Capacity planning is a crucial aspect of software development that involves ensuring services have enough spare capacity to handle expected workload increases and normal spikes. It's a collaborative effort involving multiple stakeholders, including developers, project managers, and IT operations teams. Capacity planning can be done on short-term or long-term basis, with the former focusing on immediate resource needs and the latter taking a more extended view to accommodate growth and align with business goals. The benefits of capacity planning include efficient resource utilization, cost-savings, enhanced system performance, scalability, and risk mitigation. There are four common methodologies for calculating capacity: service-starvation analysis, load-generation analysis, static-resource analysis, and others. A typical capacity planning process involves calculating free capacity, determining the safest minimum amount of free capacity needed, scaling services to at least n+2 instances, projecting workload growth, and calculating additional capacity needed. Teams should regularly review and iterate on their capacity plans to ensure they remain accurate and effective in preventing production-level incidents.