Coworking in Scott's Addition: Capacity and Pricing Strategy (A)

Abstract

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 cafe. In the A case, Nguyen examines survey data from 50 respondents that captures willingness-to-pay (WTP) price points for each of the four monthly rental options. She must set prices and allocate the available space between these options to optimize revenue. Students are provided with a spreadsheet of survey results and asked to calculate the optimal price point for one of the four monthly rental options, ignoring capacity constraints. Then students must recalculate their answers while considering all four options and capacity constraints. Thus students must solve a problem that incorporates both pricing and capacity allocation decisions. Excerpt UVA-OM-1694 Sept. 28, 2020 Coworking in Scott's Addition: Capacity Planning and Pricing Strategy (A) Pricing for Maximum Value Emilia Nguyen, third generation of the Nguyen family and newly appointed CEO of the historic Art Deco deLisa building in downtown Scott's Addition, reviewed the presentation she would soon make to the Board of Directors (including her mother and brother) regarding her proposed change in plans for the use of the deLisa building. For several decades, management had utilized a traditional one- to three-year leasing plan to rent the seven multiroom offices to a variety of businesses such as health care providers, accountants, and attorneys. The space was dated and would require a substantial renovation. . . .