Kill Fees, Deposits and Scope Creep: Payment Terms That Protect You

The deposit

An advance of between a quarter and a half of the fee before work begins does two things. It funds the period before your first milestone, and it establishes that the client is willing and able to pay, which is information you want early rather than at the end.

The objection you will hear is that the client policy is to pay on delivery. That is a real constraint for some larger organisations, and the workable response is a milestone structure that shortens the exposure rather than removing the advance entirely. A client who cannot pay anything until the work is complete is asking you to finance the project.

The kill fee

A kill fee provides that if the client cancels, you keep the deposit and are paid for work completed to that point. Without it, a client can cancel after most of the work is done and the position is unclear.

The structure that is easiest to defend ties the fee to what was actually delivered: payment for completed milestones plus a proportion of the one in progress. That reflects real value provided rather than a penalty, which matters because Sections 73 and 74 of the Indian Contract Act direct courts to reasonable compensation for loss actually suffered, with any stipulated sum operating as a ceiling.

Scope

Scope creep is rarely a single decision. It is a sequence of small additions, each individually reasonable, that collectively double the work. The defence is not resistance in the moment but a mechanism agreed at the start.

The mechanism is simple: the contract states what is in scope, provides that anything outside it is a change request, and provides that change requests are priced and confirmed in writing before work proceeds. That converts an awkward conversation into a process, and processes are much easier to invoke than opinions.

The full set of payment terms worth having

• Deposit before work begins, or a first milestone payable early.
• Milestone payments through the engagement rather than everything at the end.
• A deemed acceptance window so approval cannot stall indefinitely.
• A kill fee tied to work completed.
• A defined revision cap, with further rounds priced.
• A written change request process for anything outside scope.
• Interest or a late fee on overdue amounts, alongside the MSMED position if you are registered.
• Ownership transferring only on payment in full.

Asking for them

None of these is unusual and none is aggressive. They are how professional services engagements are normally structured, and presenting them as your standard terms rather than as a negotiation over trust is the framing that works.

The time to raise them is with the proposal, before the client has mentally committed to a number. Introducing a deposit requirement after the price is agreed reads as a change of terms; including it in the proposal reads as how you work.