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 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.
There are a two fundamental problems with paying by the hour (or sprint):
The client shoulders the risk.
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.
PPP is good for White October too. And that’s important for you.
In short, Price Per Point billing gets White October focused on delivering results. And crucially, there is a sustained vested interest in the outcome.
There are four straightforward steps to PPP billing:
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.
Using a consistent method, we make estimates of the effort, in ‘points’, that it will take to deliver each component of the software.
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.
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.