23 Crucial Financial Benchmarks for a Thriving Coworking Space

There’s more to a successful coworking space than just a vibrant office environment or a strong, connected community.

While those two components are wildly important, financial performance ultimately determines your company’s success. Financial performance is key to long-term viability, growth, and scaling opportunities.

For coworking operators, setting and tracking financial benchmarks are essential for understanding the health of the business, optimizing operations, and making informed decisions.

These benchmarks provide the data needed to evaluate profitability, allocate resources efficiently, and adjust strategies to stay competitive in a dynamic market.

In this post, we’ll explore the essential financial metrics every coworking space must track to ensure a thriving business.

Quick Summary

The key financial metrics of a coworking space are:

• Revenue per Available Square Foot (RevPAF)
• Total Revenue
• Revenue Forecast
• Revenue Occupancy
• Revenue per Available Desk (RevPAD)
• Revenue per Occupied Desk (RevPOD)
• RevPAD Index
• Rent Roll Report
• Average Revenue per Customer/Account (ARPC/ARPA)
• Additional Revenue
• Average Revenue per Member
• Invoiced Revenue
• On-demand (Bookings) Revenue
• Churn Rate (Revenue Churn Rate)
• Committed Revenue
• Desk Revenue
• Gross Margin
• Gross Profit
• Lifetime Value of a Customer
• Membership Revenue (Monthly Recurring Revenue – MRR)
• Revenue Occupancy Index (CROI)
• Profit Margin
• Target Revenue

Understanding Financial Benchmarks in Coworking Spaces

Financial benchmarks are key performance indicators (KPIs) that measure the financial health of a business. In the context of coworking spaces, these benchmarks serve as guiding metrics to assess profitability, scalability, and operational efficiency.

By consistently tracking these metrics, operators can make informed decisions on pricing, reduce unnecessary expenses, and strategically invest in areas that yield high returns. Financial benchmarks help operators monitor performance, plan for growth, and ensure that coworking spaces remain competitive and sustainable.

Key Financial Benchmarks to Measure Success

Now that we understand what financial benchmarks are and why they are important, let’s dive into the essential financial metrics every coworking space should monitor to track performance and measure success.

Revenue per Available Square Foot (RevPAF)

RevPAF Defined: A metric that measures the financial efficiency and profitability of the space based on the revenue generated relative to the physical size of the space.

Tracking RevPAF helps operators assess how effectively the physical space is being utilized to generate income. It lends insights into the effectiveness of current space allocation and aids in making adjustments to occupy the space better.

Read more about revenue per available square foot here.

Revenue (Total Revenue)

Total Revenue Defined: The comprehensive sum of all income generated from various sources within the coworking operation over a specific period of time.

Being able to assess the coworking business’s financial health, sustainability, and growth potential comes from knowing your total revenue.

As this is a comprehensive total that comes from all revenue streams, it is a strong indicator of your business’s overall performance and viability. It is also a good indicator of the value of your service offerings and amenities.

Read more about total revenue here.

Revenue Forecast (Projected Revenue)

Revenue Forecast (Projected Revenue) Defined: A predictive analysis that estimates the future revenue, or projected revenue, generated by the coworking or flex space.

Identify your recurring membership revenue and build assumptions for how this may change and how the on-demand revenue will fluctuate.

Based on that the formula would be:

Projected revenue aids in strategy planning and resource management, and can help inform decisions that will ultimately drive business growth.

It’s important to note this number is merely a prediction and though it can get you close to your target, it will never be a guaranteed number. That being said, it is an important marker that can help prepare you for what’s to come.

Factors that influence Revenue Forecast include:

• Historical Data Analysis: Comprehend past financial data and identify trends and patterns that can influence future projections.
• Market Research: Conduct surveys and a market analysis to understand your competitors and their offerings.
• Membership and Occupancy Rates: Analyze current and projected occupancy rates for membership types and office rentals.
• Scenario Planning: Brainstorm multiple revenue scenarios (optimistic, pessimistic, and realistic) to account for different market conditions.
• Growth Projections: Estimate total revenue based on past revenue, marketing efforts, and market demand.

Read more about projected revenue.

