What is Kill Fee?
Compensation paid to a freelancer when a client cancels an engagement after work has begun, covering completed work and opportunity costs.
Definition
A kill fee (also called a cancellation fee or contract cancellation fee) is an agreed-upon sum paid to a freelancer to compensate for losses incurred when a client cancels, terminates, or abandons an engagement after work has already commenced — but before the project is complete. The kill fee compensates the freelancer for work already performed, time invested in planning and setup, and opportunity cost of having turned down other work to be available for this project.
When Kill Fees Apply
Kill fees typically apply when: a client cancels a contract or project before completion; a client breaches the contract making continued work impossible; a client terminates the engagement early; or a project is put on indefinite hold by the client. Kill fees generally do not apply if the freelancer is in material breach (i.e., the freelancer failed to deliver as agreed), in which case the client may have grounds to terminate without paying a kill fee.
How Kill Fees Are Calculated
Kill fee structures vary by contract. Common approaches include: percentage of total project value (typically 25–50%); compensation for work completed to date at the agreed hourly rate or fixed fee pro-rata; the greater of work completed or a fixed cancellation fee; or a flat fee specified in the contract regardless of completion stage. The specific structure should be agreed upon in writing before the project begins.
Kill Fee vs. Deposit
A deposit is paid upfront before work begins as security and is typically applied against the final invoice. A kill fee is paid only if the project is cancelled — compensating for losses at the point of cancellation. Both serve to protect the freelancer's financial exposure. A contract might include both: a non-refundable deposit paid at signing, and a kill fee that applies if cancelled after a certain date.
Protecting Yourself with Kill Fee Clauses
Every freelance contract should include a cancellation/kill fee clause specifying: what triggers the kill fee (e.g., cancellation after a certain date or after a specific milestone); how the kill fee amount is calculated; payment terms for the kill fee (e.g., due within 15 days of cancellation); and whether the kill fee is in addition to payment for work already completed. Without this clause, you have limited legal recourse if a client cancels and refuses to pay for work already done.