual office and VO related terms.  Some examples include developing even small paragraphs around these terms:

Virtual office, virtual office space, what is a virtual office, what are virtual office services, how virtual office works, how to setup virtual office, virtual office address, business address, virtual mailbox, digital mailbox. For more impact, you can also add the city to these keywords, such as virtual office in [city], [city] virtual office space, [city] business address, etc.

The ability to sell virtual offices on your website is a must.  Have a reputable e-commerce web developer set you up or talk to Yardi KUBE, a shared workspace solution provider and member of the Global Workspace Association. They have a proven online sales module that will work with any website.

Virtual Office Plans and Pricing | CloudVO Partner Pacific Workplaces

Systematically educate all prospects on your virtual office offerings.  Whether they email you asking questions, or stop in for a tour, make sure everyone you communicate with knows what a virtual office plan is and why they might need one (down the road if not today). 

Sign up with a reputable channel partner such as CloudVO.  CloudVO does the national marketing you probably won’t do, and has relationships with enterprise companies looking for touchdown space in multiple cities.

Step 5: Manage your VO business effectively

At first the incremental resources necessary to support a VO business are very small. Having less than 50 mail plans to support does not necessitate more staff. Remember that most users don’t get mail everyday. Some VO clients almost never get mail, but will use only your local address and perhaps a local phone number on their website.

Only when you get over 75 VO clients will you need to give serious thoughts about optimizing your VO operation. By then, you should be generating more than $10k of incremental revenue per month.

Pacific Workplaces averages around 150 VO plans per location, at an average of $140 per month of revenue per plan. That’s more than $20k of total VO revenue per month. The Cupertino location supports over 400 VO plans, enough to pay for the (very expensive) rent of this 18,000 square foot coworking space!

Pacific Workplaces has made the effort to capture the staff time associated with supporting VO clients for a full month, such as answering emails from VO prospects or clients, walking them through options, on-boarding new members, helping them set up their phone system if the plan included phone services, handling their mail after they move in, helping them book a room occasionally, preparing and sending their invoice, chatting with them on any topic when they come by, as well as allocating time spent on general center maintenance tasks to all members (e.g. kitchen duties), etc. That comprehensive effort captured the time spent by the staff, literally second by second, for a full month and re-allocated it to each category of clients and individual plans.

We then converted that data into dollars, considering the fully loaded payroll cost for the time spent supporting VO clients, factoring the opportunity cost of meeting room usage when the VO plan included free hours of meeting rooms, the cost of answering calls (outsourced to CloudVO), the opportunity cost of a mail room that could be converted into office space, and more.

The results are pretty amazing: on average, it costs less than $7 per plan of staff time to support a Mail Plan! The VO business is Pacific Workplaces most profitable line of business!

These numbers may seem low, but they are real. Our perspective is often biased by the occasional heavy user, or that guy that likes to hang around and chat with the staff while picking up his mail. But you have to remind yourself that this guy is an out layer, and the burden he represents is more than offset by the many silent VO clients you never see, you rarely hear from, and for whom you receive mail very rarely.

How To Build a Healthy Virtual Office Business Staff Resources Data | CloudVO
How To Build a Healthy Virtual Office Business Profitability Data | CloudVO

These slides were part of the Deep Dive on Financial Metrics webinar. For more details, go here.


About CloudVO

CloudVO is the umbrella brand of Cloud Officing Corp., headquartered in San Francisco, California. CloudVO’s mission is to provide comprehensive virtual office, coworking and meeting room solutions to professionals under a Workplace-as-a-Service™ model. CloudVO operates the CloudTouchdown network that grants preferential access to day offices and meeting rooms at 750 locations worldwide for mobile workers and distributed workforces under a subscription model or on a pay-per-use basis.



Meeting Room White Paper 2019

Meeting Room White Paper 2019 Hourly Prices Per Room Size All Operators in United States

Tell us a bit about yourself before downloading the white paper.

We are excited to announce our 2019 Meeting Room White Paper. This survey analyzes Day Office and Meeting Room pricing, utilization rates, and revenue, and serves as an update to the comprehensive meeting room price review first published by CloudVO in 2015. It is a high-level summary of considerable data and analyses collected and performed in Q1 2019.

We collected hourly prices from 20,710 day offices and meeting rooms in 3,378 locations across the United States, available for booking online directly from the providers’ own websites or via resellers like CloudVO, Liquidspace and Davinci. We mined the data to draw comparisons across regions and providers, between resellers and original providers, and of course a comparison between CloudVO partners and Regus in each region.

