What is Price Per Point?

Price Per Point (PPP) is a new way of charging our clients for the work that we do for them. It’s getting a lot of interest. Not only does PPP balance the risk of a project between the client and the agency, but it incentivises the agency to work efficiently - and to frequently deliver completed parts of a project while keeping the quality of the work high.

Using PPP we bill clients based on the components that we complete and deliver to them. This has obvious benefits over traditional ways of billing.

Let’s look at how…

The problems with fixed-priced billing

The benefits of an agile approach are clear. It encourages efficiency and reduces the time wasted on a project by allowing the business to make multiple iterative changes to the specification while the software is being built.

But, if the scope of a project is flexible - and changes as the project progresses - it is impossible to fix a price against it.

The problems with paying by the hour

There are a two fundamental problems with paying by the hour (or sprint):

  1. There is no incentive for the agency to work more efficiently - in fact, they get paid less if they do
  2. If the agency’s estimates for a project are incorrect, the client is hit with unexpected costs (conversely, the agency actually makes more money)

The client shoulders the risk.

No link between payment and delivery

If there’s no link between payment and delivery, the agency can get sloppy - perhaps components remain uncompleted, or technical debt starts to accumulate.

In many organisations Agile has a bad name, not because the methodology is flawed, but because the commercial basis of Agile contracts encourages sloppy practice.

How PPP aligns your interests with ours

PPP is good for White October too. And that’s important for you.

Why?:

  • If we don’t deliver quality working software as we go then we don’t get paid. Thus PPP forces us to work more efficiently, it gets us focused on getting everything right.
  • If our stories aren’t 100% completed and tested, then guess what - we don’t get paid either. This stops us carrying “development debt” – those almost finished stories where early enthusiasm for a project slips away.

In short, Price Per Point billing gets White October focused on delivering results. And crucially, there is a sustained vested interest in the outcome.

How PPP actually works

There are four straightforward steps to PPP billing:

We break a project down into discrete component parts

At a distance we break the project up into its component parts, usually in a workshop with our client. There may be 100s of components.

We then estimate each component using ‘points’

Using a consistent method, we make estimates of the effort, in ‘points’, that it will take to deliver each component of the software.

In batches the project’s component parts are scheduled for build

We document the specification (acceptance criteria), review the ‘points’ estimate, and fix it for each component. At this point we guarantee that we’ll deliver each completed component for its set cost (or points value) - meaning we carry the risk.

We deliver working software in incremental pieces

Each component is designed, built and tested before we send it to the client. If it doesn’t meet the client’s criteria, it is passed back. And we only get paid after the acceptance of each component.

Reasons our clients like our new Price Per Point billing model:

  • Risk is shared equally between White October and client
  • White October must meet the client’s exact quality standards to get paid
  • Client is in genuine control of a project and can adjust its direction to meet changed priorities
  • It encourages collaboration between client and White October
  • White October’s development team are rewarded for efficiency, not corner cutting
  • It encourages timely decisions without killing creativity
  • It’s flexible – direction is easily switched based on user feedback without high cost

Our clients include

Bupa
Hitachi
Foyles
BT
NHS
PWC
CABI
Ethex
Oxford Analytica
Open Data Institute
Oxford University
Lambeth
Oxford University Press
Wiley
Pearson