What Is a Kill Fee?
A kill fee is the payment owed if a client cancels a project midway — typically 25–50% of the remaining contract value.
How kill fee works
A kill fee charges the client 25 to 50 percent of the remaining contract value when they cancel a project before completion. The clause lives in your contract and triggers the moment the client terminates work that is already underway. You calculate the fee against the unbilled balance, not the total contract. On a $10,000 project where the client has already paid $4,000, the remaining value is $6,000, so a 40 percent kill fee bills $2,400. The kill fee compensates you for the income you reserved on your calendar and the work you turned down to take the job. It applies specifically to client-initiated cancellation. It does not cover scope changes, which a change order handles, and it does not cover your own withdrawal, which a termination clause governs separately. The practical implication for your pricing is that a kill fee protects your effective hourly rate against dead time. When a client cancels mid-project, you rarely backfill that booked time at full value, so the fee bridges the gap. Set the percentage higher (40 to 50 percent) for projects that block large calendar windows and require turning away other clients. Set it lower (25 to 30 percent) for short engagements you can quickly replace. Always pair the kill fee with a non-refundable deposit so the deposit and the fee together cover your sunk costs. State the exact percentage and the calculation base in writing before the project starts, because a kill fee you never wrote down is a kill fee you cannot collect.
Example
Killed brand identity project
A freelance designer signs a $12,000 brand identity contract with a 40% kill fee clause. She collects a $4,000 deposit upfront and completes the logo and color system. At the halfway mark, the client gets acquired and cancels. Remaining contract value is $8,000. The kill fee is 40% of $8,000, or $3,200. The client owes $3,200 on top of the $4,000 already paid, so the designer collects $7,200 total for a project that never finished. Without the clause, she would have walked away with only the $4,000 deposit and lost $3,200 in protected income.
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