A more comprehensive analysis is made available for free to CloudVO partners to enable them to drill down on their region of operation and use this collection of data to set up more effective meeting room strategies.

In this public version we are sharing data aggregated on a US-wide basis that highlight different strategies across providers and should raise many good questions in the operator’s mind. We also share meeting room utilization metrics from our sister company Pacific Workplaces.

The meeting room business is a substantial source of revenue for shared office space operators, with expected revenue significantly higher than alternative uses, such as full-time offices or coworking space. This analysis gives a sense of the potential for revenue per type of room and per square foot. It also shares statistics on observed retail hourly prices for various room sizes.

The survey does not include data from hotels or conference centers that have a different value proposition and typically charge higher rates.

We believe this survey paints an accurate picture of the meeting room business provided by the Shared Office Space industry in the U.S.

Get access to invaluable resources like this when you list your workspace location for free and partner with us. Join our network of close to 700 locations around the world. Visit us at www.CloudVO.com  


About CloudVO

CloudVO   is the umbrella brand of Cloud Officing Corp, headquartered in San Francisco, California. CloudVO’s mission is to provide comprehensive virtual office and meeting room solutions to professionals under a Workplace-as-a-Service ™ model. CloudVO operates the CloudTouchdown network that grants preferential access to day offices and meeting rooms at close to 700 locations worldwide for mobile workers and distributed workforces under a subscription model or on a pay-per-use basis.

CloudVO Partner Compares Prices and Customer Reviews with Regus

It was not even close!

Our Northern California Partner (and sister company) Pacific Workplaces recently conducted a comprehensive comparison of Regus prices vs Pacific Workplaces  based on actual published prices, for a number of virtual office and meeting room bundle of services including:

  • Mail collection and forwarding
  • Digital Mail
  • Live phone answering
  • Bundled access to Day Offices (2 days and 5 days).

Pacific Workplaces also reported on the Regus customer reviews on Google and Yelp and compared them with its own, for each of the locations.

The methodology was the same in all 15 locations that were the object of this benchmarking effort, where nearby locations in buildings and shared office spaces of similar standings were targeted across both companies. The report published by Pacific Workplaces in all transparency includes all locations branded Pacific Workplaces, with no local spinning and no “pick & choose” element that could induce a competitive bias.

The analysis reports the price difference on a location-by-location basis which we can summarize as follows:

  • Regus Basic Mail Plans are 50%+ more expensive than at our CloudVO Northern California partner locations, on average.
  • Regus Virtual Office Packages, which add to the basic mail service a local phone, live answering services, and access to CloudVO Partner Pacific Workplaces versus Regus Price Analysis Blog Post2 days of day office each month, are on average 20%+ more expensive and considerably less flexible.
  • Regus Virtual Office Plus packages that provides 5-day access to day offices each month, on top of mail services, local phone number, and phone answering services, are on average close to 30% more expensive than at our Northern California partner locations, and infinitely less flexible.
  • Hourly rates on meeting rooms are over 70% more expensive. Really?
  • Customer Reviews on Yelp and Google also show big differences in favor of our Northern California partnering locations, often by a significant margin, based on several hundreds of reviews.

See details of this comparative analysis report on our partner Pacific Workplaces web site: Regus Price & Customer Review Comparison. There is also a paragraph that addresses the lack of price competitiveness of Regus in full time offices with reasons as to why.

Thank you Pacific Workplaces for sharing such a comprehensive bench-marking analysis.

Note that we have a few locations in Northern California with even more attractive prices for some of these virtual office services. Check them all on the San Francisco or California pages.

This result is consistent with our own research last year, when we conducted a comprehensive price benchmarking effort focused on hundreds of Regus and CloudVO meeting rooms in the U.S. that pointed to CloudVO meeting rooms being often 50% less expensive than Regus on an
apple-to-apple basis. See the report here.


About CloudVO

CloudVO is the umbrella brand of Cloud Officing Corp, headquartered in San Francisco, California. CloudVO’s mission is to provide comprehensive virtual office, coworking and meeting room solutions to professionals under a Workplace-as-a-Service™ model. CloudVO operates the CloudMeetingRooms.com and CloudVirtualOffice.com e-commerce sites and grants preferential access to day offices, coworking space, and professional meeting rooms over 650 locations worldwide for distributed workers on a subscription or a pay-per-use basis.

