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All-in-one-solution

Inspired by the great exchange of ideas had during our session, Industry Best Practices at the 2015 Global Workspace Association Conference just two weeks ago, I’ve begun this blog series to keep the conversation about best practices going.  Every Monday, I’ll be posting a blog that features one of the best practices.  I welcome your comments suggesting new topics, telling stories about how these practices have helped you, and elaborating on elements of the practice featured.

Let’s start with the popular topic of ‘build your own virtual office” through offering bundles your various services offered.  Bundling is commonplace in the insurance, wireless service, and telecommunication industries.  We’re often presented with the option to buy one service at one rate or buy more than one service at a cheaper rate for each than what we would pay if we purchased them separately.  In this blog post, I will share the benefits of bundling for your virtual office products.

In the case of the serviced office center, bundling means pairing one or more package options together on one contract and offering a discount on the total monthly cost.  The best bundling option that we’ve found is to pair a group of meeting room hours at a substantially discounted hourly rate with mail services and/or receptionist services.  A typical meeting room hours package will consist of 8, 16 or 24 meeting room hours.  The customer’s block of hours recurs monthly and unused hours do not roll over.   I’ll present a hypothetical fee schedule to make the illustrations going forward clearer.

XYC Business Center charges $25/hour to their preferred customers to use meeting room space with the walk in rate being 20% higher.  They also have a 16 hour package that costs $149 and a mail services package that costs $70.  Customer A purchases a bundle of the mail service package and the eight hour package at $197.10 (bundling the two packages together saves 10%).

The clear benefit of bundling to the customer is savings.  But, what’s the advantage of offering this savings to the customer?  Let’s first take a look at the nature of the meeting room usage package and the advantage that gives the center.  In the example above, the hourly cost in the $149 meeting room hours package is $9.31.   Your instinct is probably to call that a significant loss in potential revenue when the hourly cost without the package is $25.  And I would agree with you if it wasn’t for this one particular insight: Clients that purchase the 16 hour block generally use only 30% of the time purchased which equates to 4.8 hours monthly.  Over my nearly 17 year career in consulting, management, and development of serviced office centers, this figure has been pretty consistent.  People like the security of having the option to reserve as many as 16 hours per month, but only use about 30% on a regular basis.  So what does that mean for the center?  You’re actually getting an hourly rate of $31 with the meeting room package option.    And even if that package is in a bundle with the 10% discount, you’re still getting your regular hourly rate of $27.94.  And there is the added bonus of a lengthy commitment to that block of hours because it is a part of their contract.

Final thoughts…

If you’re not currently offering bundling at your center, give it a go.  We’ve seen our meeting room revenue increase substantially since we adopted this method.  You only stand to gain when it comes down to it.  You can offer the option to bundle a meeting room hours package to all of your current customers and new prospects. This might be just the incentive for them to start using meeting space at your center rather than the local coffee shop giving them the advantage of privacy and professionalism.  Please weigh in on the topic with your suggestions for future topics, anecdotes, and your notes on this topic by contacting me here.