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Four Steps to setting up an Output based Testing & pricing model

Posted on: 08 August '13

In our whitepaper titled “Moving Towards an Output Based Testing & Pricing in QA” we present the following methodology to arrive at an output based pricing structure for your organization.

Independent Testing

The fundamental question for output based pricing is the definition of a unit. A unit will be the central entity to which performance SLAs and improvement targets should be translated.

Pricing Model

The foundations behind defining a unit of work are repeatability and availability of historical data. The intent is to make the details transparent to the customer by shifting focus to SLAs.

The parameters used in defining the units result in a basis for defining the SLAs. By ensuring that a unit is defined along with its SLAs takes down governance overhead and makes the conversation between the stakeholders simpler. The SLA framework specifies the allowable tolerances in unit definition.

Finally, defining a unit in such a way, along with SLAs and allowable tolerances, allows for a simpler pricing model and elevates independent testing to a higher maturity level. The pricing can be done either top down or bottoms up based on the amount of data available for analysis.

Following an output based model is not for everyone because it requires significant data collection and benchmarking to align clients and service providers. However, in order to begin the journey, units can informally be agreed upon, tracked and measured so that over time, it’s possible to move to this model.

Read our whitepaper titled “Moving Towards an Output Based Testing & Pricing in QA” to learn more.

Rajeevan Velayudhan

Rajeevan Velayudhan is Senior Director of Quality Assurance business unit in Mindtree. In 14+ years of experience in IT, he has played the roles of QA engagement manager, program QA manager and head of specialized testing CoEs. He works with customers to make QA engagement a success, by helping structure the right engagement model. This helps customers and partners improve quality and efficiency.