I'm Warren Davies, founder of BeyondCRM, a Microsoft Dynamics CRM consultancy in Australia. Over 30 years in the industry, I've handled $12+ million in project sales and learned hard lessons about contract structures. I used kill fees early in my career but moved away from them completely. The biggest issue was explaining to clients why they'd pay for "nothing"--it created immediate tension before projects even started. I found clients would question our commitment and assume we were planning to bail. Instead, I switched to milestone-based contracts with clear deliverables at each stage. If a client cancels mid-project, they pay for completed milestones plus any work-in-progress at cost. This approach feels fairer to both sides because clients get tangible value for every dollar spent. My advice: skip kill fees entirely. Structure your contracts so clients receive value at regular intervals--weekly demos, documented processes, or working prototypes. When clients can see progress, they rarely want to cancel. In my experience, transparent milestones eliminate the need for kill fees while building stronger client relationships.
The biggest challenge is explaining it to clients upfront without sounding defensive, but framing it as standard business practice usually helps. My advice to freelancers is to be transparent and position a kill fee as mutual protection, not punishment.