How to Write a Kill Fee Clause (When Projects Get Canceled)

You’re three weeks into a project. The client suddenly goes silent. Then: “We’re pivoting. We don’t need this anymore.”

You’ve already invested 30 hours. Now what?

Without a kill fee clause, the answer is usually: nothing. You eat the loss.

With one? You get compensated for work already done—even if the final deliverable never ships.

This guide shows you exactly how to write a kill fee clause that protects your time without scaring off legitimate clients.

What Is a Kill Fee?

A kill fee is partial compensation when a client cancels a project before completion.

Think of it as severance pay for projects.

Common structures:

– Percentage-based: 25-50% of total project fee

– Milestone-based: Payment for completed phases

– Hourly floor: Minimum hours billed regardless of completion

The key: you get paid for work already performed, even if they never use it.

Why You Need One (Beyond Obvious Reasons)

Scenario 1: Client runs out of budget mid-project

Scenario 2: Internal politics kill the project

Scenario 3: They hire someone cheaper to finish your work

Scenario 4: Company gets acquired and priorities shift

In every case, you didn’t fail. The project circumstances changed.

A kill fee clause makes it clear: you’re billing for your time, not just final deliverables.

Basic Kill Fee Language

Here’s a starter template:

> Project Cancellation:

> If Client cancels this project after work has begun, Client agrees to pay a kill fee equal to [percentage]% of the total project fee, or payment for all milestones completed to date, whichever is greater.

Percentage recommendations:

– 25%: For projects under $5K (balances protection with accessibility)

– 50%: For projects over $10K or longer than 1 month

– 100% of work completed: For hourly or milestone-based contracts

> Cancellation & Kill Fees:

> Client may cancel this project at any time with written notice. Upon cancellation, Client will pay for all completed milestones plus 50% of the fee for any milestone currently in progress.

>

> Milestones:

> 1. Discovery & strategy ($2,000) — due upon completion

> 2. Design mockups ($3,000) — due upon client approval

> 3. Development ($5,000) — due upon launch

Why this works:

– Client knows exactly what they’ll owe at each stage

– You’re protected even if they cancel mid-milestone

– Clear payment triggers reduce disputes

The “Minimum Hours” Floor

For open-ended or consulting projects, set a billing floor:

> Cancellation Policy:

> If Client terminates this agreement, Client agrees to pay for all hours worked to date, with a minimum of [X] hours billed regardless of project completion.

Example: 10-hour minimum on a 40-hour project means you’re guaranteed $1,000 (at $100/hr) even if they cancel after week one.

When to use this:

– Retainers

– Ongoing advisory work

– Projects with unclear scope

– Clients with history of scope changes

What NOT to Do

❌ “Non-refundable deposit” without kill fee language

→ Deposits cover getting started. Kill fees cover the middle.

❌ Making the kill fee 100% of project cost

→ Clients won’t sign. Aim for fair compensation, not punishment.

❌ Leaving cancellation terms vague

→ “We’ll work something out” = you’ll work for free.

How to Present It to Clients

Bad: “I need a kill fee in case you flake.”

Good: “This clause protects both of us if project circumstances change. You’re only paying for work I’ve actually completed—nothing more.”

Key framing:

– Emphasize fairness (they don’t pay for work you didn’t do)

– Normalize it (“industry standard for projects this size”)

– Tie it to milestones, not arbitrary penalties

Most professional clients understand. The ones who push back hard are often the ones you’ll need it with.

Real-World Example

Project: Website redesign, $12K total

Milestones: Strategy ($3K), Design ($4K), Development ($5K)

Client canceled after design phase:

– ✅ Strategy complete: $3K paid

– ✅ Design complete: $4K paid

– ⏸️ Development not started: $0 owed

Kill fee clause result: $7K paid (58% of total), zero dispute.

Without clause: Client might argue they only owe for “usable” deliverables, leaving you fighting for the $4K design fee.

Pairing Kill Fees With Scope Protections

Kill fees work best alongside:

1. Change order clauses (additional work = additional cost)

• Payment milestones (money in hand before next phase)

• Deliverable definitions (what “done” means at each stage)

Together, these create a contract where:

– Clients can’t infinitely revise

– You’re paid as you go

– Cancellations don’t bankrupt you

State-Specific Notes

Most states enforce kill fee clauses as long as they’re:

– Reasonable (50% is generally safe, 100% may be challenged)

– Clear (specific language, not “subject to negotiation”)

– Signed (verbal agreements won’t hold up)

California note: Kill fees are standard in entertainment/media contracts. Courts generally uphold them for creative services.

New York note: Similar—just make sure the fee is proportional to work performed.

If you’re working with clients in multiple states, include a jurisdiction clause specifying which state’s law applies.

When Clients Push Back

“We’re not going to cancel, so we don’t need this.”

→ “Great! Then it’ll never come up. But my contract template includes it for all projects.”

“Can we remove the kill fee clause?”

→ “I can lower the percentage from 50% to 25%, but I need some protection if circumstances change.”

“This feels like you don’t trust us.”

→ “It’s not about trust—it’s about making sure we’re both clear on what happens if the project scope shifts.”

If they refuse entirely, that’s a red flag. Proceed with extreme caution (or walk).

Bottom Line

A kill fee clause doesn’t prevent cancellations. It just makes sure you’re not eating ramen for a month when they do.

Standard language:

– 25-50% of total fee, OR

– Payment for completed milestones, whichever is greater

Best practice:

– Tie it to clear project phases

– Present it as fair protection for both sides

– Make it non-negotiable for projects over $5K

Your time has value—even when the project doesn’t finish.

Not legal advice. LawAmie is built by a practicing attorney, but this tool does not create an attorney-client relationship. For specific legal questions, consult a licensed lawyer in your state.

Related Articles:

– [Client Won’t Pay? 5 Contract Clauses That Stop Payment Disputes](#)

– [How to Write a Scope of Work That Prevents Scope Creep](#)

– [Should You Require a Deposit? (And How Much?)](#)