Coworking in Scott's Addition: Capacity and Pricing Strategy (B)
These cases follow Emilia Nguyen-newly-appointed CEO of her family's third-generation real estate business in the historic district of Scott's Addition in Richmond, Virginia-as she prepares her proposal to renovate her family's 8,000 sq. ft., three-story Art Deco building. She plans to convert the building from traditional annual-lease office suites into a coworking space with five separate options, each with its own price point. Four of these options are available as a month-to-month rental, and one option will be offered to walk-in customers in a caf . In the B case, Nguyen must develop a pricing scheme for walk-in customers who want to rent office space in the caf , which occupies half of the first floor. She is deciding between establishing a fixed price-per-day and hourly pricing. This requires calculating the optimal price for each pricing scheme and comparing the respective revenues. She examines survey data from 20 respondents that captures WTP price points for spending up to eight hours working in the caf (in increments of one hour). Students are again provided with a spreadsheet of survey results which allows them to calculate the optimal pricing scheme (and price) without considering capacity constraints, then again repeating the calculation after considering capacity constraints.