Webinar: Phone Answering Best Practices & Outsourcing

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Phone Answering Best Practices & Outsourcing

Complete this form to Download the PDF Slides, View the Q & A, and view the Webinar Recording

 

In this free webinar, Laurent, Kassandra, and Kim share Best Practices for Phone Answering Services, as well as the economics of outsourcing with CloudVO™. The main areas of focus include:

  • Best practices for in-center phone answering
  • How to upsell phone answering services – What revenue?
  • Economics of phone answering – What is the cost? How much margin?
  • Online sales and Provisioning
  • Data from Pacific Workplaces & CloudVO™
Thank you!

Freelancing in America & GWA’s Role

This post reflects the results from a survey conducted by Edelman Berland of over 7,000 U.S. workforce members on Freelancing in America, whose Result Desk was published on October 1, 2015, and the need to corral the voice of coworking providers via the Global Workspace Association.

Here are some of the salient data from the survey, with meaningful implications for the coworking industry.

breakdownoffreelancers
Source: Edelman Berland Freelancing in America Survey, Oct 1, 2015

  • 34% of workforce are freelancers, or 53.7 million people
  • This represents a growth of 1.3% from prior year, which is remarkable – in the past, the number of freelancers would decrease in upswings of an economic cycle as people returned to “stable” jobs in large companies. The fact that this has not been the case in this particular cycle points to individual lifestyle choices, which corroborates the results of the poll.
  • 60% of freelancers indeed said they started more by choice versus necessity, up 7% from the previous year. Youngest and oldest generations are most likely to start freelancing by choice, driven by flexibility and freedom.
  • The majority of freelancers who left traditional employment earn more now, with 3 in 4 earning more within 1 year.
  • Technology is making it easer for freelancers to find work online. 51% had obtained a project online.
  • 50% said they would not quite freelancing for any traditional job.
  • 3 in 4 non-freelancers said they are open to doing additional work outside their primary jobs.

Worth noting is that all of the increase came from the “Diversified Workers”, which grew 8% from 2014 to 2015. Diversified workers are made of people from multiple sources of income, including part time jobs at a traditional work and freelancing. They are a growing segment of users we see on CloudVirtualOffices and CloudMeetingRooms.

Not all of the 53.7 million freelancers are candidate-users of coworking space. For example, construction contractors and Uber drivers are not a target marketing for coworking providers. But what this survey means is that the trend towards freelancing is meaningful, durable, and will require some changes in the mindset of political leaders and legislation. The coworking lobby (in the good sense of the word, i.e. be the voice of coworker) needs to become a significant force to evangelize what coworking is, and push for changes in legislations that currently do not factor the benefits of the sharing economy and people’s desire to achieve flexibility in their work. These efforts can be everyone’s responsibility, but also need to be corralled by a trade association like the Global Workspace Association. I know they are working on it. Good luck, Jamie Russo!

When to Charge (or not) for Meeting Rooms?

Update: 2019 Meeting Room White Paper is now available.

One of the key elements of the value proposition of shared office spaces is to provide collaborative space and meeting rooms to their members. This blog post will explore what we believe are the best practices for workspace providers to monetize access to meeting space.

Do Not Charge for Informal Collaborative Space on a Pay-Per-Use Basis

One of the tenets of coworking is to build a closely knit community of professionals that often interact in unplanned ways to maximize serendipity. Although convenience and privacy are more central to the value proposition of serviced offices, community curation is critical to their success as well. Note that in this article, we are using the terms “Serviced Office” and “Business Center” interchangeably.

Semi-private informal meeting spaces in the coworking area and/or by the break room of a business center are very desirable amenities to encourage instantaneous meetings without encroaching on the privacy of other members doing concentrated work.

Trying to monetize this kind of informal space (e.g. comfy couch, chairs, stools, or even meeting tables in open space) on a pay-per-use basis would be an undesirable barrier to accomplishing community bonding goals, not to mention in some cases, life changing serendipitous moments. Access to that kind of space should be part of the privilege of membership. If the space is heavily used, then day pass and virtual office users may be barred access from it, or else be charged a premium for it, as they are only peripherally involved with the community.

However, in general we like to discourage access restrictions to this kind of space, even to visitors, as today’s virtual office or meeting room user may become tomorrow’s full time member. In our experience, few virtual office or “walk in” visitors turn out to be heavy users of that kind of informal collaborative space anyway.

