Prices were intentionally set at half-price (1500 CZK, no VAT) and there was only one membership tier (Full Time). I ran it off of a Živnostenský List for the first year or two, and it opened with just two members and me working there (shout out to Jan Stojaspal and Florian Boucault). The 50% discount was justified by the idea that the value of a coworking space comes from the community. That was a good choice, and Locus gained members quickly, increased to full price without a hiccup, and was profitable before the end of the first year (though without paying myself a salary).
The first obvious mistake: A poor pricing model
The choice to only offer full-time memberships and the initial price of 3000 CZK were made with the recognition that if everyone who signed up used the space during standard business hours to work full time, I would not be able to pay the rent. I was counting on a pricing model I had seen work with US health club memberships. Many good gyms had full-time unlimited memberships for under $50 (some for as low as $15) per month. Because the prices were so low, and because people intending to work out a lot often don’t follow through, these gyms could sell hundreds or even thousands of memberships without being overcrowded, even if they only had the comfortable capacity for 50 or so members at any one time.
I was expecting something similar for Locus: at the prices I was charging, I thought people should join even if they only wanted to use it a couple of times per month. They could still get value from the community and events and from the knowledge that they could use it whenever they wanted to. I thought I could make a great profit selling perhaps more than 100 full time memberships in a space that could only handle, at most, about 20 members at any one time.
Most members reasoned differently. 🙂 Since a full-time membership cost 3000 CZK, they thought that should reflect full-time use. I was regularly asked for discounts from members who didn’t come every day, and many people chose not to sign up because they would not be able to use it full time. I explained that the price was too low for that, and they explained that the price was too high for something less than full-time use. My reasoning was not helped by the fact that other coworking spaces were charging only slightly higher prices for full-time memberships.
I continue to believe that small coworking spaces like Locus tend to charge too little, and that members in turn expect to pay too little. That said, of course, freelancers and remote workers have the option to work for free from home, and any price can feel “optional” when that alternative is always available, especially for freelancers worried about their own bottom line. In any case, it quickly became evident that my initial assumptions were mistaken and that my business model would not work. Perhaps just a month after opening, the full-time-only option expanded to 10-day, 5-day, “Evenings & Weekends,” and Virtual membership. For the most part those tiers have remained.
The second mistake and a serendipitous outcome
Although I believed expats were a good target market for the kind of coworking I had in mind, the limited focus on English and on expats was a choice of convenience not of intentional design. I did not want an expat coworking space. I wanted everything to be bilingual and I thought the biggest market by far were Czechs (which was and remains true). Even though I could clearly see the value of coworking for expats, for me that value was in large part associated with helping expats integrate with Czech life and Czech culture: meet Czechs, learn the Czech language, start businesses on the Czech market, get access to local knowledge and expertise. A big part of what I valued about living in a foreign country came from learning about the people and culture.
I also thought there was a large group of freelance Czechs who would want the complement to that: to connect with and meet and learn from English-speaking expats from around the world. As such, my initial vision was an entirely bilingual space, marketed as much to Czechs who do not necessarily speak English as to expats who do not necessarily speak Czech. I felt disappointed and a little ashamed that everything was originally in English and that all my marketing was to expats. It was a choice of convenience, and I intended to correct it as soon as I could.
That initial “failure” on my part was an early stroke of luck. I underestimated the degree to which expats were seeking community with other expats and the degree to which that would have likely been diluted with an equal focus on Czechs who do not speak English. I did–relatively quickly, thanks to my translator Czech wife–eventually set up a Czech-language version of the website, and I tried–never effectively–to market to a Czech audience. But the Czechs who joined Locus almost universally found it through the English-language marketing, and most of them found it because they wanted to be in an English-speaking, international environment. Many of them had returned to the Czech Republic after living abroad and felt reverse culture shock and missed the international expat vibe they had become used to living abroad. Locus scratched that itch.
A near equal mix between Czechs and expats was achieved in a way that would not have been possible if I had been successful with my original intentions to market effectively in Czech, and the group of Czechs who joined as a result were the best suited to serve as conduits between local and expat, and had the most to gain from Locus’s expat community.