A deposit covers the start of a project. A Cancellation Fee covers the sudden end of it. If a client cancels a $10,000 project after you've cleared your schedule for the month, a 50% deposit might not be enough to cover your lost opportunity.
1. Defining the Fee
A cancellation fee is often a "sliding scale" based on when the project was killed:
- Canceled 48 hours before start: 25% of total fee.
- Canceled after Phase 1: 50% of total fee + kill fee.
2. Making it Enforceable
To make this stick in small claims court, the fee must be a "Liquidated Damage"—a reasonable estimate of your loss—not a "Penalty." If the fee is too high (e.g., 200% of the project), a judge might throw it out.
3. Invoicing the Cancellation
Send a professional cancellation invoice immediately. Refer to the specific section of your contract. If the client refuses to pay, you may need to escalate to a collections agency.
Frequently Asked Questions (FAQ)
Is a 'Kill Fee' the same as a cancellation fee?
They are similar, but a "Kill Fee" usually applies to creative work that was performed but won't be used, while a "Cancellation Fee" applies to the time that was reserved but now won't be filled.
How do I handle a 'postponed' project?
A postponement is often a "soft" cancellation. You should have a clause that says: "If a project is postponed for more than 30 days, a restart fee of $X will apply."
Can I keep the work if they pay a cancellation fee?
Yes. Unless the invoice is paid in full, the copyright does not transfer to the client. You are free to repurpose the work for other clients or your portfolio.