Clauses › Kill fee

Kill fee.
The clause that pays you when the client walks.

The client cancels. The project stops. Without a kill fee clause, you've done weeks of work — and all you have to show for it is whatever deposit you collected.

Draft an agreement with a kill fee clause

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What it means

In plain English.

A kill fee — sometimes called a cancellation fee — is a predetermined amount the client owes if they cancel the project after it's started. It compensates the provider for work already done, time blocked out, and opportunities declined. It's not a penalty; it's compensation for a contractual breach.

Plain English definition

The kill fee is the amount you keep — or the additional amount owed — when a client cancels mid-project. Common structures: a flat percentage of the total project fee (e.g. 25–50%), or a tiered structure based on how far into the project the cancellation happens.

When you need it

Any project where you block significant time, turn down other work, or invest in pre-production before the client pays in full. Creative projects — design, copywriting, video production, software development — are especially vulnerable to mid-project cancellation.

What happens without it

Without a kill fee, you're entitled to payment only for work completed. If the client cancels after you've done 40% of the work but before any milestone payment is due, you may have a legal claim — but it will be disputed, hard to calculate, and expensive to enforce.

Why it's missed

It sounds morbid. It protects the living.

Why missed

"They won't cancel"

Clients cancel for reasons outside your control: budget cuts, leadership changes, pivots, acquisitions. No matter how good the relationship, include the clause.

Why missed

The deposit feels like enough

A 25% deposit doesn't cover a project that was 60% complete at cancellation. The kill fee bridges the gap between what you've already received and what you've already done.

Why missed

Negotiating it feels presumptuous

Including a kill fee signals that you're protecting yourself from the client. But framing it correctly — as standard industry practice — makes it a non-issue at signing and a lifesaver at cancellation.

What can go wrong

The downstream consequences.

Weeks of unpaid work

You blocked off three weeks, completed a third of the project, and the client cancels. Without a kill fee, your deposit doesn't cover the time spent. You've worked at a fraction of your rate.

Turned-down opportunities

You declined two other projects to take this one. The client walks. You're left with an empty calendar and no recourse for the business you turned away.

Disputed "work completed" calculation

Without a pre-agreed kill fee structure, arguments about how much work was done — and what it's worth — become expensive. The kill fee eliminates the calculation dispute entirely.

Stranded deliverables

Half-finished work has limited resale or reuse value. The kill fee compensates for the fact that what you've built is built for the client, not the market.

Red-flag wording

Kill fee language that won't hold up.

These formulations seem like kill fees but leave you with no reliable protection.

Red flag

"Client may cancel with reasonable notice"

No kill fee mentioned. "Reasonable notice" compensates you nothing. Cancel with two weeks' notice and you owe nothing beyond what's been invoiced.

Red flag

"Fee for work completed to date"

This sounds fair but invites a fight over valuation. What's a half-completed design worth? A quarter-finished codebase? Pre-agreeing on percentages avoids the argument.

Red flag

"Deposit is non-refundable"

A non-refundable deposit is not the same as a kill fee. If the project was 70% complete, the deposit alone may not cover time invested.

Red flag

"Cancellation subject to negotiation"

Negotiation at cancellation time favors whoever has more leverage — often the client. Lock in the terms before the project starts.

Safer pattern

How to structure a kill fee that holds up.

The most enforceable kill fees use a tiered structure tied to project completion — the further along, the higher the fee. They also clarify what happens to deliverables and whether the deposit counts toward the kill fee or is separate.

BizDraft generates kill fee clauses calibrated to your project size and industry, using tiered percentages that courts consistently uphold as reasonable liquidated damages.

The pattern

Use tiered percentages. "If Client cancels within 7 days of signing: 25% of total fee. If cancelled after delivery of first draft: 50%. If cancelled after delivery of final draft: 75%."
Clarify what the deposit covers. "The non-refundable deposit paid at signing is credited toward any kill fee owed."
Address deliverable ownership at cancellation. "Upon payment of the applicable kill fee, Client receives all completed work product as of the cancellation date. No license to incomplete deliverables is granted."
Define what triggers cancellation. "Cancellation means written notice from Client of intent to terminate the project before all deliverables have been accepted."
Frame it as standard practice. Many creative industry agreements include kill fees by default. Presenting it as standard reduces friction at negotiation.