What coworking space operators need to know about pass networks

Participating in a pass network should not devalue your product – it should highlight your worth.

One of the newest offerings on the coworking block is a growing list of companies offering a pass for access to multiple coworking spaces. 

My coworking space recently got an email from one of these companies pitching us on signing up to be a host space for their new pass. Participation would require that we allow their members day access up to a set number of days per month. 

Now, Cowork Tahoe gets a significant number of day pass visitors during peak tourism season and charges $30 per day. This is exactly who we offer day passes for. The vast majority of these customers do not become permanent members of our space.

The pass company offered us a payout of $7.50 per visit from members with their pass. That is a 75% discount compared to our standard rate.

What’s the incentive to say yes to that? There isn’t one. 

After paying as little as $50/month for their pass membership to access my coworking space, would they ever be willing to pay $30? Probably not. Our day pass now has the perception of being disproportionately expensive in comparison. Our product has a lower perceived value and there’s no going back from that.

There is also the loss of trust in our company if we are providing such a steep discount through a pass, but charging full rate to everyone else. It is a bad precedent to set with a potential member and can do harm to your business in the long run.

We previously wrote about why we discourage flexible workspaces from offering blanket free day passes to attract new members. This is the same. 

Pass networks like this are not good for coworking businesses. 

Is this type of pass network for coworking really that common? Unfortunately, yes, and increasingly common. 

Coworking pass memberships offer use of coworking spaces directly to the end users, whether they have a “home” coworking space or not. People pay for membership to the network, not a specific coworking space, so the customer relationship, including pricing, belongs to them. They are not your members.

Why are these companies popping up? What problem are they trying to solve?

Simply put: Easy access to a place to work, whenever, wherever.

On a recent business trip, I needed a coworking space for the day. I was staying with friends, so needed a professional office space to work from for a few hours in between meetings. 

As the owner of a coworking space, this should have been easy. 

I did a google search and checked the map results for spaces closest to where my meeting & lodging was, then cross checked those against reviews on Google & Yelp. Then, I had to go to the websites of the top results one by one to determine if I could just walk in, if I had to schedule a tour, if they even allowed drop-ins, etc. 

It was not a frictionless process. So, as a customer, I understand the idea of a pass network. If I belonged to PassX, I could quickly see spaces that were included, reducing the number of steps it takes for me just to get to work.

Are Pass Networks the best solution for this problem?

It is important for coworking space operators to understand that these passes are attempting to solve a problem for traveling workers, not necessarily for coworking spaces. The problem that many coworking spaces have is customer acquisition – getting more members.

It is easy to conflate the two. The problem pass networks are addressing is a person’s ability to quickly access coworking space for a day across multiple cities. However, that is not directly increasing the overall membership of participating coworking spaces.

The value proposition that these network companies pitch to coworking spaces is better exposure, more members filling empty seats, and revenue as a result of more deal flow. Having access to your beautiful workspace through a pass is providing more value to their company than it is to yours, however. 

Should you use a pass network? It depends. 

There are a lot of companies out there doing this, so it is important to do due diligence to determine if there is one that is the right fit for your coworking business. 

Here are some things to consider when deciding:

• If you choose to be affiliated with them, will it be a positive reflection on your brand and your product? What is their reputation as a company?

• What payout are they offering? If they require you to discount your day rate to bargain bin prices, think twice about if the company is really acting in your best interest or using you as a means to benefit their own customer base & their bottom line.

• What are the expectations on your staff time when hosting a member of the pass network? Does it vary significantly from your typical onboarding or check-in process? If so, is that additional time or effort worthwhile?

• Who are their customers? Are these customers the same as your target customers? Are there any expectations or guidelines for their behavior as a guest in your space? How do they handle bad actors?

• What, if any, are the criteria they have for your participation in the network? Is there an expectation of high quality, convenient experience, with beautiful workspace that supports the productivity of their members or are they aiming for volume by signing up as many spaces as possible without regard for the reputation of the coworking space?

• What are they offering for your participation besides a payout? Does participation in their network elevate your brand or does it bury it?

Finally, does the company recognize the needs of your coworking space as much as their members? Are the incentives of the company aligned with your own? They need to be.

Without a good supply of profitable coworking spaces, pass networks can’t exist.  And if they do not align their incentives with those of the coworking spaces they need as hosts, they shouldn’t.