Profit is essential because, without profit, a business is unsustainable. The problem is that while there is lots of guidance on pricing regular goods and services, there is little guidance on how to design profitable software-enabled solutions – until now.
After years of estimating things every kind of wrong way (e.g., time-based estimates), I’ve learned that there is one method that always yields better results, faster, than any other method: Relative Estimation with Reference Stories.
It works based on two principles:
Our brains are naturally good at estimating the size of things relative to each other.
We can learn from experience to make better decisions about the future.
But there’s a lot more to the story. That’s why I’ve put together a short collection of essays on the subject below along with my go-to downloadable Reference Story Board, a key piece of the Agile estimation toolkit.
Estimation is hard. Even the most experienced development teams miss the mark with traditional time-based estimates. The most popular alternative, Planning Poker®, sounds fun, though it falls short in practice.
Relative estimation works for two reasons: 1) Our brains are naturally good at estimating the size of things relative to each other, and 2) We can learn from experience to make better decisions about the future.
This game allows a team to quickly review 5-15 items, organize them in relative rank order, and then assign a value scale to those items. Relative estimation is completed by comparing an item to the items around it to find where it falls in the prioritized list.
Agile release planning requires more than picking dates on a calendar. In this how-to guide, my colleague Kevin Rosengren provides a comprehensive review of the process and helpful frameworks to get the job done.
How to Incorporate Value into Your Estimates
How to use the Impact/Effort Matrix and the Business Value Prioritization equation to incorporate value into agile estimates — and make better business decisions.