The Danger of 5 day and 10 day Coworking Membership Passes
The tension... tell me if you can relate?
You open your coworking space. You want to sell memberships. No, “want” doesn’t quite describe the feeling... You are desperate to sell memberships. You open with expenses and quickly need to build revenue to cover them.
You tour people that are candidates for a coworking membership but they don’t want to commit to full-time. You are carrying the anxiety of living through an uncertain ramp-up period and you are not ready to stand your ground. You just want to sell memberships. You think about how helpful it would be to have people using the space.
Touring potential members around an empty space is not super compelling. So you cave and sell a bunch of 5 and 10 day passes.
Here’s what you just sold:
Flexibility that not even the local gym will sell.
Members that will likely not show up very often and not help you look full, feel full or build your community.
Very little revenue.
Let’s Look at the Math
Let’s say that your pricing looks something like this:
Two-person office: $1,000
Dedicated desk: $475
Full time coworking membership: $300
10 day pass: $150
5 day pass: $75
How many 5 day passes do you have to sell to equal one two-person office?
Thirteen. Your sales funnel had better be on fire.
If you have 10 tours a week and you convert 25% of them, if all of them wanted 5 day passes, it would take you 5.2 weeks to sell 13 of them and you will have recurring monthly revenue of $975.
If you have 10 tours a week and you convert 25% of them and you sell dedicated desks, it would take you one week to sell $975 in recurring revenue.
If you have 10 tours a week and you convert 25% of them and you sell coworking seats, it would take you a little over a week to sell $975 in recurring revenue.
If you have 10 tours a week and you convert 25% of them and you sell all two person offices, it will take you roughly half a week to make $1,000 in recurring revenue.
The typical tenure of an office member is: 24 months
The typical tenure of a dedicated desk member is: 20 months
The typical tenure of a coworking member is:
In a 4-week month, there are 20 working days in the month. People that buy offices and dedicated desks are likely looking for a space they can work most of those 20 days. They need the routine, or they may have a team that they work with at the space and they’re paying a premium to not work at home or Starbucks.
People with coworking memberships however, typically have much more fluid schedules. They are in your space roughly 30%- 50% of those 20 days... Which is 6-10 days a month.
What does that mean? If you offer a part-time membership, almost all coworking members will want it. Pay less to use only the time I need? Heecccckkkkk yes.
What does that mean for your business model on your open/coworking portion of your space? You will be constantly trying to sell low-dollar memberships to people that are not in the space very often and don’t “need” your membership.
They don’t solve your revenue goals.
They don’t help much with making the space look full.
They likely won’t spend enough time in the space to develop sticky relationships.
They will also likely be more focused on tracking their days and the ROI of their low-level membership.
Back to the gym membership model.
Wouldn’t it be amazing for most folks to pay a la carte to use the gym? Do you think that many gyms would stay in business on this model?
“If all the people who purchased gym memberships were truly dedicated to exercising regularly, the clubs would have a real problem trying to squeeze everyone in. That's actually fine with gym owners, who expect only about 18 percent of people who buy memberships to use them consistently.
In fact, to be profitable, they need about 10 times as many members as they can actually fit through their doors.”
What do people do that want to work out? They buy a full membership. It’s the only option. If you are visiting from out of town and want to do a day pass, you can, but it’ll be priced at a premium to the membership day rate.
Speaking of options - The next challenge we run into when selling part-time memberships is laying out the membership options on our website and not putting our potential members into analysis paralysis. Harvard Business Review research shows that when people have too many choices, they don’t buy.
Why do we sell 5 and 10 day passes?
We don’t do the math on how many we’d have to sell to make meaningful recurring revenue
We are afraid that we won’t be able to sell full-time memberships... No one wants what we have to offer.
We are not prepared for people to ask for off-menu options, so we say yes under pressure.
We are committed to offering our members the ultimate flexibility... Without thinking about the sustainability of our business model.
When is it OK to Sell a 5/10 day Pass?
For a strategic member, off menu. There are times when we want someone to be a member - an influencer, someone very visible in the community, and we want a “lite” option for them.
When you’re selling a larger package to a corporate team and you’re including some “lite” access as part of a larger, more lucrative bundle.
A small, finite number of them as a founding member package.
What is your experience with selling 5-10 day passes? We’d love to hear from you in the Everything Coworking Facebook Group!