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Target Revenue (Potential Revenue)

Target (or Potential) Revenue refers to the maximum possible income the space could generate if all available workspaces and services were fully utilized and occupied at their optimal pricing.

How do you calculate your Target or Potential Revenue?

What you need to calculate your Potential revenue is the following:

  • Coworking Inventory: The total number of desks, private offices, and other rentable spaces that can generate recurring revenue.
  • Target or Optimal Price: The ideal pricing for each type of workspace or resource, such as flex or fixed desks, private offices, etc.

Then, the next steps typically are:

  1. Identify Total Capacity: Determine the total number of workspaces and services available for rent.
  2. Set Optimal Prices: Assign the highest feasible price for each workspace based on market conditions and demand.
  3. Aggregate: Multiply the total number of each type of workspace or service by its optimal price, then sum these amounts to get the total potential revenue.

For example,

  • Sum up all Dedicated Desks by their Target price
  • Sum up all Hotdesks by their Target price (consider if you want to allow for overbooking)
  • Sum up all Private Offices by each Target price (or sum up all individual desks in private offices by their optimal price)

The result should be a single number for the specified Coworking Location.

Why you should know your Potential Revenue?

  1. Benchmarking and Goal Setting: Helps set financial goals and benchmarks for performance assessment.
  2. Strategic Planning: Aids in strategic planning and decision-making to maximize revenue potential.
  3. Investment Decisions: Provides insights for investors and stakeholders about the maximum earning potential of the coworking space.
  4. Performance Measurement: Serves as a reference point for measuring actual performance against the maximum possible performance.
  5. Revenue Occupancy: Target revenue is a crucial component of one of the most important metrics for coworking spaces.

Target Revenue encompasses the total workspace availability, optimal pricing, and additional services, providing a critical benchmark for financial goals, strategic planning, and performance management.

Example

If you have 100 dedicated desks for $300 and 50 desks in 5 offices for $400, your Target Revenue = 100*$300 + 50*$400 = $30,000 + $20,000 = $50,000.

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