What is the difference between capacity and occupancy in terms of costs?

Simply put, capacity refers to the maximum number of people or resources a workspace could potentially accommodate. On the other hand, occupancy is the actual number of people or resources utilizing the space at a given time. In terms of costs:

• Capacity-related costs: Capacity-related costs arise from providing space, infrastructure, and amenities to accommodate for the maximum number of potential occupants. Some examples of capacity-related costs include construction or lease costs, maintenance, utilities, and furniture. Capacity-related costs are typically fixed, meaning they don't usually change based on actual usage.
• Occupancy-related costs: On the other hand, occupancy-related costs vary depending on the actual usage of the space. As the occupancy rate increases, certain costs like utilities, consumables, and cleaning costs may arise. However, higher occupancy can also lead to better cost efficiency, as the cost per person decreases when the space is utilized closer to its maximum capacity.

All in all, understanding the difference between capacity and occupancy costs helps organizations optimize workspace management, as well as balance fixed and variable costs, helping you make informed decisions about space utilization, expansion, or contraction.