Charge Everyone for Access to Formal Private Meeting Rooms

Some operators include several hours of access to private meeting rooms as part of the privilege of membership. This is especially true for private office users whose monthly rent or membership fees are considerably higher than the virtual office or coworking passes.

Five to ten years ago, it was a common practice for serviced office space operators to think that the primary function of the meeting room was to serve full time office clients. Many provided a generous package of free access to the meeting rooms, 16 hours per month and sometimes more.

That practice is disappearing, and most operators are monetizing their day offices and meeting rooms aggressively. They learned that the contribution of a healthy meeting room business can be very significant to their business model both financially and also in terms of filling the pipeline of future full time members.

CloudVO Meeting Room Utilization by Type of Users
CloudVO Meeting Room Utilization by Type of Users

We believe that the best practice for operators is to offer no more than 4 hours of free access to formal meeting rooms as part of a full time user package. Many provide no free hours at all but offer meaningful discounts to full time members as a privilege of membership (e.g. 10-25%). Regus provides full time clients with free access to meeting rooms that is a function of how much money the clients spend every month. This typically accounts for just 1 or 2 free hours of a medium size meeting room. Pacific Workplaces (based in Northern California, with 15 locations) offer 4 hours of free access to their standard full time office members, a 50% reduction from what they provided less than 5 years ago and a 75% reduction from 10 years ago.

This trend towards charging for usage of private meeting room while not charging for the usage of informal meeting space makes sense when realizing that the ‘utility’ associated with a formal professional meeting is typically significantly higher than the ‘utility’ associated with informal meeting space. Another way to say this is that there is so much invested in a formal meeting that gathers 5, 6 or more people, in terms of everyone’s opportunity cost to be in the meeting, that the cost of the actual meeting space becomes a small % of the collective investment made to attend the meeting.

Think of a sales pitch or a fund raising pitch to busy third parties that cannot afford to be encumbered by technology glitches or a beer bust breaking out in the middle of the meeting.

Hence it makes sense for the operator to reflect that value in how he or she charges for the space, and to get a significant ROI on that meeting room space investment.

The space charged on a pay-per-use basis needs to be private, professional, with plenty of bandwidth, wireless access, and standard presentation equipment (flat screen with Apple TV or HDMI cable). That, along with the dedication of the meeting room space, is an expensive investment by the operator. The good news is, with the proper plan, that space should be the most profitable line of business for the operator as shown in the Expected Revenue Graph per meeting room size we explained in a a recent webinar on meeting room pricing.

Potential Revenue per Meeting Room Type - US Average
Potential Revenue per Room Type – US Average

Provide Meeting Room Choices

In that same webinar, we highlighted the importance of having several meeting rooms of different sizes in your inventory (1 or 2 day offices, 1 or 2 medium size rooms and one large room as a minimum). We touched on regional differences. We also explained how distributors, resellers, and other partners can quickly help develop a meeting room business with new, unique visitors, generating very high revenue per square foot and desirable traffic to also feed new memberships. Please refer to the webinar and to the associated White Paper on meeting room pricing and check our Resource Center with other similar goodies for operators.

Bundle Plans

Monetization of meeting room can come in several ways, including charging hourly rates, with or without discounts, deploying an e-commerce platform on your web site to enable real time booking of meeting rooms and charging user credit cards, leveraging partners like CloudMeetingRooms.com to expand your marketing reach, but also by providing well thought out bundles of meeting room hours.

Bundles should always be priced as a function of expected usage, in a statistical sense, based on data analysis of your pool of meeting room users. Hours should expire every month. If the operator follows these two principles well, the bundles can be priced at very attractive levels, and with minimum advertising, the meeting room revenue will increase quickly.

If you are starting your operation, use the CloudVO data as a meaningful starting point. For example, our experience of the average use of a 16-hour bundle (with no carry over of unused hours) is 3.9 hours/month when the bundle is an add-on to an existing package (e.g. Mail plan or Full time user); and 6.9 when it is a stand alone package. Price your bundles accordingly, not as if everyone were going to use all their hours. They don’t, and the light users typically more than pay for the occasional heavy user. Most people end up consuming fewer hours than they initially projected. This is particularly true if you package a 16-hour bundle with a 3-month minimum contract, which we recommend.

Upload your center information on our CloudVO portal, and we will automatically populate our e-commerce sites, CloudVirtualOffice.com and CloudMeetingRooms.com, with your offering. Join LinkedIn Workspace-as-a-Service ™ group for more data driven discussions on our industry.


