Since we opened the Pioneer Collective in 2015, we have attempted to learn from our customers, and refine our experience to meet demand.  We had zero experience running a shared workspace, but Audrey did an amazing job of forecasting back when the space was just a plan based on gut instincts and market research, but even she was surprised by some of the revenue streams that emerged, and some of our ideas that flopped.

Initially, we borrowed from the LEAN startup methodology, test, listen, measure, adjust, repeat.  Essentially, if enough people requested a feature, product offering, or amenity, we would add it to the menu*.  We ended up adding an HD television display to our conference room (though we still dream of one day having a gadget free think-room), free La Croix to the beverage fridge, and 5 & 10 day membership options.  This strategy served us well in the early days, because it allowed us to find an audience (and revenue) while we searched for our audience.

After serious reflection, analysis, and debate, we've decided it's time to adjust our strategy to optimize our services and better serve our customers.  Starting in 2018, we will be moonlighting our Punchcard, Community 5, Community 10 and Team Pool memberships.  It's always tough to shut down a product that customers value, but ultimately we believe it's the best decision, both for our viability as a small business, our coworking members, and our awesome team of staff and community leads.

Coworking Streamlined:  Our New Membership Options

Starting in 2018, we've combined the best features of all our membership tiers into two, easy to understand offerings:

Community Membership - $225 per month

• 8-6 M-F unlimited access to communal spaces
• 500/500 Mbps High-speed fiber internet (Wireless)
• 100 B&W prints per month
• Fax/copy/scan
• 3 hours conference room rental per month
• Weekday access to showers, gym, bike storage
• Full access to lounge area and kitchen
• Phone booths and free long distance calls
• Complimentary gourmet coffee & tea, beer and wine
• 2 guest passes per month
• Member social events and networking opportunities

Resident Membership - $475 per month

• 24 hour / 7 day per week space access
• Dedicated desk, Herman Miller office chair, task lamp
• Drawer set, storage locker
• 500/500 Mbps hard-line Ethernet data port & WiFi
• 150 color prints per month, 300 B&W
• Fax/copy/scan
• 5 hours conference room rental per month
• 24/7 private showers, bike storage, gym
• Full access to lounge area and kitchen
• Phone booths and free long distance calls
• Complimentary gourmet coffee & tea, beer and wine
• 3 guest passes per month
• Member social events and networking opportunities
• 25% discounted event space rental
• Discounted rates for 6-month or 12-month prepay

The Rationale Behind the Change

As a small business operator, you are at a consistent disadvantage to your larger competitors when it comes to customer intelligence, data and technology.  Even if it is technologically feasible to collect data from all of your customers, your sample sizes are small and it's expensive and labor intensive to put those insights into action.  

When we started building out custom management software, rather than trying to beat our competitors at their own game, we decided to question assumptions we had long held and challenge the conventional wisdom in the industry.  

Early on, many prospective tPC customers asked for a flexible communal membership that allowed them to access the space 5 or 10 days per month.  Our 24/7 communal membership was priced rather high at around $325, so it made sense to introduce cheaper options to capture this part-time demand.  It worked in the short term, but it ultimately introduced a layer of complexity that became hard to manage once the program scaled, namely, how to keep track of and quantify use-days (e.g. if a member stops in for a 20 minute meeting, does that count as a day?  Do unused days rollover? etc.)

We started by trying to replicate what most white-label coworking SaaS apps did: allow users to check in when they use the space.  There are a few ways of doing this, including but not limited to RFID, WiFi authentication, iPad checkin, manual check-in, but what we found was that no matter what we implemented, these users were the least loyal, and the most likely to churn.  We'd essentially positioned the use of the space as a commodity and encouraged our customers to value time based on hours in the space, rather than how productive they were while they were here.  We were setting ourselves up to spend money and hours to engineer a solution for a customer segment that barely produced a positive ROI.

Questioning assumptions

I thought back to my time as a customer of coworking spaces in 2011.  People would often ask me, "why on earth would you spend hundreds of dollars a month on a desk when you can work from your kitchen table for free?"  I would always respond with some version of the following: "I spent a year working from my apartment and coffee shops, and the incremental work I can get done (or revenue I can generate) in the focused time I spend at my workspace, is worth thousands of dollars a month.  The value in my case is unquestionable."  In other words, we can all divide our time into $10 per hour work, $100 per hour work and $10,000 per hour work (those key hours of deep work each month which are responsible for a disproportionate amount of productivity, whether that is closing on a new contract, knocking out a writing assignments or meeting a contact that opens up an entirely new line of business).  We wanted to tap into that $10,000 per hour time and shift the focus back to output and away from hours.  In order to do that, we decided to eliminate all part-time memberships.  We also committed to lowering the price of our communal memberships to a level where two or three hours of focused output would justify the entire monthly cost for 90% of our customers.  And those for whom the math didn't add up probably weren't ideal coworking users to begin with, and would be better off at the kitchen table until they had more consistent cash flow. 

Members on the new Community Access plan can continue to use the space as little or as much as they need throughout the month, but they don't have to waste time counting days, and after they produce that single piece of high value deep work, the rest is gravy.  

We are aware that there is the potential for unintended consequences and blowback when implementing change.  While most part-time members were low LTV and high churn, some of our most loyal early adopters, joined at this tier.  We've already had to deny requests from past members looking to re-up on the old plans.  It's always tough to turn away revenue, but we're committed to seeing this experiment through.  Naturally, we grandfathered in any existing memberships and will continue to support them as long at tPC exists.  Moving forward though, we think the two membership tiers are the best product offering we can possibly put forward, and we're confident that they represent the best value in the Seattle coworking market. 

Time will tell, but so far revenue and loyalty are both up, and our software engineer and front desk staff are loving the elegance of the two-tier system.  We'll provide further updates at year-end.

Chris

*Requests to which we've never acquiesced include members bringing their own furniture, storing items in communal areas, or picking music.  It may sound dogmatic and/or pretentious, but we strongly believe that the physical space we inhabit contributes significantly to our well-being and productivity.  If a hundred people store boxes and personal items around the space and the music randomly oscillates between Charlie Parker and Kenny Chesney, it becomes very difficult to maintain a peaceful and inspiring environment.