Kill Fee Clause Generator

What is a kill fee?

A kill fee (also called a cancellation fee) is a pre-agreed payment a client owes a freelancer if the client cancels, terminates, or indefinitely shelves a project before it's finished. Instead of the freelancer walking away with nothing after reserving time, turning down other work, and often completing a meaningful chunk of the project, the kill fee guarantees at least partial compensation tied to how far the work had progressed. The practice started in publishing, where a magazine would pay a writer a partial fee for a commissioned piece that ultimately didn't run, and it's since become common across freelance design, development, consulting, and other creative work.

A kill fee clause isn't adversarial. It's closer to an insurance policy that both sides can read before anything goes wrong: the client knows exactly what cancellation will cost at each stage, and the freelancer knows they won't do weeks of unpaid work only to have the project disappear. Contracts that spell this out up front tend to produce calmer conversations if a cancellation actually happens, because the number was agreed before either side had an incentive to argue about it.

Why freelancers use a kill fee clause

Freelance work carries a specific risk that salaried employment doesn't: once you commit your calendar to a project, you generally turn down other paid work to make room for it. If that project cancels partway through, the lost income isn't just the unfinished work. It's also the other clients you said no to during that window, work you can rarely recover once the slot has passed. A kill fee clause converts that open-ended risk into a defined, negotiated number instead of an argument after the fact.

It also protects against a specific and common failure mode: a client who goes quiet mid-project rather than formally cancelling. Freelancers without a cancellation clause often end up with weeks of "maybe it's still happening" limbo and no clean way to bill for the work already done. A written kill fee schedule gives both sides a trigger and a number, so an abandoned project has a defined resolution rather than an indefinite unpaid holding pattern.

How to calculate a fair kill fee

The fairest approach ties the fee to how much of the project's value has already been delivered or reserved at the point of cancellation, using a small number of clear stages rather than trying to track exact hours in the contract itself. This tool uses three common tiers, each expressed as a percentage of the total project fee:

• Before work starts (commonly ~10%): covers the time already spent on discovery calls, proposals, contracts, and holding the calendar slot, even if no billable work has begun.
• Mid-project (commonly ~50%): reflects that roughly half the deliverable has likely been built, reviewed, or iterated on, and that unwinding the engagement mid-stream carries real cost.
• Near completion (commonly ~90%): acknowledges that almost all of the work is done. The freelancer shouldn't lose the bulk of the fee over a cancellation that arrives just before delivery.

These defaults are a reasonable starting point for most freelance engagements, but adjust them to fit your own risk: a project with a long exclusive-commitment period (where you turned down significant other work to take it) justifies higher early-stage percentages, while a short, low-commitment engagement might use lower ones. What matters most isn't hitting an exact "correct" number. It's agreeing on the percentages and getting them in writing before the project starts, so there's no renegotiation under the stress of an actual cancellation.

Example clause

The generator above produces a ready-to-use version filled in with your own client name, project name, fee, and percentages. In plain terms, it reads roughly like this: if the client cancels before work begins, they owe the "before work starts" percentage of the fee; if they cancel partway through, they owe the mid-project percentage; and if they cancel close to completion, they owe the near-completion percentage. Each amount is shown both as a percent and as a dollar figure, so there's no ambiguity about what's owed. The generated clause also notes that the fee is compensation for reserved time and completed work rather than a punitive penalty, and that it doesn't cancel any separate obligation to pay for work already delivered and accepted.

Related tools: turn extra client requests into a priced document with the change order generator, or calculate what's owed on a late invoice with the late payment interest calculator.