Early Termination Settlement Calculator

Understanding the early termination settlement calculator — concept and principle

When a client cancels a project or service contract before it is finished, the freelancer, agency or contractor usually wants to be paid for the work already done, plus any cancellation fee the contract provides for. This calculator estimates the settlement: what has been earned, what kill fee applies to the unfinished part, and how much is still owed after the payments already received. It works with any currency.

How it is calculated

Earned for work done = contract total × work completed %

Kill fee = contract total × (100% − work completed %) × kill fee %

Amount still owed = earned for work done + kill fee − already paid

• Contract total: the full agreed price.
• Work completed (%): share of the work delivered or performed at the time of termination.
• Already paid: deposits and instalments received so far.
• Kill fee on remaining work (%): the cancellation fee agreed in the contract, applied to the value of the unfinished part.

The principle

The settlement has two separate parts. First, the client pays for the value already created, in proportion to the work completed. Second, a kill fee compensates the provider for the remaining work that was reserved but will no longer be paid: booked time that is hard to resell at short notice. Applying the fee only to the unfinished part avoids charging twice for work already paid for. Payments received are then deducted.

Worked example

1. Earned for work done: $20,000 × 45% = $9,000.00.
2. Unfinished value: $20,000 × 55% = $11,000.
3. Kill fee: $11,000 × 20% = $2,200.00.
4. Amount still owed: $9,000 + $2,200 − $6,000 = $5,200.00.

How to read the result

A positive amount is what the client still owes you; a negative amount means you have been paid more than the settlement and may owe a refund, depending on your contract. The completed-work percentage drives most of the result, so document it with milestones, deliverables or time records. If the contract has no kill-fee clause, set the fee to 0% and the result becomes a simple pro-rata payment.

Common mistakes

• Applying the kill fee to the whole contract value instead of the unfinished part, if the contract does not say so.
• Estimating the completed percentage without evidence the client can check.
• Forgetting non-refundable expenses already incurred, such as licences or materials, which are often billed separately.

Frequently asked questions

What is a typical kill fee?

It is whatever the contract says. Creative and freelance contracts often state a percentage of the fee or of the remaining work; agree it before the project starts.

How do I measure work completed?

Use agreed milestones, delivered files, or hours logged against the estimate, and share the basis with the client.

What if the deposit was non-refundable?

Then the contract may let you keep it even if it exceeds the calculated amount. Check the clause and adjust the result manually.

Sources: Graphic Artists Guild, Handbook: Pricing & Ethical Guidelines — cancellation and kill fees