Revenue Occupancy

Revenue Occupancy Defined: The portion of Actual Membership (or Desk) Revenue realized as a percentage of the Target (or Potential) Revenue.

The most widely adopted metric at this stage of the game, Revenue Occupancy is beneficial as it not only indicates occupied spaces, but also provides the price at which they are being “sold” for. If prices are low, sheer volume is not enough to make your space profitable.

Tacking on the revenue in addition to the amount of spaces used provides a clearer picture of your financial health.

Factors that influence Revenue Occupancy include:

• Financial Health: Financial health helps depict the space’s financial performance and indicates how well the space is being monetized.
• Operational Efficiency: Revenue occupancy helps operators to identify underutilized areas and optimize space allocation and pricing strategies.
• Benchmarking: Use your Revenue Occupancy to measure yourself over different periods of time as well as against your competitors

Read more about revenue occupancy.

Revenue per Available Desk (RevPAD/TrevPAD)

Revenue per Available Desk (RevPAD/TrevPAD) Defined: A measurement of the average income that could be generated by each desk within a coworking facility.

RevPAD lends insight into the coworking space’s profitability as it quantifies the revenue each available desk provides over time. Higher RevPAD indicates consistently favorable utilization of space. This metric is a key player in assessing pricing and marketing strategies.

Factors that influence RevPAD:

• Desk Volume and Space Layout: The amount of desks within the space and the way they are dispersed will impact the total revenue generated by desks.
• Space Optimization: Use RevPAD to determine if the current layout is best for revenue or if there are other ways to design the space.

Learn more about revenue per available desk.

Revenue per Occupied Desk (RevPOD/TrevPOD)

Revenue per Occupied Desk (RevPOD/TrevPOD) Defined: The average income generated by each occupied desk within a coworking space.

RevPOD highlights the space’s profitability by quantifying revenue brought in from occupied desks over time. It is a KPI that lends insights into how pricing strategies and discounts affect revenue. RevPOD can also be a strong indicator of whether or not it’s time for the business to expand based on demand and how effectively the current space generates revenue.

Factors that influence RevPOD:

• Desk Volume and Space Layout: The amount of desks within the space and the way they are dispersed will impact the total revenue generated by desks.
• Space Optimization: Use RevPAD to determine if the current layout is best for revenue or if there are other ways to design the space.

Learn more about revenue per occupied desk here.

RevPAD Index

RevPAD Index Defined: An evaluation and comparison of the revenue-generating efficiency of coworking spaces.

Calculating RevPAD Index: First, calculate your own Space’s RevPAD (using the formula above) and benchmark it against other spaces. Calculate the average RevPAD across all spaces through research and industry reports to compare against your own number.

A metric that aids operators in understanding their space’s performance regarding Revenue per Available Desk, RevPAD allows coworking space operators to benchmark their space against industry standards and competitors.

Being able to measure against the rest of the industry helps investors, landlords, managers, and other stakeholders better assess efficiency and viability of the coworking space.

A solid understanding of RevPAD Index will encourage performance evaluations, competitive analyses, and operational optimization, and will influence future investment decisions.

Factors that influence RevPAD Index:

• Location of coworking space
• Size of coworking space
• Services offered in different coworking spaces
• Membership base

Read more about RevPAD index.

Rent Roll Report

Rent Roll Report Defined: A detailed report that lists all members and their respective membership or license agreements.

Components of a Coworking Rent Roll Report:

• Member Identifiers: This includes names and contact information of all current members
• Membership Details: This entails specifics of each membership or license agreement, including the type of workspace(s) they are operating as well as contract start dates, end dates, and renewal options.
• Rent Amounts: The monthly rent of membership fees each member is responsible for, including discounts, promotions, or special pricing agreements.
• Payment Status: Insight into any outstanding invoices.
• Additional Charges: Any additional fees or charges, such as for add-ons not built into membership packages.

Rent Roll Reports serve as a comprehensive overview of the financial performance of a coworking space related to the rental income generated.

They are crucial for tracking membership dues and occupancy levels, highlighting any financial discrepancies and helping operators understand space utilization.

