You are three weeks into a project when the email arrives: "We've decided to go in a different direction. Please stop all work." Your first question is the obvious one: do I still get paid?
The answer depends almost entirely on whether your contract includes a kill fee. This guide covers what a kill fee is, common ways to structure one, how to invoice a cancelled project, and your options when no kill fee exists.
The quick version
- A kill fee is cancellation compensation agreed in advance, in the contract, that the client owes if they end the project before completion.
- If your contract has one, you invoice for the work completed so far plus the kill fee, citing the contract clause on the invoice.
- If your contract has no kill fee, you can still invoice for all work completed to date at your normal rate, then negotiate anything beyond that.
- A non-refundable deposit you already hold acts as de facto kill protection: at minimum you keep it, provided your contract says it is non-refundable.
What a kill fee actually is
A kill fee is a pre-agreed amount a client pays if they cancel a project through no fault of yours. The key phrase is pre-agreed. It is not something you improvise after the cancellation email lands; it is a clause you both signed before work started.
It exists because cancellation costs more than the hours already worked. You turned down other work and planned your cash flow around the full project. The kill fee compensates for that reserved time and lost opportunity, not just finished deliverables.
Two things make a kill fee hold up in practice:
- It is written down before work begins, in your contract or in a signed proposal the client accepted. (More on what counts as an agreement in is an invoice a contract.)
- It is specific. "Client pays a cancellation fee" is vague. "If Client cancels before final delivery, Client pays for all work completed to date plus 30% of the remaining project fee" leaves nothing to argue about.
Common ways to structure a kill fee
There is no single standard. These are contract choices; pick the one that fits how your projects run. All numbers below are illustrative examples on a $4,000 project.
| Structure | How it works | Example on a $4,000 project |
|---|---|---|
| Percentage of the full fee | Client owes a flat percentage of the total project price if they cancel, regardless of stage | A 30% kill fee = $1,200 |
| Percentage of the remaining fee | Client pays for completed work in full, plus a percentage of the unbilled remainder | $2,500 of work done + 30% of the remaining $1,500 = $2,950 total |
| Stage rates (pay for work completed) | The project is split into stages with set values; client pays for every stage started or finished | Discovery 20% + concepts 40% completed = $2,400 owed |
| Sliding scale | The kill fee grows the further along you are | 25% if cancelled before drafts, 50% mid-project, 100% after final files are delivered |
Practical notes:
- Percentage of the remaining fee is the most common-sense structure for many freelancers: you are paid in full for finished work and partially compensated for the work you never get to do.
- Stage rates work well for projects with clear phases. They double as a payment schedule, so define the stages in your estimate before the project starts.
- Whatever you choose, state clearly whether the kill fee is in addition to payment for completed work or includes it. Ambiguity here is where disputes start.
Deposits are your first line of kill protection
If you collect a deposit before starting work, you already have partial kill protection. A 50% deposit on a $4,000 project means $2,000 is in your account before the client can cancel anything.
For the deposit to work as real cancellation cover, your contract should say it is non-refundable once work begins and credited against whatever is owed at cancellation. Without that language, a client may argue it was just a prepayment they can get back.
Deposits and kill fees complement each other. The deposit protects you early, when little work exists to bill for. The kill fee protects you late, when the unbilled remainder is what you lose. Our guide to deposit invoices and upfront payments covers how to set the deposit up correctly.
How to invoice a cancelled project
When a project is killed, send the final invoice promptly. The structure that works:
- Reference the contract clause. Add a line in the notes: "Final invoice issued per Section 7 (Cancellation) of our agreement dated March 3, 2026."
- Itemize the completed work as normal line items: deliverables, stages, or hours.
- Add the kill fee as its own labeled line. Do not bury it in a lump sum. A clear label like "Cancellation fee per Section 7 (30% of remaining fee)" prevents confusion.
- Credit the deposit you already hold, then show the balance due.
