As the flexible workspace market in India grows rapidly, with projections indicating it will reach 60 million sq ft
by the end of 2024, a new pricing model is making waves—occupancy-based pricing. This innovative approach is set to reshape how companies manage their workspace costs, especially as hybrid work models become the norm.
Occupancy-based pricing is a flexible approach where costs are adjusted based on the actual space used rather than a flat rate. This model offers businesses the ability to pay only for the space they actively use, including additional costs for extra desks or meeting rooms as needed.
Understanding Occupancy-Based Pricing
Occupancy-based pricing adjusts costs based on the actual space utilized, offering a tailored approach that benefits both companies and office providers. Here’s how it works:
- Dedicated Desks + Occasional Usage: Companies like WeWork India offer a model where clients lease a set number of dedicated desks and benefit from discounted rates for additional desks needed during peak periods. This flexibility supports businesses experiencing variable team sizes.
- Sensor-Based Tracking: Managed office providers may use sensors to monitor desk occupancy, adjusting pricing in real-time based on usage patterns. Smartworks integrates IoT and sensor-based technology to monitor and manage office space usage effectively. This ensures that their pricing models and space management strategies are aligned with actual usage, enhancing overall efficiency and flexibility.
- Hybrid Work Model Considerations: For companies adopting hybrid work models, occupancy-based pricing allows them to pay a base fee for dedicated desks and incur additional charges for hot desks or meeting rooms used by occasional in-office team members. This flexible pricing structure supports varying work patterns and fluctuating office needs. WeWork India offers a similar model, where businesses can have a base rate for dedicated desks and additional charges for using hot desks or meeting rooms as needed. This model ensures cost efficiency and adaptability for companies with dynamic workspace requirements.
Benefits for Managed Office Providers
- Optimized Revenue Generation:? Managed office providers can adjust rates based on demand, enhancing revenue potential. For instance, WeWork employs a flexible pricing model that adjusts rates based on factors such as location, demand, and lease duration. During periods of high demand, WeWork can increase prices for available coworking spaces, while offering discounts or promotions during off-peak times to attract new clients.?
- Improved Space Management: Providers can promote efficient use of office space by leveraging real-time data. Smartworks, for example, employs sensor technology to monitor workspace utilization and adjust space allocations accordingly. This approach minimizes underutilized areas and supports a more dynamic office environment, leading to better overall space management.
- Data-Driven Decisions: Real-time occupancy data provides insights into workspace usage patterns, enabling providers to make informed decisions. WeWork India uses data analytics to optimize space configurations and adjust pricing based on occupancy trends. This data-driven approach enhances operational efficiency and allows providers to tailor offerings to meet client demands more effectively.
Benefits for Managed Office Users
- Cost Savings: With pricing tied to actual usage, companies only pay for the dedicated space they use regularly and any additional space at pre-negotiated rates. This can lead to significant cost reductions compared to traditional flat-rate models.
- Scalability: Occupancy-based pricing offers flexibility, allowing companies to adjust their workspace needs as team sizes or work models change. This adaptability ensures that companies can efficiently manage their office requirements.
- Transparency and Predictability: This model enhances budgeting and cost control by providing a clear view of how costs vary with space usage. It helps in predicting future expenses and controlling costs more effectively. By offering transparency, it enables better financial planning and management.
As hybrid work models become more common, occupancy-based pricing is set to transform the flexible workspace market in India. Currently, the flexible workspace sector is expanding rapidly, with projections indicating it will reach 60 million sq ft by the end of 2024. This pricing model aligns costs with actual space usage, offering greater efficiency and flexibility for both office providers and businesses.
As the market evolves, occupancy-based pricing will continue to drive innovation and shape the future of workspace management in India.?
