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

1 Pages Posted: 14 Oct 2020

See all articles by Ozlem Yildiz

Ozlem Yildiz

University of Rochester - Simon Business School

Dana Popescu

INSEAD - Technology and Operations Management

Rebecca Goldberg

University of Virginia - Darden School of Business

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 café. 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.

. . .

Keywords: operations management, pricing strategy, capacity planning, new venture, entrepreneurship, coworking, decision-making

Suggested Citation

Yildiz, Ozlem and Popescu, Dana and Goldberg, Rebecca, Coworking in Scott's Addition: Capacity and Pricing Strategy (A). Darden Case No. UVA-OM-1694, Available at SSRN: https://ssrn.com/abstract=3705726

Ozlem Yildiz (Contact Author)

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Dana Popescu

INSEAD - Technology and Operations Management ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France

Rebecca Goldberg

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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