A worked example: a $4,000 branding project, $2,000 deposit collected upfront, 30% kill fee on the remaining fee, cancelled after discovery and initial concepts:
| Line item | Amount |
|---|---|
| Discovery and brand research (completed) | $800 |
| Logo concepts, three directions (completed) | $1,600 |
| Cancellation fee per Section 7 (30% of remaining $1,600) | $480 |
| Subtotal | $2,880 |
| Less: deposit received | -$2,000 |
| Balance due | $880 |
What if the deposit exceeds what is owed? Say your contract entitles you to $1,400 total at cancellation, but you hold a $2,000 deposit. If you refund the $600 difference, issue a credit note documenting the refund against the original deposit invoice. That keeps both sides' records clean; a free credit note generator makes it quick.
Keep your normal payment terms on the final invoice and follow up like you would on any other invoice.
When there is no kill fee: invoice the work and negotiate
No cancellation clause does not mean no payment. You still did the work. Invoice everything completed to date at your normal rates, quickly, with a short factual note: "Per your cancellation on July 8, this invoice covers all work completed through that date."
Do not sit on it. Unpaid work is a widespread problem: 56% of US small businesses are owed money from unpaid invoices, averaging about $17,500, according to the Intuit QuickBooks 2025 US Small Business Late Payments Report. A cancelled project with no final invoice is exactly how that happens.
Beyond work completed, you are in negotiation territory. Some angles that work:
- Time reserved. If you blocked out the next month for this client and turned away other inquiries, say so and propose a partial fee for the reserved time.
- Work product as leverage. Offer to hand over source files, drafts, and research upon payment of the final invoice.
- Get the cancellation in writing so the scope of what you are owed is not disputed later.
If the client refuses to pay for completed work at all, treat it like any other non-payment. Our guide on what to do when a client won't pay walks through the escalation steps.
One caveat: contract enforceability and treatment of cancellation fees vary by state and jurisdiction, so verify the rules that apply to you. This article is general information, not legal advice. For significant amounts, a lawyer in your state is money well spent.
Put a kill fee in your next contract
The best time to handle a cancelled project was before it started. Add a short cancellation clause to every contract or signed proposal. Plain language works:
"Either party may cancel this project with written notice. If Client cancels, Client agrees to pay for all work completed to date, plus a cancellation fee of 30% of the remaining project fee. The deposit is non-refundable and will be credited toward the final amount due."
Adjust the percentage and structure to your field. The exact number matters less than the fact that it exists in writing, with a signature under it.
When a cancellation does land, you want the final paperwork out the door the same day. Invoity's free invoice generator lets you itemize completed work and a kill fee line, reference your contract clause in the notes, and download a professional PDF instantly, no signup required to start. If you end up refunding part of a deposit, the credit note tool works the same way, so the whole cancellation is documented in one sitting.
Frequently asked questions
Do I still get paid if a client cancels the project?
Usually yes, at least partially. If your contract includes a kill fee or cancellation clause, you are owed whatever it specifies, typically payment for completed work plus a cancellation amount. If there is no clause, you can still invoice for all work completed to date at your normal rates, then negotiate compensation for reserved time.
How much should a kill fee be?
There is no fixed standard; it is a contract choice. Common structures include a percentage of the total project fee (for example, 30% of a $4,000 project is $1,200), a percentage of the remaining unbilled fee on top of full payment for completed work, or stage rates where each phase has a set value. Pick the structure that matches how your projects run, and state it clearly before work begins.
Can I charge a kill fee if it wasn't in the contract?
You cannot impose one retroactively, since a kill fee is by definition agreed in advance. What you can do is invoice for all work actually completed and negotiate additional compensation for time you reserved. Emails where the client approved scope and pricing can support your claim, even without a formal contract.
What happens to the deposit when a project is cancelled?
It depends on what your contract says. If the deposit is non-refundable and credited against amounts owed, you apply it to the final cancellation invoice and bill only the balance. If the deposit exceeds what you are owed and you refund the difference, issue a credit note against the original deposit invoice so both sides have a clean record.