Should a coworking operator unbundle meeting rooms?
Before the decision
Larger tenants occupy rooms for long stretches and smaller tenants complain about access. Room reservations are booked under team names, making usage hard to compare with desk counts. The manager suspects that a few teams make most of the bookings.
The problem
Should the team choose Lower desk fee plus room usage or Bundled desks for the next 12 months?
Decision owner: The business unit lead.
Room pricing can change reservation behaviour before it changes occupancy.
Option economics
Scroll the table to see all figures.
| Option | Volume (desk-months) | ₹ per unit | Fixed cost | Net contribution |
|---|---|---|---|---|
| Lower desk fee plus room usage | 12,000 | 2850 | ₹260 lakh | ₹82 lakh |
| Bundled desks | 10,900 | 3220 | ₹257 lakh | ₹93.98 lakh |
Make the call
- Calculate net contribution for Lower desk fee plus room usage and Bundled desks. Which assumption makes the comparison most fragile?
- If the leading option delivers 10% fewer desk-months, does your recommendation change?
- What evidence would you ask for before the team makes an irreversible commitment?
Reveal the worked solution
Start by validating Bundled desks. It contributes ₹93.98 lakh after fixed costs and leads by ₹11.98 lakh. Treat that gap as the amount of unmodelled cost or lost contribution the option can absorb before the ranking reverses.
- Frame the decision
Compare contribution after the volume response. A better margin on each sale can be offset by lost transactions, downgrades or cancellations.
- Calculate both options
Lower desk fee plus room usage: 12,000 desk-months × ₹2,850 less ₹260 lakh in fixed costs gives ₹82 lakh. Bundled desks: 10,900 desk-months × ₹3,220 less ₹257 lakh in fixed costs gives ₹93.98 lakh.
- Stress-test the forecast
Bundled desks leads by ₹11.98 lakh in the base case. If Bundled desks delivers 10% fewer desk-months (9,810) at the same margin and fixed cost, it contributes ₹58.88 lakh. Holding the other option constant, the stressed result falls behind. This isolates volume risk. Check whether both options would respond to the same change in demand.
- Set a decision threshold
Holding the other option’s result fixed, Bundled desks needs at least 10,528 desk-months to match or beat it under the model. Track actual room hours, cancellations and new memberships by team size.
Room pricing can change reservation behaviour before it changes occupancy. Compare the cost of a limited test with the loss the business would face if the full commitment failed. Ask the team to agree the decision criterion before collecting more evidence.
Check whether your answer names the trade-off, cites a number from the exhibit and specifies a reversal condition.
What if the whole market moves?
The worked solution tests a change to one option at a time. Here, both options gain or lose the same percentage of volume. Unit contribution and fixed costs stay constant.
| Volume scenario | Lower desk fee plus room usage | Bundled desks | Higher contribution |
|---|---|---|---|
| Both lose 10% of volume | ₹47.8 lakh | ₹58.88 lakh | Bundled desks |
| Base assumptions | ₹82 lakh | ₹93.98 lakh | Bundled desks |
| Both gain 10% of volume | ₹116.2 lakh | ₹129.08 lakh | Bundled desks |
Explain which option you would take forward. Check whether capacity, price or customer mix would also change as the market moves.
Practise this case as an interview