Get 50% off our limited company packages for your first three months
When it comes time for contract negotiations with a client, there are several clauses you should always include. Late payment penalties are the most obvious, but there are plenty more items that need to go into any good contract. One important clause you should consider is a kill fee.
A kill fee is, in a very general sense, an insurance against your work getting canned.
Sometimes, often for reasons totally beyond your control, a project may be cancelled, funding cut, or your client may simply have a change of heart and decide you don’t fit into their plans any more. Without a kill fee you could end up completely out of pocket, with nothing to show for your hard work.
A kill fee clause will mean that, even if your hard work never sees the light of day, you’ll still get at least partial payment.
If you’re looking for reliable contract samples that can help protect you and your business, check out our “Protect yourself with these contract samples” article for all the information you need.
Don’t forget to explore our online accountancy software page for more information on Crunch and our unique blend of state-of-the-art online accountancy and real human support.
Deciding how much your kill fee should be boils down to personal preference, and can be structured in any number of ways. For example, you could:
There are some situations in which a kill fee simply won’t be needed. For example, if you’re paid on receipt of your work, rather than publication.
They sure are! There are strong arguments both for and against. The Against camp point out that if a client enters into a contract the terms of that contract should always be honoured – whether the work is cancelled or not. Your full payment should be factored into the cost of cancellation, and you should always insist on full payment.
The For camp argues that Kill Fees act as a legitimate insurance and make the canning of a project less disastrous for all involved. They also let clients know up-front that they shouldn’t be expecting to mess you around.
The perfect kill fee clause will vary from client to client, but you should think about including the following details:
Whether you’re for or against kill fees, it can’t be denied that being prepared for every eventuality is better than not preparing for any of them.