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While there is no single formula for setting incubator prices, the right fee structure is essential if your program is to generate enough revenue to be self-sustaining. Learn how several managers tackled this task and glean ideas for ensuring that your incubator's prices reflect your market and your program's value.

Pricing space and services: Or, what are you worth?

by Corinne Colbert

October 2005

Tom May and Kim Fisher are miles apart. He is the director of the Nussbaum Center for Entrepreneurship, a mixed-use incubator in Greensboro, N.C. She is the director of Prologue International, an incubation consulting company based in San Francisco.

They’re separated by more than geography, though.

At May’s incubator, clients pay below-market rate rents charged by the square foot; there is no charge for incubator services, and rents have not increased in 14 years. “We’re cash-flow positive,” May says. “There’s no reason to make more.”

Fisher, on the other hand, changed prices several times during her three years as director of the Women’s Technology Cluster in San Francisco, based on market forces. And the first thing she does when Prologue takes over management of an incubator is change the pricing to a flat rental rate plus an additional service fee.

“If you’re charging only for rent, the client won’t understand the increased value of the services in the incubator,” Fisher argues. “You’re giving away those services for free.”

May’s and Fisher’s experiences are opposite sides of the same coin: the challenge of setting prices for incubator space and services.

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Keywords: budget -- incubator, fee structuring, financial management -- incubator, lease, license agreement -- incubator, service agreement

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