Kill fee and cancellation clause: how to write one in 2026

A kill fee is the payment a client owes when they cancel a project after you have started. A cancellation fee covers the gap between signing and starting, and a deposit is money you already hold. Whether a cancelled project pays you is decided when the contract is signed, not when the cancellation email arrives. Write all three into the contract.

Three terms that protect three different moments

People use these words loosely, so separate them before you draft anything.

A kill fee applies after work has begun. It pays you for the work done and for the time you reserved and the other jobs you turned down. The term comes from publishing, where an editor kills a commissioned piece and pays the writer a share of the agreed fee. Crunch, a UK accounting firm, describes it as "a safety net for your work if a project gets cancelled" (Crunch).

A cancellation fee applies after signing but before work starts. You booked the weeks, said no to other clients, and then the client pulled out the Friday before kickoff. The fee covers the commitment you made, not work you did.

A deposit is the simplest. It is money paid before work starts that you keep regardless. It is not triggered by anything. It is already in your account when the cancellation email lands.

How to set the percentage

There is no legal standard, only common practice. Crunch says figures "in the region of 25% are fairly common" and that experienced people can often negotiate more (Crunch). TechRepublic suggests about 50% as a rough ceiling and says a figure nearer 25% is usually easier to collect on longer, costlier projects (TechRepublic). Treat those as starting points for a negotiation, not as rules.

Whatever number you pick, it has to be written as a number. "The client will pay a reasonable fee" is an argument waiting to happen. Three structures work.

The first is a flat share of the total fee, for example 50% if the project is cancelled at any point after work begins. It is easy to understand and easy to enforce.

The second is tiered by stage. A common shape is 25% if the client cancels in the first phase, 50% after the midpoint and the full fee in the final phase, because almost all the value has been created by then. Tiers line up neatly with a payment schedule, which is why they work well for design, development and photography.

The third is work completed plus a share of what remains. On a $20,000 project with $8,000 of work done, a 25% kill fee on the remaining $12,000 adds $3,000, for $11,000 in total. Clients tend to find this the fairest because most of the bill is tied to delivered work.

Write the trigger, the number and the deadline

A workable clause names four things: what counts as cancellation, what counts as work begun, what is owed at each stage, and when it is due. Crunch's checklist adds reclaiming expenses incurred, keeping copyright until the fee is paid, and defining whether cutting scope counts as "killed" (Crunch).

Here is wording to adapt. Check it with a lawyer in your country before you use it:

If the Client cancels the project after work has begun, the Client will pay for all work completed to the cancellation date plus 25% of the fee for the remaining work. The deposit is non-refundable once work has begun and is credited against the amount owed. Amounts due under this clause are payable within 14 days of the cancellation date. Ownership of the work passes to the Client only when all amounts are paid.

That paragraph names the trigger, sets the number, treats the deposit properly, gives a deadline and keeps your rights until you are paid. If you need a base contract to put it in, start from the roundup of free contract templates.

The deposit does the heavy lifting

For a small business, the deposit usually does more work than the kill fee. A kill fee is a debt owed by someone who has already decided to leave. Collecting it means invoicing a client who has mentally closed the project, and if they ignore the invoice your only route is escalation. A deposit avoids that conversation.

A common structure is a deposit of a third to a half of the project fee, paid before work begins and stated as non-refundable once work has started. Add a kill fee for the balance. A cancelled project then still pays: the deposit covers the early commitment automatically, and the kill fee covers work done beyond it. The deposit is the floor you can count on, and the kill fee is the part you may have to invoice for. More on setting this up in how to collect a deposit before you start.

If the project dies and the contract says nothing

You are in a weaker position, but you are not empty-handed. Without a kill fee clause you can usually still claim payment for work you actually completed, because the client received something of value. What you have almost certainly lost is any claim to the income you gave up by blocking out the time, because nothing in writing promised it.

Invoice immediately and specifically. List what was completed, attach whatever proves it was delivered, and present it as ordinary billing, not a negotiation. Many clients will pay for finished work without argument. What they resist is an open-ended demand.

If they refuse even that, the route is the same as for any unpaid invoice: a formal demand, then small claims or a collections route for larger sums. It is winnable for completed work and it is slow. In the UK, for example, a business that is paid late can claim statutory interest of 8% above the Bank of England base rate plus a fixed sum per debt, though a contractual rate can replace it (GOV.UK). Rules differ by country, so ask a local adviser what applies to you.

The asymmetry is the whole argument for writing the clause first: a missing clause does not erase your right to be paid for work done, but it erases your protection for work you committed to.

Written contracts are becoming the legal baseline

Cancellation terms matter more because the law increasingly expects a written contract. New York State's Freelance Isn't Free Act took effect on August 28, 2024. It requires a written contract when you hire a freelancer for work worth $800 or more, counting projects within a 120-day period. The contract must name both parties, itemise the services, state the rate and give the payment date, and it sets a default payment deadline of 30 days unless the parties agree otherwise (Whiteford, summary of the Act). A law firm bulletin on the state version covers the same ground (Epstein Becker Green). Check the official text, because exclusions and enforcement details differ.

The point for cancellation is direct. If the law expects a written contract that states what you are owed and when, your kill fee, cancellation fee and deposit terms belong in that same document. A clear clause becomes part of the terms the client agreed to, not a surprise you invent afterwards. New York is one place, but the direction is general: more places want terms written down and signed. For the payment-timing side, see payment terms, net 30 and deposits.

How Delivvo gets the deposit paid before work starts

Delivvo is built so the cancellation terms and the deposit are agreed in one step, before any work begins.

1. Build the quote from your packages and add-ons. Add your kill fee and cancellation wording to the contract template once, and every new quote carries it.
2. Send one link. The client reads the quote and the contract on the same page.
3. With the one-page close (Pro plan and up), the client picks their package, signs the contract and pays the deposit in one visit. Delivvo then creates the client record, the project, the contract, the invoice and the payment schedule for you.
4. The signature is stored with a SHA-256 fingerprint, IP address and device, and the PDF is archived, so the clause you agreed is easy to prove later.
5. A payment schedule can split the rest into up to 12 payments tied to stages, which gives you the tiered structure above without a spreadsheet. If a payment is late, automations send reminders at 7, 14 and 30 days and stop once it is paid.
6. If a client cancels, you already hold the deposit and the signed clause, and you can issue the kill-fee invoice with the next sequential number from the same project.

The client pays through your own gateway, so the deposit goes to you, not through Delivvo, and Delivvo takes 0%. Every invoice and contract carries a verification code that anyone can check.

Delivvo's templates are a starting point and you can edit every clause. They are not legal advice, so have a lawyer review wording that carries real money. See the details on the proposals page.

Read more about contracts and e-signatures, or start with the CRM and client portal.

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