Some designers may specify that the deposit (usually a percentage of the project estimate) serves as a kill fee. Or, your freelance design contract might specify that the kill fee is equal to the amount of the initial deposit plus any additional expenses incurred above and beyond the deposit amount.
One important reason for explicitly including a cancellation clause and/or non-refundable deposit in your contract is that most projects are cancelled before you have delivered anything tangible to the client other than maybe a few preliminary sketches. Because of this many clients may labor under the belief that they shouldn't have to pay much because you haven't done much. They often don't understand how many hours of thinking time goes into a project at the beginning.
A non-refundable deposit and cancellation clause protects you from having hours of uncompensated work during the critical research, brainstorming, and conceptualization phase of a project. You probably don't want to be working with a client who objects to a cancellation clause because they are just the type of client that a cancellation clause or kill fee is designed to protect you from.
Additionally, the cancellation clause of your contract may further specify:
- all materials delivered to the client to date (in connection with that specific project) must be returned
- use of work done in connection with the project without your consent could result in additional fees or legal action
- you will keep all original artwork, digital files, disks or CDs prepared in connection with the project
Some of these stipulations may also appear in other parts of your freelance design contract, such as a specific Ownership of Artwork clause.