About CloudVO ™
CloudVO is the umbrella brand of Cloud Officing Corp, headquartered in San Francisco, California. CloudVO’s mission is to provide comprehensive virtual office, coworking and meeting room solutions to professionals under a Workplace-as-a-Service ™ model. CloudVO operates the CloudMeetingRooms.com and CloudVirtualOffice.com e-commerce sites and grants preferential access to day offices, coworking space, and professional meeting rooms at close to 500 locations worldwide for distributed workers on a subscription or a pay-per-use basis.

Webinar: Optimizing Your Meeting Room Business

Update: 2019 Meeting Room White Paper is now available.

Before downloading this webinar, please tell us a little bit about yourself:

Optimizing Your Meeting Room Business

 

In this free webinar, Laurent, Keith, and Karina share how U.S.-based shared office space operators:

 

  • Currently Price their Meeting Rooms throughout the U.S.
  • Compare with Regus on prices & utilization and with each other
  • Can maximize Meeting Room utilization
  • Can optimize Meeting Room revenue
  • Can develop their distribution channel
  • Can identify the ideal mix of meeting rooms in size and quantity for their space
  • Prioritize Meeting Room Space for Full Time Members, or not
  • Perceive how their community is impacted by outside visitors and what to do about it
  • How to leverage the power of the new CloudVO Portal

They use the recent and data-rich CloudVO Meeting Room Business Review White Paper as a starting point, with new data and additional perspectives.

Thank you!

What Revenue to Expect from Meeting Rooms?

Update: 2019 Meeting Room White Paper is now available.

A Guide for Shared Office Space Providers (Part 2)

In a previous post, we shared some thoughts on how Shared Office Space operators can price their meeting rooms for hourly bookings. In this article we will explore another set of data released in CloudVO’s “Meeting Room Business Review” White Paper that quantifies revenue expectations per type of room.

The white paper explains why, from a practical perspective, a meeting room can be considered fully utilized if it is booked 100 to 120 hours per month. Using U.S. hourly averages for rooms advertised on CloudMeetingRooms.com, we estimated revenue potential that greatly exceeds alternative use of these rooms as Full-Time Offices.

This is certainly true at 100 hours of utilization as shown on this graph, even after factoring special incentives for your in-house clients, promotions, and wholesale discounts to resellers (which for simplicity we have assumed to be a weighted average of 35% for Day Offices and Small Rooms and 25% for Medium and Large size Rooms). But this is also true at less efficient utilization levels.

Average Monthly Revenue of Meeting Rooms at 100hrs Utilization

How long does it take for a new meeting room to ramp up to 100 hours? The answer will vary greatly depending upon what type of market you are in and your marketing strategy.

However, 50 hours of booking does not seem to be a stretched goal to reach within a reasonable amount of time. As a benchmark, less than 15% of the rooms in Pacific Workplaces 86-meeting room portfolio achieved less than 50 hours of booking per month in the first quarter of this year.

With that in mind, the revenue per square foot operators can generate from meeting room bookings is significant, particularly if you look at it on a per Square Foot basis.

The following size assumptions were used to generate the per Square Foot Revenue graph, which we felt sufficient to support the average seat capacity we found in our analysis for each category:

  • Day Offices: 125 sq. ft. (3 seats)
  • Small Rooms: 125 sq. ft. (4.3 seats)
  • Medium Sized Rooms: 220 sq. ft. (8.0 seats)
  • Large Rooms: 330 sq. ft. (13.4 seats)

Average Monthly Revenue of Meeting Rooms per square foot

Remember that these estimates are based on average hourly rates as published on CloudMeetingRooms.com throughout the U.S. and will hide significant regional variations. For example, New York City Day Offices are on average priced 21% higher than the national average and larger Meeting Rooms 38% higher.

Download the white paper for more data analysis, and join our LinkedIn discussion group for comments and discussions.

CloudVO ™ Analysis Team

How to Price Meeting Rooms?

Update: 2019 Meeting Room White Paper is now available.

A Guide for Shared Office Space Providers (Part 1)

Meeting Rooms Pricing White Paper
Download the entire meeting rooms Pricing White Paper

If you are a CloudVO partner and have ambition to develop a healthy meeting room business, your meeting rooms should be available for booking to people outside of your core members. Not only can outside visitors be a good revenue supplement for your business, but they may also enrich your community experience. Some of your meeting room users may later decide to take on a more permanent membership at your location.