This is a great tool to help predict future membership income and can serve as useful collateral for investors and stakeholders. Maintaining comprehensive and organized membership accounts will make retrieving Rent Roll Reports much easier.

Factors that influence Rent Roll Reports:

• Membership packages and pricing
• Additional services and amenities
• Available rentable spaces

Learn more about Rent Roll report here.

Average Revenue per Customer/Account (ARPC or ARPA)

Average Revenue per Customer/Account Defined: A metric that represents the size and financial contribution of your members.

A metric more closely aligned with coworking spaces who lease workspace to other companies, ARPA indicates the size of each customer. In order to grow your ARPA, customers need to be better monetized by either obtaining larger customers to occupy the space better or by upselling services to existing customers.

Learn more about average revenue per customer/account here.

Additional Revenue

Additional Revenue Defined: Referring to all other forms of revenue besides desk/membership revenue and on-demand revenue.

Components of Additional Revenue:

• Food and Beverage Revenue: Derived from food and beverage sales from on-site cafes to catering options and more.
• Event Revenue: Income from events hosted by the coworking space.
• Other Revenue: All other revenue generated outside of memberships, rentable spaces, food and beverage, and events.

Additional Revenue helps in assessing the “extras.” This metric lends insights into the demand and quality of your space’s service offerings and amenities.

Factors that influence Additional Revenue:

• On-Demand Revenue: Typically, the more members and bookings you have in the space, the more you can upsell with food, beverages, events, and other amenities.
• Additional Services and Amenities: The more, and better, your service offerings, the more members you’ll likely attract, therefore increasing your chance at these additional sales.

Here’s more info on additional revenue.

Average Revenue Per Member (ARPM)

Average Revenue Per Member Defined: The average revenue generated by each individual member.

A KPI that indicates how engaged your members are with the space, ARPM also lends insights into selling strategies.

This will help operators assess how well their salespeople are selling and upselling services and memberships. It will also help determine if the services being offered are in demand and attractive to your member-base.

Factors that influence ARPM:

• Membership Structure: This metric will help you determine which membership options are the most popular to your member-base.
• Upselling Abilities: ARPM will indicate if all members are being sold the standard membership package as opposed to better offerings that will in turn generate more revenue.
• Service Offerings and Amenities: Use this metric to determine if the additional services and amenities you are offering are what your members are looking for in coworking space.

You can learn more about average revenue per member here.

Invoiced Revenue

Invoiced Revenue Defined: The total amount billed to members for services and memberships with a specific period of time, regardless of when the billable event was or if it has been paid.

Invoiced revenue includes all memberships, bookings, and additional services, but is different from Total Revenue in that it is representative of a particular billing cycle or pattern.

Typically this number is studied on a monthly basis and provides information that aids operators in tracking performance, managing cash flow, and making informed financial decisions.

Check out an example of calculating invoiced revenue here.

On-Demand Revenue (Bookings Revenue)

On-Demand Revenue Defined: The income generated from services and amenities that both members and non-members can access as needed without a membership.

Components of On-Demand Revenue:

• Meeting Room Bookings: Rent out meeting spaces by the hour or by the day to appeal to both members and external clients who need private space for slightly larger groups.
• Day Passes: Individuals are able to access the coworking space for a single day, offering flexibility for those who do not require permanent workspace. This is also great for a potential new member to try and experience your space.
• Event Space Rentals: Coworking spaces generally have their own areas for events, seminars, workshops, and networking functions, so renting out these spaces when not in use can generate significant on-demand revenue at little to no cost.
• Other Additional Services: Other services could include but are not limited to printing, scanning, mail handling, administrative support, parking, loyalty programs, etc.

On-Demand Revenue generates income on top of recurring membership and allows coworking spaces the opportunity to reach a wider audience with their services as users do not need an active membership.

It is not uncommon for a coworking space to generate upwards of 20-30% more revenue with these additional offerings. It is crucial to a coworking space as it can provide stability that balances out revenue fluctuations in other areas.

It also allows operators to maximize their space and offerings while reaching a much broader client base that could potentially turn into recurring memberships.

Check out some important details about on-demand revenue.

Churn Rate (Revenue Churn Rate)

Churn Rate Defined: The percentage of recurring revenue lost over a specific period.

