getting paid when a client pulls the plug: the kill fee clause

Anatomy of a strong kill-fee clause

Trigger

A clear definition of what counts as cancellation — written notice from the client, abandonment after a stated period of silence, or termination for convenience. Naming the trigger prevents disputes about whether the project was actually killed or merely paused. Tie the fee to the moment the client communicates they are stopping, or to a defined window of non-response.

Deposit retention

Confirmation that the upfront deposit is forfeited on cancellation and not returned. This is your floor. Because the deposit was non-refundable when paid, the kill fee clause simply restates that a cancellation does not reverse it, removing any argument that unfinished work entitles the client to a refund of money already earned.

Work completed

A right to bill for all work performed up to the cancellation date, beyond the deposit, at your agreed rate or in proportion to milestones reached. This captures the value you created between kickoff and the kill. State how it is measured — hours logged, milestones delivered, or a percentage of phase completion — so the invoice is calculable rather than negotiable.

Minimum percentage

A floor expressed as a percentage of the total project fee, payable on cancellation regardless of how little work was done. Common figures are 25 to 50 percent. This compensates you for the opportunity cost of holding the slot, turning down other work, and the disruption of an abandoned project — costs that pure time-billing never captures.

Deliverable status

A statement that work-in-progress is not delivered, licensed, or owned by the client unless the kill fee and any outstanding balance are paid. This keeps your leverage intact even at cancellation. A client who wants to walk away with the partial work must settle first; otherwise the unfinished deliverables remain yours.

Example language

Drop this into your contract and adapt the bracketed placeholders.

Cancellation and Kill Fee. If [Client] cancels this project after work has begun, whether by written notice or by failing to respond for [14] consecutive days, the deposit is forfeited and non-refundable. In addition, [Client] shall pay for all work completed through the cancellation date at the agreed rate, plus a kill fee equal to the greater of that amount or [40%] of the total project fee. No work in progress is delivered, licensed, or owned by [Client] until the kill fee and any outstanding balance are paid in full. [Provider] retains all rights to incomplete materials.

Common mistakes

• Having no kill fee at all, so a client can cancel a half-finished project and leave you with only the deposit for weeks of work.
• Defining cancellation too narrowly, so a client who simply goes silent for a month is technically never 'cancelled' and never triggers the fee.
• Setting the minimum percentage too low to cover the opportunity cost of the slot you held and the work you turned away.
• Forgetting to confirm the deposit is forfeited, leaving room for the client to argue an unfinished project entitles them to a refund.
• Releasing work in progress before the kill fee is paid, giving away your only leverage to collect on a dead project.
• Failing to state how completed work is measured, turning the cancellation invoice into an open negotiation rather than a calculation.