Most software development is sold by the hour. We sell ours by the story point, billed on what ships. That arrangement is unusual enough to deserve a proper explanation, including the parts that are hard about it.
The problem with hours
An hourly rate prices attendance. The meter runs whether the work converges or wanders, so the commercial risk of inefficiency sits entirely with the client, who is also the party least equipped to see it. Nobody involved needs to be dishonest for this to go wrong; the incentive simply points the wrong way, and incentives work without anyone’s cooperation.
Fixed-price contracts overcorrect. Pricing the whole scope up front forces everyone to pretend the scope is knowable up front, which converts every discovery into a change-control negotiation, and the project management effort migrates from building the thing to defending the number.
Pricing the unit of value
A story point prices a unit of delivered, working capability. Points are estimated openly, the backlog is priced before work starts, and the invoice reflects what shipped. Whenever something takes us longer than estimated, that inefficiency is our cost rather than the client’s, and whenever we get faster the gain is ours too, which is what makes the model sustainable rather than saintly.
The client’s side of the bargain is a backlog that is honestly groomed. Points reward clarity, because a well-specified story estimates tight and ships clean while a vague one carries a visible premium. The pricing model turns ambiguity into a number both sides can see, which tends to get ambiguity resolved with remarkable speed.
The one hourly line
One thing stays hourly: project coordination. PMO effort is billed per hour against the delivery it coordinates, because coordination genuinely is a time-shaped activity, and pretending otherwise would just hide it inside the point price. Everything that ships is points, while the one thing that honestly is hours stays hours.
What this does to behaviour
The interesting effect shows up in the standing meeting rather than on the invoice. When delivery is priced on what ships, conversations get shorter and more concrete: what is blocking this story, what would split that one, is this specified well enough to estimate. The commercial model quietly does the job that process frameworks are usually hired to do.