Velocity is a measurement of how much the team gets done in an iteration (a sprint). Velocity is what actually got done in the last iteration not what is planned.

velocity = Number of total story points / One iteration

What affects the velocity?
The velocity is affected by a number of things. It could be adding new team members to the team – or team members leaving the team. Every time something like this happens the team needs to find a sustainable pace again – and until this is done the velocity will deviate from its original curve.

The Calculation
There’s different ways to calculate velocity in different teams but the most important thing when doing velocity calculations is that you use the same formula each and every time. The way I usually calculate velocity is like this:

The last 8 sprints (rolling average) and then detract the outliers (highest and lowest).

This will give me a curve that deviates a bit up and down (depending on the sustainable pace of the team). The gap between high (green) and low (red) indicates the teams capacity and the median (black) indicates “Yesterdays Weather“.

Velocity Graph