Occupancy is the most common key performance indicator (KPI) to measure the success and growth of a shared workspace like co-working space, serviced office or business center. Occupancy in most cases refers to the number of units in use in the office - desks, offices, etc.
In OfficeR&D, we define 3 different occupancy metrics that, we believe, are quite important to keep track of when managing a coworking space.
Dedicated Desks (Fixed) Occupancy
Desk occupancy is the most popular and straightforward metric in a shared workspace. It takes into account the difference between the occupied dedicated desks and the total number of dedicated desks. This is why in order to have the system calculate this number for you, you have to assign the occupied dedicated desks to members.
You can measure the occupancy at a specific point in time, per month or make a combined chart for the last month and the next few months.
NOTE: It's good practice to aim for 80-90% occupancy. This rate gives you sustainable revenue, at the same time gives your community an option to expand and grow in the space.
Hot desks (Flex) Occupancy
This is the number of hot-desking members as a percentage of the total number of hot desks multiplied by a Hot Desk Coefficient. The system calculates the hot-desking members based on the hot-desking membership plans. The system doesn't care if the plan provides 5 days of hotdesk usage in the month or a 24/7 usage. It only takes the number of purchased plans of type HotDesk for the month you're analyzing.
IMPORTANT: The Hot Desk Coefficient is a number that tells the system what is the targeted occupancy of the hot desks in your space. This number is multipled by the number of hot desks when calculating the occupancy level. You can set the coefficient under Settings/Space.
Cash occupancy is the easiest-to-calculate metric and it gives the most actionable and usable number to understand the performance of your space. When it comes to desks occupancy, the percentage is based on binary data - checking if a desk is occupied at a certain moment or not. Cash Occupancy takes into account one more dimension - the money. It is calculated based on the difference between the money you can make out of your space - the Target Revenue, compared to the money you actually make - the projected revenue. It brings value by showing how well your space is utilized.
NOTE: You can always achieve 100% occupancy when you lower the prices and give many discounts. But then the cash occupancy will drop or stay the same.
Revenue is another key performance indicator not only for a coworking space but for commercial shared space or any business in general. OfficeR&D helps you to have a fresh overview of your finances, projections and historical data.
Target revenue is the total amount of money that you can make from recurring memberships. This assumes a 100% occupancy - every desk and a private office are occupied and sold at full price. This number usually serves as a good reference point for your sales goals.
Projected revenue is the total amount of all memberships that are active for a period of time, usually a month. This is usually good metric to measure your confirmed, monthly recurring revenue (MRR). We use this number to calculate the Cash Occupancy and other metrics in OfficeR&D. You may have projected revenue for the current month, next month, quarterly or early.
NOTE: You may also measure the total amount of leads (or opportunities with more than 75% chance of winning) combined with the next month projected revenue.
Another aspect of the revenue is the actual revenue. It is the money that you collected from all invoices for a period of time. Usually, the actual revenue is higher than the projected revenue as it also includes:
- One-off charges;
- Setup fees and deposits;
- Meeting room bookings,
- Events and etc.
The actual revenue may be broken down into these revenue streams - membership fees, bookings, one-off charges, setup fees, events, and etc.
OfficeR&D helps you analyze, read and keep this data fresh. Having fresh, actionable data is mission critical for every type of business.