What Is a Kill Fee in a Freelance Contract?

A kill fee is a payment due when a client cancels commissioned freelance work before the project is completed.

It is designed to recognise that a freelancer may have:

• already done work;
• reserved time;
• turned away other clients;
• committed to expenses.

The useful question is:

If the project is cancelled, how much of the agreed fee remains payable?

How does a kill fee work?

There is no single standard formula.

A contract might provide:

• 25% of the remaining fee;
• 50% of the project price;
• payment based on the stage reached;
• a non-refundable deposit that functions as a cancellation payment.

For example:

If the Client cancels the Project for convenience after work has begun, the Client will pay all fees accrued plus a cancellation fee equal to 25% of the remaining project fee.

That creates a more predictable outcome than leaving cancellation entirely unaddressed.

Why do freelancers use kill fees?

Freelancers sell capacity as well as deliverables.

If you reserve a month for a client, you may reject other work.

A cancellation can therefore cause loss even when you are paid for the hours already completed.

A kill fee can help recognise that lost capacity.

When is the fee triggered?

Check whether the clause applies when:

• the client changes its mind;
• the project is paused indefinitely;
• the client fails to supply required materials;
• the client terminates for convenience;
• the freelancer terminates because of non-payment.

The trigger should be understandable.

What if the freelancer is in breach?

Some contracts distinguish between:

• cancellation for convenience; and
• termination because the freelancer materially breached the agreement.

A kill fee may apply only to the first situation.

That distinction is worth checking.

Kill fee versus deposit

A deposit is paid upfront.

A kill fee becomes payable on cancellation.

Sometimes the deposit is expressly non-refundable and credited against the kill fee.

The contract should make clear whether the client could end up paying both.

Work completed before cancellation

A kill fee should not distract from payment for work already done.

Check whether the client must also pay for:

• completed milestones;
• work in progress;
• approved expenses;
• committed third-party costs.

Questions to ask before signing

Check:

• What events trigger the kill fee?
• How is it calculated?
• Is completed work paid separately?
• Does the deposit count towards it?
• Does it apply to project pauses?
• What happens if the client terminates for alleged breach?
• When must the fee be paid?

Do you need a kill fee?

Not every engagement does.

A rolling hourly contract with short notice may already manage cancellation risk.

A large fixed-fee project requiring substantial reserved capacity may create a stronger commercial reason to address it.

For broader context, see Freelance Termination Clauses: What Should You Look Out For?.

PactRivet can identify cancellation, notice and final-payment terms in your agreement and show how they fit together.

Related guide

For a broader look at this area, see Freelance Termination Clauses: What Should You Look Out For?.

PactRivet provides general information and questions to consider. It is not legal advice.