Handbook / Contracts and proposals
Kill fees: protecting yourself when a client cancels a project
Projects get cancelled for reasons that have nothing to do with your work: budgets are cut, priorities change, a manager leaves. When that happens mid-project, a freelancer can lose weeks of work and income, plus other work turned away to make room. A kill fee is the contract term that shares that risk fairly. This guide explains how to set one up.
What a kill fee is
A kill fee is an agreed payment due if the client cancels a project after it begins. It compensates for:
- work already completed
- time you reserved and could not sell to anyone else
- costs you incurred
It is common in creative and media work and useful in any project-based business.
Setting the amount
The amount should reflect what cancellation actually costs you. A stage-based approach is easy to understand:
- Before work starts: the deposit, if non-refundable.
- During early work: a portion of the total fee.
- After a first draft or major milestone: a larger portion.
- Near completion: most or all of the fee.
Alternatively, charge for all work completed to date at your rate, plus a fixed amount for reserved time. Whatever method you choose, make it clear and predictable.
Keep it reasonable
A kill fee is a form of agreed damages. Legal sources describe liquidated damages as a way to set compensation in advance when actual losses are hard to prove, and note that courts will not impose them if a clause is punitive, illegal, unconscionable or contrary to public policy. In practice, a fee linked to work done and time reserved is much more defensible than an arbitrary large sum. Contract law varies by state; for large projects, have a lawyer review your clause.
Writing the clause
A good cancellation clause covers:
- How to cancel: written notice.
- What is due: the kill fee by stage, plus approved expenses.
- When it is due: for example within 14 days of cancellation.
- What the client receives: completed drafts, files, or nothing beyond what is paid for.
- Rights: whether any usage rights transfer, and when.
- Your right to cancel: for non-payment or lack of client input, with what happens then.
Example clause in plain words: "Either party may end this project by written notice. If the client ends it, the client pays for work completed to the date of notice at the agreed rates, and in any case no less than 25% of the project fee once work has started, or 50% after the first draft is delivered. Rights in work transfer only on payment."
Adapt to your work and get advice for significant contracts.
Rights and files on cancellation
Ownership of creative work depends on the contract. US copyright law defines works made for hire to include certain specially commissioned works where the parties agree in a signed writing; otherwise the creator generally owns copyright unless it is assigned. Many freelance contracts transfer rights only on full payment. State clearly whether a cancelled project's partial work transfers to the client on payment of the kill fee, or stays with you.
The guide on independent contractor agreements covers ownership terms.
Deposits work alongside
A non-refundable deposit protects against cancellation before or early in a project. A kill fee protects later. Using both covers the whole timeline. See invoice payment terms for deposits and milestones.
Raising it with clients
Most professional clients understand cancellation terms. Explain briefly:
"If the project is cancelled partway, this covers the work completed and the time I have set aside, so I can keep my schedule open for you."
If a client strongly objects, consider whether they expect to cancel, and whether the project is worth the risk.
When cancellation happens
Stay calm and professional:
- confirm the cancellation in writing
- send a summary of work completed and the amount due under the clause
- deliver whatever the contract says the client receives on payment
- invoice promptly
A cancelled project handled well can still lead to future work. If the cancellation follows a change in direction, the guide on scope creep may help you renegotiate instead.
Put a reasonable, stage-based kill fee in every project contract, state what happens to work and rights, and pair it with a deposit.
Questions people ask
How much should a kill fee be?
It should reasonably reflect the work done and the time you reserved. Many freelancers set it by stage, for example a smaller share before the first draft and a larger share after.
Is a kill fee enforceable?
A cancellation fee agreed in a contract is generally enforceable when it is reasonable. Legal sources note that courts will not impose liquidated damages that are punitive or unconscionable, so avoid amounts that look like a penalty.
Who owns the work if the project is cancelled?
Whatever the contract says. Many contracts transfer rights only on full payment, so on cancellation the client receives only what the kill fee covers, or nothing beyond paid work.
Does a deposit replace a kill fee?
A non-refundable deposit can cover early cancellation, but a kill fee protects you later in the project when more work has been done.
Do this week
- Add a cancellation clause with a stage-based kill fee to your contract template.
- Decide what the client receives on cancellation: drafts, files or nothing beyond payment.
- Require a deposit for new clients that covers early-stage work.
- Prepare a short explanation of the clause for clients who ask.
- Review the clause with a lawyer if your projects are large.
Sources read for this page
Published November 8, 2026. Sources checked November 8, 2026. Rules, limits and forms change; the linked page is the authority.