Churn Rate helps coworking space operators identify revenue retention and loss from existing members. This could be from membership cancellations, non-renewals, or downgrades. A high revenue churn indicates the coworking space is losing a significant amount of recurring revenue and strategic adjustments need to be made.

There could be misalignment with pricing strategies and service offerings, but this could also suggest poor customer service and member satisfaction. Regardless, high Revenue Churn signals the need for immediate change.

It is important to note that this metric only indicates lost revenue and does not account for new memberships or membership upgrades during the same period.

Interested in learning more about this important coworking space metric. Here’s everything you need to know about churn rate.

Committed Revenue

Committed Revenue Defined: The guaranteed income from members who have signed long-term contracts or agreements for using the space.

Committed Revenue is generated by members with fixed-duration contracts ranging from several months to multiple years and ensures a steady stream of revenue. It is not limited to membership contracts though and can also encompass recurring space rentals and other on-demand offerings.

Committed Revenue is guaranteed money that can ensure revenue for the coworking space and be used as a helpful budgeting tool. Investors and stakeholders will be looking for this number to better understand the business’s financial health and long-term viability. Committed Revenue also plays a key role in company valuation.

Learn more about committed revenue.

Desk Revenue

Desk Revenue Defined: The revenue generated over a specific period of time from all rentable and on-demand desks, including dedicated desks, private offices, and hot desks.

This metric provides the total amount of revenue brought in from individual work stations.

Check out more about desk revenue here.

Gross Margin

Gross Margin Defined: The percentage of revenue exceeding operational costs

Gross Margin indicates how effective a coworking space’s services are. Understanding the relationship between revenue and operating costs allows operators to better plan budgets and processes going forward.

This can help determine pricing strategies for the future and can serve as a benchmark for investors and stakeholders assessing the company.

Analyzing your Gross Margin will allow you to make more informed decisions about pricing, service offerings, and cost management strategies to enhance your profitability and competitive advantage.

Here’s more on gross margin.

Gross Profit

Gross Profit Defined: The revenue that exceeds the direct costs associated with operating the coworking space.

Gross Profit provides the coworking space’s profitability without taking into account indirect expenses such as administrative costs, marketing, and sales efforts. Costs of services generally include rent and utilities, cleaning and maintenance expenses, supplies and materials, staff wages, and depreciation of office equipment and furniture. It is an important number to know and understand as it highlights the efficiency of the space’s core operations and the difference between revenue and expenditures.

This can be useful in setting and adjusting pricing strategies as well as identifying where costs can and should be reduced.

Factors that influence Gross Profit:

• Occupancy Rates: High occupancy rates generally lead to increased revenue, while lower rates equate to decreased revenue
• Cost Control: Managing direct costs effectively can enhance Gross Profit
• Service Offering: Additional revenue can be made by diverse services and amenities
• Market Conditions: Market landscape can make an impact on Gross Profit with influences from competitors, demand, and economic conditions
• Operational Efficiency: Streamlining coworking space operations and optimizing the space can reduce revenue loss

Read more here.

Lifetime Value of a Customer (LTV)

Lifetime Value of a Customer Defined: The total revenue a coworking space can expect to generate from a single member over the duration of their membership

LTV is helpful in identifying a customer’s long-term financial value and emphasizes the importance of retaining members. It can also drive service enhancements and member experience efforts as a way to increase the customer lifespan.

Forecasting future revenue is much easier when you’re able to base it on your customer base and their retention rates. Long-term members ensure financial stability and recurring revenue, which is attractive to investors and stakeholders alike.

Additionally, understanding your LTV will help you identify high-value customers so you’re better equipped to target marketing and sales efforts toward them.

Factors that influence LTV:

• Membership Plans: A variety of pricing tiers and service offerings will impact your ARPC, and in turn will impact your LTV.
• Customer Satisfaction and Retention: Happy members lead to longer customer lifespans.
• Service Diversity: A wide variety of services and amenities will increase your member-base, therefore increasing your ARPC.
• Engaged Community: A strong, connected community provides networking opportunities and can aid in customer retention.
• Location and Accessibility: Convenient and desirable locations can attract and retain more members, which in turn positively impacts LTV

Learn more about lifetime value of a customer in a coworking space here.