Booking a meeting room in your location is a great way to respond to a user’s immediate need, but also for him/her to experience your location first hand.

So how should a Workspace-as-a-Service operator price its meeting rooms? We believe pricing meeting rooms should be a function of:

  1. A Realistic Approach to the Market
  2. The Competitive Environment
  3. Supply & Demand

A Realistic Approach to the Market

Sometimes we get emotional about our own space and we can easily convince ourselves that our space is unique and therefore deserves a considerable premium. Remember that the first time a user experiences a new meeting space is probably online, on your web site, a competitor’s web site, or on a reseller’s web site, where all meeting room pictures tend to look really good. So while you should not be shy about commanding a premium for unique amenities, don’t price yourself out of the market. Conversely, really low pricing may suggest a problem with the amenities for some prospects. A new coat of paint, a good wifi connection, or a new HD TV might be better solutions than giving the room away.

A good strategy we like to recommend is to price Day Offices and small meeting rooms aggressively, to lower the barriers to entry into your space, while keeping healthy margins on medium size and larger meeting rooms. This is because the users of small rooms are often also users of larger rooms when they need to get a team together or make a presentation to a larger group.

Day Office bookings represent roughly ¼ of all of the meeting room bookings, so slightly tighter margins on 25% of the business, to seed and feed healthier margins on the rest, seems to be a winning recipe.

The Competitive Environment

Unless you are the only space in town, the pricing level of other providers in your area matters. So check what your competitors are charging.

We found the meeting room business to be very price sensitive for small rooms and Day Offices, but a lot less price sensitive for larger meeting rooms (6 seats or more). This is probably because when a client books a larger room, it typically involves a larger group, often with a higher “utility” level attached to it, to use an economist term.

In fact, the cost per user of a larger room is typically much lower than the cost per seat of a small room, which suggests a very rationale behavior by users when they are less price-sensitive for larger rooms.

Another way to say this is that if I make a sales pitch in front of a large group of potential clients, I want to make sure that I am in a place with great amenities, which may impress positively upon my audience, and maximize my chances of having a successful meeting.

On the other hand, if I have a one-on-one meeting, I can stay more easily in control, and there is less of a risk the meeting will flop, even if I take my visitor to a coffee shop. Thus I am likely to be more price-sensitive while shopping for a small meeting room than for a large room.

Benchmark your competitors by checking their website or going on websites like Liquidspace.com, DavinciMeetingRooms.com, and CloudMeetingRooms.com to see what others are charging in your market.

Our experience is that going too far out of the middle of the range can severely restrict your business, unless of course your center is in a trophy building that serves free French Champagne on tap!

The graphs below, recently released by CloudVO in a “Meeting Room Business Review” white paper for CloudVO partners, shows the nationwide average of CloudVO partners’ pricing of conference rooms by size. Download the white paper for more metrics and analysis.

Average Hourly Price by Meeting Room Size

Supply & Demand

Pricing should also reflect the popularity of your service offering and the dynamic of your center. If your meeting rooms are fully utilized, there is clearly no need to price them aggressively. Conversely, if you have a low utilization, which we define as 60 hours or less of paid conference room usage per month, you may want to consider more aggressive promotions or lowering your price level. Remember that 10 hours at $100 gets you a lot less revenue than 100 hours at $40!

The following graph shows an actual meeting room utilization chart at 86 Pacific Workplaces Rooms, broken down by quartile.

Pacific Workplaces Meeting Room Utilization

Download the white paper for more data analysis, and join our LinkedIn discussion group for comments and discussions.

CloudVO ™ Analysis Team

Meeting Room White Paper 2015

Update: 2019 Meeting Room White Paper is now available.

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Meeting Rooms Pricing White Paper

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This white paper explores the industry averages of meeting room sizes, prices, utilization, and expected monthly revenue. This micro-economic analysis of Day Office and Meeting Room pricing, utilization rates, and revenue was done by mining the CloudVO database of published prices and actual bookings, and by using data shared by Pacific Workplaces in a case study.

 

The Meeting Room business is a substantial source of revenue for shared office space operators, with expected revenue significantly higher than alternative use, such as full time offices or coworking space. This analysis aimed at giving a sense of the potential for revenue per type of room, and per square foot. It also shares statistics on observed retail hourly prices for different kinds of rooms.