Guide · Contracts · 5 min read
The kill fee, explained
What a kill fee is, what percentage is fair, how to word the clause, and how to explain it to a client who has never heard of one.
· Ferrier Industries LLC
In short
- A kill fee is what a client pays when they cancel a project you have already made room for. It pays for the calendar you held open and the work you turned down to hold it.
- For project work, the usual shape is everything completed, billed in full, plus a percentage of what remains. A flat percentage of the total is common in editorial work.
- The deposit is non-refundable and is credited against what is owed. It is what bought the slot.
- Say in the clause that the client receives and owns the work done to date once they pay. It changes how the clause reads.
A kill fee is what a client pays when they cancel a project you have already made room for. It is not a penalty and it is not compensation for hurt feelings. It is payment for the calendar you held open and the work you turned down to hold it.
The term comes from journalism, where a commissioned piece that never runs is “killed” and the writer is paid a fraction of the fee. It has spread to other kinds of freelance work, and it belongs in the contract for any project longer than a couple of weeks.
Why it exists
Take an eight-week booking at $16,000. You accept it, you turn down two other projects for that window, and in week three the client’s budget is frozen. Without a kill fee you invoice for three weeks of work, $6,000, and spend the remaining five weeks trying to fill a gap at two weeks’ notice.
The client did nothing wrong. Budgets do get frozen. But the cost of that freeze should not sit entirely on the person who cleared the calendar, and that is the whole argument for the clause.
What percentage is fair
Two structures are common, and both are defensible.
- Work to date plus a percentage of what remains: everything completed, billed in full, plus a share of the unbilled balance (a quarter to a half, as an example). Best for project work.
- A flat percentage of the total fee. Common in editorial and commissioned work, where “work completed” is hard to measure.
A sliding scale is fairer still and only slightly more complex to write. Late cancellation costs you more, because the slot is harder to refill, and the number can reflect that:
| Canceled during | Fee on the remaining balance |
|---|---|
| The first third of the schedule | 25% |
| The middle third | 35% |
| The final third | 50% |
Whichever you use, the deposit is non-refundable, and it is credited against what the client owes on cancellation. It is what bought the slot in the first place, not an extra charge on top.
The clause
Cancellation. Either party may terminate this agreement with 14 days’ written notice. If the Client terminates, the Client will pay for all work completed to the date of termination, plus a cancellation fee of 35% of the remaining project fee. The deposit is credited against these amounts and is otherwise non-refundable. On payment in full, the Client receives all work completed to date and the intellectual property in it transfers as set out above.
The last sentence is the part clients care about, and leaving it out makes the clause feel punitive. They are not paying for nothing. They are paying for the work so far, and they own it. Say that in the clause and the negotiation goes differently.
The freelance contract template covers the kill fee next to the termination clause, and explains why the two are different things.
Kill fee, cancellation fee, or deposit forfeiture?
The words get used interchangeably. The distinctions are worth keeping straight, so you do not protect only a fraction of the work by accident.
| Mechanism | What you keep | Best for |
|---|---|---|
| MechanismDeposit forfeiture | What you keepMoney already paid | Best forThe start of a project only |
| MechanismKill fee | What you keepA percentage of the total, at any stage | Best forEditorial and commissioned work |
| MechanismCancellation fee | What you keepWork to date plus a share of the remainder | Best forStaged project work |
| MechanismNotice period | What you keepPayment through a notice window | Best forRetainers |
How the billing structure changes things
If you are billing monthly in advance, you are already partly covered. The client has paid for the current month, so a cancellation costs you the unbooked future rather than money you are owed. In that case a 30-day notice period is usually enough, and a kill fee on top can look greedy.
If you are on 50/50, you need the cancellation clause. Half the fee up front does not protect you against a cancellation in week six of eight.
Explaining it to a client who balks
Many objections come from people who have not worked with a freelancer before and read it as a trick clause. A short reply usually does it:
Happy to talk that one through. When I take an eight-week project I stop taking other work for that window, so if it stops halfway I cannot refill the second half at short notice. The clause covers everything completed plus 35% of what is left, and if it is ever triggered, you get all the work to date and own it outright. It only applies if you cancel. If I have to withdraw, you owe nothing beyond work delivered. If 35% feels steep, I am fine with a sliding scale that starts lower and rises as we get closer to delivery. Whichever you prefer.
The offer of a sliding scale at the end matters. It shows the clause is about risk rather than extraction.
Invoicing it
When a cancellation comes, respond within a day, in writing, warmly and specifically. Do not go quiet and do not get emotional. Confirm the end date, state the numbers, attach the invoice, and hand over the work on payment.
Hi Marcus, Sorry to hear the budget got pulled. These things happen, and I hope it comes back around. Confirming where we land: work completed to September 14 is $7,200 (discovery, wireframes, and the first design concept). The cancellation fee is 35% of the remaining $8,800, which is $3,080. Total $10,280. Less the $4,000 deposit already paid, the attached invoice is for $6,280, due in 14 days. On payment I will send over everything completed (Figma files, wireframes, and the research notes) and they are yours to use. If the project restarts within six months I will credit the cancellation fee against the new booking. Just say the word. Sam
That last offer costs little and can bring the project back. A cancellation is rarely a rejection of you, and the client who felt treated well when the budget vanished is the one who calls when it returns.
Read next · Invoices
Deposit vs milestone billing: which one to use
Same $24,000, two schedules. One pays every four weeks, the other makes you wait fourteen.
Continue →Try PaloWorks for free
Intake, scope, rounds, change orders, invoice on one project URL. The extra round goes on the invoice.