Kill Fee
A kill fee is a predetermined payment owed to a service provider when a client cancels a project after work has begun but before it is completed. It compensates the provider for the time, effort, and opportunity cost invested in the project up to the point of cancellation. Kill fees are typically calculated as a percentage of the total project fee, commonly ranging from 25% to 50%, though the exact amount depends on the agreement and how much work has been completed. Kill fees are standard in publishing, journalism, creative services, and freelance contracts. Without a kill fee clause, a service provider who has turned down other work and invested significant time in a project has no recourse when the client abruptly pulls the plug. A well-drafted kill fee clause specifies the trigger conditions (what counts as a cancellation), the calculation method, when the fee is due, and whether any completed work is transferred to the client upon payment. Kill fees protect the financial stability of service providers while giving clients a clear, fair exit path.
Example
A freelance copywriter includes a kill fee clause in her contract stating that if the client cancels the project after the first draft is submitted, 50% of the total project fee is due within 14 days.
Frequently asked questions
- How much should a kill fee be?
- Kill fees typically range from 25% to 50% of the total project fee, but the appropriate amount depends on how much work has been completed and the opportunity cost to the provider. Some contracts use a sliding scale where the kill fee increases as the project progresses through milestones.
- Is a kill fee the same as a cancellation fee?
- They serve the same purpose and are often used interchangeably. Both refer to a payment owed when a project is terminated early. The term "kill fee" originated in publishing, while "cancellation fee" is more common in general business contracts.
- Does the client receive completed work after paying a kill fee?
- It depends on the contract. Some kill fee clauses transfer all completed work to the client upon payment, while others specify that work product remains with the service provider. This should be explicitly addressed in the clause to avoid disputes after cancellation.