What is a fair kill fee when a client cancels a design project halfway?

What the term means

The Graphic Artists Guild contract glossary, excerpted from its Pricing and Ethical Guidelines handbook, treats "kill fee" as a general term covering two different payments:

• A cancellation fee is due when the work meets the client's stated requirements but the client decides not to use it for reasons outside your control, such as a cancelled launch or a change in budget.
• A rejection fee applies when the work does not meet the client's stated requirements, for example when final art departs from the approved sketches.

The glossary says artists generally negotiate the kill fee as a percentage of the agreed fee for the finished piece, and that the Guild has seen kill fees "from 20 to 100 percent, usually depending on the stage of completion." It also makes a point many designers miss: if the contract does not mention a kill fee, there is no guarantee one will be paid.

A model clause to compare against

The Guild's sample Letter of Agreement includes this structure, which is a useful benchmark when you write or review your own:

Stage when the client cancels	Model clause in the Guild letter
Before the final stage	50 percent of the final fee, due within 30 days of notice
After the art is completed	100 percent of the total fee
Rights and materials	All rights revert to the artist, and originals, sketches and comps are returned

The Guild's Code of Fair Practice adds the principle behind the numbers in Article 5: a kill fee "should be negotiated based on time allotted, effort expended, and expenses incurred," and other lost work should be considered too. That last part matters for freelancers. If you turned down another job to hold the dates, the cancellation cost you more than the hours you logged.

These are one professional body's published model terms and positions, not legal rules. Many designers use different percentages or tie the fee to milestones.

Working out a number for this project

If your contract already sets a kill fee, that is the number to invoice. If it does not, or it is vague, build a figure the client can follow.

1. List what was delivered. Discovery notes, mood boards, sketches, concept rounds, presentations. Attach dates.
2. Count the hours. Use your time log. Multiply by your hourly floor, from the thread on working out a minimum hourly rate.
3. Add committed costs. Stock, fonts or printing bought for the project.
4. Consider the reserved time. If the schedule blocked other work, say so, and include it if your agreement allows.
5. Compare with the percentage. If the project was at the concept stage of a fixed fee, check where your hours land against the 20 to 100 percent range in the Guild glossary. Explain whichever basis you use.

Send it as an invoice with a short cover note, not as an opening offer in a negotiation.

Rights after a kill

Decide who can use the work. The Guild glossary notes that on cancellation the client usually still gets the originally agreed rights once it pays the cancellation fee, unless the agreement says rights revert. On rejection, the client has chosen not to obtain any rights. If you want the unused concepts back so you can show or reuse them, write reversion into the contract, as the model letter does. This also protects you from the client using half finished concepts with another designer, which is how a cancelled project can turn into spec work after the fact, as discussed in the thread on free logo concepts.

Before your next contract

Put the kill fee in writing before work starts, with stages that match how you actually work. This is not legal advice, check with a lawyer where you work before relying on a clause in a dispute, because contract rules differ by place. For a worked overview of the clauses designers rely on, see freelance designer rates and contracts on no-spec.com.