What are Story Points in Agile & How to Calculate Them? (2023)

Wondering what Agile story points are?

Story points might sound like a reward you get while playing a fantasy video game. 

But they’re not!

Story points are an Agile estimation technique that gives you a relative estimate of how much work and effort will go into a particular task.

But the problem is, even though the Agile guide tells us to make such estimates, it doesn’t specify exactly how to make an estimate. 

But don’t worry.

In this article, we’ll demystify story points and also talk about how story points are calculated in Agile. As a bonus, we’ll even let you in on a secret to help implement story points effectively in your Agile development projects!

What Are Story Points in Agile?

Before we talk about what a story point is, we need to understand two terms: ‘user story’ and ‘product backlog.’ 

A user story is an informal explanation of features that your user wants in the system. 

A real-world user story example is: “As a gamer, I want my hero to be able to fly.” 

But wait, where does the user story fit in the Agile development process?

It fits into the product backlog. 

A product backlog contains a list of every user story that needs to be worked on and implemented into the final product. 

Think of it this way: 

User stories are items in your video game inventory like magic swords, armor, and other cool stuff. The product backlog is the inventory that contains the items!

Bonus: Inventory Templates!

So now, let’s get back to story points.

A story point is a unit assigned to a user story to express how much time and energy would be required for that job.

It’s sort of like the difficulty level in a game. 

A higher number means a more difficult level.

However, this is where most people get it wrong.

In a video game, level 2 doesn’t necessarily mean it’s twice as difficult as level 1. But that’s not the case in story points.

Let’s explain:

Story points are a relative estimation technique (also called relative sizing). 

Relative estimation means that values are assigned on a comparison basis. That means there are no standard units for story points.  

For example, if a user story A has a point 2 and user story B has a story point 1, it’ll mean that A will take twice the amount of effort as compared to completing B.

However, video games and story points have one similarity: points of reference.

For example, let’s say two teams are building two similar puzzle mobile games.

Level 10 in the first puzzle game wouldn’t necessarily be as difficult as level 10 in the second puzzle game, right?

Similarly, your team could assign a story point value of 8 to one user story, and another team can make a point estimate of 13 points to a similar story. The value of your story points is totally dependent on your team and your task.

Why Use Story Points in Agile?

We know what you’re thinking.

Do we really need to use Agile estimating methods like story points?

Can’t we just use time estimates instead?

Well, you can, but story points are a far more accurate estimate. 

Story points allow you to calculate team velocity and estimate work in an objective way.

1. Team velocity can be calculated

Your team’s velocity is an important metric that you simply can’t ignore. 

Why?

By calculating your team’s velocity, you can visualize:

• efficiency of your Agile team
• speed at which your Agile team is progressing 

This way, you can make better predictions for your future project schedule.

But what’s velocity?

The velocity (also called sprint velocity) shows the amount of work that has been done in each sprint. It’s the total completed story points divided by the total number of sprints.

For example, let’s say that your team finishes 50 story points in 2 sprints. 

Then, their sprint velocity will be (50/2) = 25 points per sprint.

2. Estimate without specific time-commitments

Things don’t always go according to plan, even in an Agile project.

And when you’re using a time estimate, you’re only specifying an approximate time. You might spend more time on tasks that you thought would be completed in a jiffy, and vice versa. 

The bottom line is, it’s difficult to estimate the precise amount of time needed for a technical task.

Since story points are an Agile estimating method, they make no definite commitment (like within one week or next Friday). Instead, they provide a relative estimation of the overall effort that’ll go into a task.

This will help reduce the unnecessary stress of meeting tight, unrealistic deadlines. Instead, you’re left with a far more reasonable and accurate estimate.

3. Story points aren’t subjective

Sometimes, people differ in their estimations for how long a task in an Agile project is going to take. This often leads to subjectivity while using time estimates.

That’s why this approach doesn’t always provide an accurate estimate.

For example, a senior developer might assign a task ‘7 hours’ according to their standard, but it might take the junior developer 15 hours to complete that same task. 

Story points eliminate this problem. 

While calculating an Agile story point, the whole team sits together and decides what points to assign to the user story. 

Bonus: Check out our guide on Agile release planning!

3 Key Factors That Affect Story Points in Agile

So we talked about assigning the user story according to the ‘effort’ required for implementing the backlog item. 

But what exactly does effort mean?

Let’s take a look:

A. How much work needs to be done (story size)

Not every backlog item is equal; one product backlog item may require more work than another one.

For example, suppose there are two different backlog items:

• ‘I want a new weapon for the main hero, Monkey King’
• ‘I want new weapons for all heroes’

Which one do you think will take more time?

