Planning a value-based pricing scheme
I'm a software consultant working with a client right now, and for the first time I'm trying a value-based pricing scheme based on Agile sprints. Here is the core of our agreement:
- Work is completed in "sprints" that are two weeks in length
- Both parties agree on the scope of work before the sprint begins, and after the planning meeting we both sign off on a list of tasks to be completed
- The contract covers the whole engagement, and sets the price for each sprint
My client is a friend who's getting a reduced rate because (a) I'm helping him out and (b) I'm still doing this work on the side -- it's about 10 hours per week. The work per sprint is small enough that, in case I estimate poorly, I can still complete the sprint by working overtime. I really like this pricing scheme because it aligns my incentives with his.
However, when I switch to offering myself as a full-time consultant, there's a much larger risk that a sprint will end with some tasks unfinished. Certain tasks are really hard to estimate, especially when starting with a new client. If the two weeks elapse and tasks still remain, I don't want to ask for my money yet because the client may feel cheated; however, I also don't want to add these items to the next sprint, since it will lead to either overwork on my part or less delivered value to the client. I thought about delaying the start of the following sprint, but I'd want to start and end these sprints on the same day of the week, and if I only had a day or two worth of work remaining it would mean sitting idle for the remainder of that week.
Does anyone have experience with planning for exceptions of this nature? I'd like to add language to the contract protecting both parties, but I haven't figured out a better course of action than "just get really good at estimating".