Membership Revenue (Monthly Recurring Revenue – MRR)

Monthly Revenue Defined: The income generated from members who subscribe to various coworking space services.

Monthly Membership Revenue is a summation of dollars spent towards membership subscriptions and provides guaranteed income. In a subscription-based business like a coworking space, recurring revenue is one of the best indicators used to project revenue which helps with budgeting and strategic planning.

Consistent growth in this area implies strong market positioning. Furthermore, recurring memberships prove member retention is where it needs to be.

Check out more about membership revenue here.

Revenue Occupancy Index (CROI)

Revenue Occupancy Index Defined: A standardized measure used in the coworking industry to evaluate and compare the revenue occupancy rates of coworking spaces.

CROI serves as a benchmark to gauge the efficiency and performance of your coworking space compared to the rest of the industry.

In order to build a proper revenue occupancy benchmark, you’ll need to collect data from other coworking spaces to compare to. It’s smart to compare yourself to your competitors that are similar in size and offerings, as well as ones that differ from you to get the full picture.

Knowing how you measure up against the rest of the industry is crucial for coworking space operators as it allows them to be more strategic in their own space.

Discover more about the revenue occupancy index here.

Profit Margin

Profit Margin Defined: The percentage of revenue that exceeds the total costs associated with running the coworking space.

Profit Margin ultimately shows how much profit is made on every dollar brought in. The majority of coworking businesses take a few years before they are profitable, as it takes time for them to build out their brand and membership.

Tracking this metric allows you to stay on top of profit and losses and can help operators make decisions about how to optimize income and expenses.

Understanding your Profit Margin will also help you determine and adjust your pricing strategy and can inform strategic decisions such as expansion.

A healthy profit margin for coworking spaces is between 10 and 30%.

Read more about profit margin here.

Target Revenue (Potential Revenue)

Target Revenue Defined: The maximum possible income the space could generate if all available workspaces and services were fully utilized and occupied at their optimal pricing.

Knowing the potential revenue you could bring in from your coworking space allows you to better assess your current offerings. Use this as a tool to maximize your space and services.

Read more about target revenue here.

How to Achieve and Maintain Financial Health

Achieving and maintaining financial health is essential for the long-term success of any coworking space.

Operators must focus on a balanced approach that not only maximizes revenue but also keeps costs in check. Below are some basic actionable steps to ensure financial health and hit key benchmarks:

• Set Competitive Pricing: Offer flexible, competitive plans but ensure profitability
• Diversify Revenue Streams: Add rentable meeting rooms, host events, and sell add-on services
• Manage Operational Costs: Monitor fixed and variable costs like rent, utilities, and staff expenses
• Reduce Churn: Implement retention strategies through community engagement and regular feedback loops

Tools for Tracking Financial Benchmarks

Financial management tools can streamline the process of tracking financial benchmarks. Such platforms offer analytics on space utilization, member retention, and financial performance, providing actionable insights for optimization.

For example, OfficeRnD Flex has a powerful analytic tool called the Data Hub. It helps you obtain useful analytics around space utilization that can impact the financial state of your coworking space.

Plus, the coworking management software integrates with Stripe 2.0 which can help streamline payment processes. And that also impacts financial metrics.

Conclusion

Financial benchmarks are incredibly important and every coworking space operator should be monitoring theirs to ensure financial health.

While all are crucial measurements, metrics like Revenue per Available Square Foot, Average Revenue per Member, Membership Churn Rate, and Profit Margin are essential in assessing the performance and profitability of your space.

Diversifying revenue streams, managing operational costs, and focusing on member retention are equally crucial in achieving sustainable growth.

Consistently tracking these financial benchmarks is not just about staying afloat – it’s about setting your coworking space up for long-term success.

By regularly reviewing financial performance, adjusting pricing strategies, and making data-driven decisions, you can optimize operations, enhance profitability, and build a thriving coworking community.

For coworking operators, the road to financial sustainability lies in continuous improvement, vigilant tracking of key metrics, and flexibility in adapting to market changes. With a focus on these key principles, your coworking space will not only survive, but truly flourish.