- Flex space operators looking to increase revenue are focusing on virtual offices as a “pure profit” solution.
- Unlike physical space, virtual office inventory is limitless and can be sold multiple times over at nearly zero cost.
- Mike Sullivan explains how virtual offices have the highest profit margin in the flex space industry.
This article was written by Mike Sullivan, Chief Marketing Officer for Alliance Virtual Offices. Alliance Virtual Offices is a leading provider of virtual office solutions that help innovative businesses scale faster, including high-quality flexible workspaces, market-leading tech infrastructure, mail forwarding, and professional receptionist support.
Do you ever wonder why so many coworking and business centers focus on driving virtual office revenue? It’s because they know that it’s nearly pure profit, especially when driven from wholesalers that send closed deals, such as Alliance Virtual Offices and Davinci Virtual Offices.
Yes, I said “pure profit.” That’s a big claim. Let’s take a closer look at how that works.
When you use a wholesaler that delivers closed deals, cost of sale is negligible.
I would even argue cost of sale is non-existent.
When working with an aggregator, there are no marketing expenses, no payment processing expenses, and no expenses associated with CMRA compliance.
The basic virtual office plan requires use of the business center address, a place to store mail, a receptionist to sort mail and greet guests, and occasional access to meeting rooms — all of which the flexible space already has covered.
Therefore, virtual office operations utilize your existing infrastructure with no added costs:
- Your physical business center: street address and meeting room(s).
- Your staff: handling mail, setting up meeting rooms, and greeting guests.
- Your mail processes: receiving, storing, and redistributing mail. Any fees for forwarding mail is charged to the virtual office client, therefore mail forwarding is an additional profit center for flexible spaces, not a net cost center.
In recent conversations with industry veterans like Mark Burge of Flex Workspace Solutions, I was told their centers have anywhere from 5% to 35% of revenue attributed to virtual offices, and 30% to 100% of their profit attributed to that revenue.
Virtual office inventory is limitless. That’s why virtual offices have the highest profit margin in the flex space industry.
You might think a virtual client paying $49.00 per month isn’t worth your time.
But unlike physical office space, you can sell the same service multiple times over, and those sales take up close to zero space in your center.
Again, sale and acquisition costs are minimal. If you use an aggregator like Alliance Virtual Offices, there are no marketing costs, no compliance costs, and you won’t need to invest in sales or support. We do it all.
What is the ideal number of virtual office clients that any center can or should have? 100… 200… 500… 1,000? You choose. We knew of one in Las Vegas that had 1,600 clients!
Address and mail services are just your starting point.
Virtual clients frequently purchase additional services such as meeting rooms, hot desks, private day offices, and coworking memberships, as well as lobby listings and mail forwarding.
If you want to generate additional revenue without the overhead of personnel or an in-house phone switch, talk to Alliance Virtual Offices about our Live Receptionist and Virtual Phone revenue share programs, two more ways you can generate high-margin revenue without hassle or expense.
Whether you want to open more centers more quickly, obtain a higher valuation for your center, or if you’re just getting started in flexible space, driving virtual office revenue is a smart choice that can make a considerable difference to your center’s bottom line.