The second story, of course! 

Compared to it, the first story won’t take much work.

So the second story will get more points than the first one because of the greater story size.

B. Risk and uncertainty 

Every project has its risks and uncertainties, especially with certain types of backlog items.

For example: if the product backlog item involves working with a new framework that your team doesn’t have much experience with, that risk factor will increase the story point value.

C. Complexity 

Complexity is definitely a very important factor for any Agile estimating technique.

Here are two similar stories with different acceptance criteria:

• ‘I want a new costume for the character Geralt’
• ‘I want a new special attack for Geralt’

Notice the difference in their complexity?

The first one is a piece of cake, just some tweaks here and there, and voila!

The second one requires you to code a new special attack and see how it works in the game. 

Then, you’ll have to test for bugs.

Naturally, during the effort estimation process, such user stories clearly earn more points. 

Bonus: Check out our guide on Tech Debt!

How to Calculate Story Points in Agile

You can calculate Agile story points by creating a base story, choosing your scale and estimation technique, and then calculating accordingly.

Story point estimation is usually done by using a method called ‘the planning poker.’

Sounds interesting, right?

Let’s now learn how to make a story point estimate: 

1. Create a Base Story

Set up the poker table

The first step of the estimation technique is to create a reference story or baseline story. 

It’s a completed user story from an earlier iteration cycle assigned with a story point value (generally 1 for simplicity). 

This will be your normalized story point.

 The product backlog is also presented with all the new user stories.

2. Choose a Scale for Estimation

Deal the cards

There are two scales used for story point estimation:

• Linear scale: contains natural numbers like 1, 2, 3, and so on
• Fibonacci scale: numbers from the Fibonacci series like 1, 2, 3, 5, 8, and so on

For simplicity’s sake, most Agile teams tend to pick the Fibonacci series for their story points estimation.

In this estimation technique, the Fibonacci scale is then inserted into a table where you can assign any user story to a value.

Here’s how an estimation table looks like when the team first starts filling it in!

3. Start the planning poker

Don’t worry, they haven’t missed the empty cells! That’s what they fill in during the Agile estimation meeting!

But what’s a planning poker?

Planning poker is an Agile estimation technique that focuses on general consensus. This estimation technique is also used for estimating things other than user story points, but that’s a topic for another time!

Here’s what happens during this Agile estimation meeting:

1. Each estimator receives a set of cards containing numbers from the Fibonacci scale 
2. One backlog item is presented at a time and estimators have a detailed discussion about it
3. After the discussion is over, each estimator selects a card with a Fibonacci number 
4. Everyone reveals their card together (just like poker, all cards on the table)
5. If all the estimates match then the value is assigned
6. If they don’t match, the estimators discuss further to reach a consensus

By the end of the planning poker, our table will be filled with user stories beside their assigned points. 

Expect the story point estimation matrix to look something like this:

4. Calculating team velocity and planning project schedule 

After the estimation meeting, the sprint backlog is created after a backlog refinement session, and the team works on the stories.

But story points Agile still has a very important role to play.

They help you track the team’s performance and make better forecasts.

How?

After the first sprint is over, there’s a sprint retrospective meeting.

This provides you with the data to calculate the team velocity (the number of story points completed during a sprint).

And then the magic happens! 

Once you get the sprint velocity, you can determine how many sprints it’ll take your project team to complete the whole project. 

Bonus: Sprint retrospective examples!

This takes sprint planning to the next level.

For example, if your Agile project has a total story point estimate of 480 and your actual velocity is 48, then you can calculate that it’ll take your team 10 sprints to complete the entire project.

This makes it easy to plan your Agile project schedule.

Bonus: Agile Templates

The Best Tools for Story Points in Agile

Creating the story point estimate table is just the tip of the iceberg. 

The real challenge comes up after the planning poker session when it’s time to implement the user stories into your Agile project.

Luckily, ClickUp is here for you.

Project management with ClickUp is like equipping your main character with a power-up. You become super strong, and the game becomes a piece of cake!

But what’s ClickUp?

ClickUp is the world’s highest-rated project management software. 

Used by 200,000+ teams in startups and companies worldwide, it can help you overcome any challenges your team may face.

Whether you need help with:

• Agile software development or a traditional methodology like Waterfall
• Calculating the story point and function point for any software project
• Tracking and assigning multiple team roles like Scrum master, product manager, and product owner

ClickUp has got you covered! 

Here’s how ClickUp can help you manage any Agile project:

1. Dashboard

A product owner must have a detailed overview of everything that is going on in the workspace.

With ClickUp’s Dashboard feature, this becomes as easy as beating a level 1 video game enemy!

