Kill fee
A pre-agreed payment owed if a client cancels a project partway through, compensating the agency for reserved time and work already done.
For example, a contract might set a 50% kill fee: if the client pulls a booked project after work begins, they owe half the fee. It covers the capacity the agency held and the work delivered, instead of leaving a hole in the month.
Why it matters to agencies: a kill fee protects an agency from the real cost of cancellations - reserved capacity that cannot be resold at short notice, and work already completed. Agreeing one up front turns an awkward, contentious moment into a clean, pre-accepted clause.
- Having no cancellation terms, so a pulled project leaves a hole in the month.
- Setting it so high it scares clients off, or so low it fails to cover reserved time.
What is a kill fee?
A pre-agreed payment owed if a client cancels a project partway through, compensating the agency for reserved time and work already done.
How much is a typical kill fee?
Often a percentage of the remaining fee - commonly 25-50% - or payment for work completed plus reserved time, set in the contract up front.
Why do agencies charge a kill fee?
Because booked work reserves capacity that cannot be resold instantly, and a cancellation otherwise leaves the agency unpaid for time it held open.
Where is a kill fee defined?
In the SOW or contract's cancellation terms, agreed before work starts so it is never a surprise.