P2 · Getting paid
Kill Fees: Getting Paid When a Client Cancels Mid-Project
A kill fee compensates you for work already committed when a client cancels mid-project. Set the trigger, tiers, and payment timeline in writing.
A deposit and a kill fee solve different problems. The deposit secures your time before work begins. The kill fee compensates you for work you started, turned down other clients for, or blocked time for, when the client cancels partway through. A contract with only a deposit and no kill fee leaves a real gap once real work is underway.
Write the trigger before you write the percentage
Define exactly what counts as a cancellation before you argue about how much it costs. A client going silent for two weeks is not automatically a cancellation; a written notice ending the engagement is. Spell out in the contract what event actually starts the kill-fee clock, and require that notice be in writing (email is fine) rather than inferred from a client's behavior.
A sliding scale reflects work already done
A flat kill fee on every cancellation, regardless of timing, undercharges you late in a project and overcharges an early-stage client fairly. A tiered structure tied to project completion, or to calendar milestones you control, matches the fee to the actual sunk cost: turned-down other work, purchased materials, or hours already logged.
Common tiers run something like 25 percent if canceled before work starts, 50 percent at the midpoint, and 75 percent or more once the project is substantially done. Set your own tiers based on how much of your calendar a typical project actually blocks, not a number copied from a template that doesn't reflect your own booking pattern.
Before you add a kill fee to your contract template
- Define cancellation as written notice from the client ending the engagement before completion.
- Set a tiered percentage scale reflecting project stage, not a single flat number.
- State a specific payment deadline (e.g., 10 or 14 days) after cancellation notice.
- Clarify how the kill fee interacts with any deposit already collected.
- Note separately whether non-refundable costs incurred on the client's behalf are covered by the kill fee or billed separately.
State the payment timeline, not just the percentage
A kill fee clause that names a percentage but not a due date is an invoice waiting to be ignored. Specify that the kill fee is due within a set number of days of the cancellation notice, the same way a normal invoice has payment terms, so a canceled project doesn't quietly become an unpaid one on top of a lost one.
Distinguish a kill fee from a deposit in the same contract
If your contract already includes a non-refundable deposit, be explicit about whether the kill fee is calculated on top of the deposit or credits it. A client reading both clauses should be able to tell, without asking you, exactly what they'd owe in total if they canceled at a given point — ambiguity here is where kill-fee disputes actually start.
Kill fees and retainer clients work differently
A client on an ongoing monthly retainer doesn't cancel a single project the way a one-off client does — for retainer relationships, the more relevant clause is a notice period (30 days is common) rather than a kill-fee percentage tied to project completion. Don't try to force a project-based kill fee structure onto a retainer agreement; use a notice-period clause instead, and reserve the kill fee specifically for scoped, fixed-end-date projects.
Kill fee clause checklist
Define the specific event that counts as cancellation — written notice ending the engagement, not silence or a missed check-in.
Set a sliding scale tied to project stage or elapsed time, not a single flat percentage for every cancellation point.
State a specific number of days the kill fee is due after cancellation notice, the same as any other invoice term.
Clarify whether the kill fee is calculated on top of an existing deposit or credits against it.
Specify whether the kill fee covers only your time, or also non-refundable costs you incurred on the client's behalf (materials, subcontractor deposits).
Where kill-fee disputes actually start
Most kill-fee disputes trace back to a contract that named a percentage but never defined the trigger clearly enough. If "cancellation" isn't defined, a client who simply stops responding can argue later that they never formally canceled, leaving you trying to collect a fee for an event the contract never actually described. Write the trigger in plain, specific language: written notice, from the client, ending the engagement before agreed completion.
The other common failure point is silence on payment timing. A percentage without a due date reads as a suggestion rather than an obligation once a client has already decided to walk away from the relationship — treat the kill fee exactly like a normal invoice, with the same net-terms language you'd use for a completed project, so there's no ambiguity about when it's actually owed.
A kill fee clause is also worth revisiting whenever your typical project length or booking pattern changes significantly. A tier structure built around a six-week project timeline doesn't map cleanly onto a two-week rush project or a six-month retainer-style engagement — review your kill fee tiers against your actual current project mix periodically rather than treating the clause you wrote years ago as permanently correct for however your business operates today.
A canceled project at the midpoint
A freelance brand designer is three weeks into a six-week project when the client cancels, citing a budget freeze. The contract specifies a tiered kill fee: 25 percent before work starts, 50 percent at the midpoint, 75 percent past the midpoint. Because the designer had completed roughly half the deliverables and turned down two other inquiries during that window, the 50 percent tier applies. The contract also states the kill fee is due within 10 days of the cancellation notice. The designer sends an invoice for 50 percent of the total project fee, referencing the specific contract clause, due in 10 days — not a negotiation, because the trigger, the percentage, and the deadline were all agreed to before the project started, not improvised after the cancellation happened.
Questions about kill fees before you add one
Is a kill fee legally enforceable the same way an invoice is?
A kill fee clause is enforceable as a contract term the same way any other agreed-upon payment obligation is, as long as it's clearly written, both parties agreed to it, and the amount isn't so extreme a court might view it as a penalty rather than a reasonable estimate of your actual loss.
Can I charge a kill fee if there was no written contract at all?
Without a written agreement specifying a kill fee, you have no contractual basis to charge one — you'd be relying on general arguments about work performed or a verbal agreement, which is a much weaker position than an explicit clause both parties signed before starting.
Should the kill fee percentage be the same for every type of project?
Not necessarily. A project with high upfront costs (materials, subcontractor deposits) may need a higher early-stage tier than a purely time-based service, so consider setting the scale per project type rather than using one universal set of percentages for every contract you send.
What if the client disputes the kill fee amount after canceling?
This is exactly why the trigger, tiers, and payment deadline need to be specific and agreed to before the project starts — a dispute after the fact is far easier to resolve when you can point to exact contract language both parties signed, rather than negotiating a fair amount after the relationship has already ended.