With customizable Sprint Widgets, you can get analytical reports of your project stats without having to leave your Dashboard. 

Here’s what you get:

A.  Velocity Charts

Remember, sprint velocity is important as it gives you a report on your team’s productivity and helps you make better predictions in the future.

Take velocity calculations to the next level with ClickUp.

Not only does ClickUp automatically calculate your team’s velocity, but it also generates beautiful and easy-to-understand velocity charts.

Additionally, once your team has completed multiple sprints, ClickUp automatically performs an average velocity calculation and charts it out for your team. 

However, the Velocity Chart isn’t everything that you get. 

You also get other useful charts like:

• Burndown Charts: forecasts the amount of work left in the project.
• Burnup Charts: reveals the amount of work done in the project
• Cumulative Flow Charts: displays your task progress overtime

2. Sprint Points

You didn’t think ClickUp became the perfect Agile tool without a dedicated feature for story points, right?

ClickUp’s Sprint Points are the perfect way to monitor and measure your workload capacity by using your own personal point system. You can add Sprint Points to your task assignees to better understand how much effort it’s going to take.

This can be especially handy when you’re using it alongside the Timeline view to plan out your tasks. Using Sprint Points to identify everyone’s capacity makes for super-quick task delegation!

Choose your own point system: Fibonacci sequences (1,2,3,5,8), linear numbers (1,2,4,8) or anything else that you feel suits your team best!

Additionally, you can use the Dashboards feature we mentioned earlier to visualize your Sprint Points to better plan and execute your projects. Just select your widget of choice (velocity, burndown, burnup, etc) and set Sprint Points as the y-axis for the graph.

It’s really that easy!

3. Tasks, Subtasks, and Checklists

Great, you’ve assigned points to the stories!

But how do you organize and monitor them at the same time?

With ClickUp, log each user story as a ‘task’ to keep track of its status. 

But it gets even better…

Break down a complicated (high-point) user story into smaller subtasks and checklists to keep track of each step involved in developing it.

Here’s how it works:

A. Tasks and Subtasks

Split your entire project into small tasks and subtasks and then assign them to your user stories. Now your team can work on an entire story by completing the smaller parts, step-by-step.

B. Checklists

Create simple to-do lists that can be quickly checked off by your team as they progress through a technical task. This is really useful for mapping out steps, quality check items, detailed tracking, and so on.  

But that’s not all!

ClickUp’s Multiple Assignees feature lets you assign multiple team members to a single task when it’s needed.

4. Goals

Just like every video game, every project has its goals, and they are super-important.

But imagine this: there’s a new fantasy game with only just one super-long quest. Once you complete the quest, you’ve completed the game! 

That’s pretty boring, right?

We all love to play games with tons of interesting and engaging smaller quests. 

So why should projects be any different? 

ClickUp’s Goals make project work way more exciting! 

How?

ClickUp Goals are high-level containers that can be broken down into smaller Targets, which are much easier to achieve. Not only does it help you keep things organized, but it also gives your team members a feeling of accomplishment.

The more goals your whole team finishes, the more they stay motivated.

Additionally, with every completed Target, ClickUp automatically updates your team’s progress percentage in real-time. This way, everyone has a clear idea of how close they are to reaching the Goal.

With ClickUp’s Goals, you can also:

• Quantify your Goals with OKRs (Objectives and Key Results)
• Create weekly scorecards for better performance appraisal
• Track Scrum sprints in real-time 

Wait… you thought that was it?

ClickUp has a lot more in store for you. Here are some more epic features ClickUp offers: 

• Automations: automate repetitive and complex project processes with ClickUp Automations
• Dependencies: approach your technical tasks or sprint backlog items in the right order
• ClickUp Notepad: quickly access a notepad from your project management Dashboard to jot down ideas
• Mind Maps & Whiteboards: Plan out your sprints using ClickUp’s Whiteboard
• Assigned Comments: create action items out of comments to make sure they don’t go unnoticed 
• Custom Statuses: create custom statuses for your tasks to suit your workflow
• Custom Fields: add detailed info to a task as it progresses through various stages

Ready to implement story points for your project? Try ClickUp’s Agile Story Template. This template helps you plan out your project’s story points, create user stories and tasks, and make adjustments as needed.

Implement Story Points in Agile with ClickUp

Implementing many story points effectively can be challenging.

Luckily, you have ClickUp to easily conquer every level of project management. 

Whether you need help to estimate story points, track your project team’s progress, or anything else related to project management, ClickUp is your go-to power-up.

The best part?

Unlike most video games today, ClickUp offers tons of powerful features completely FREE! 

So sign up with ClickUp and level up your productivity today!