How to handle cancellation fee when a client cancels at different points in a project?

Question

Going to be freelancing as a web designer and web developer soon, creating websites for local businesses. I'm expecting to use a payment plan in which they pay a down payment of 50% to begin work, and they pay the remaining 50% after the website goes live.

I will be charging fixed costs instead of an hourly rate, so how do I go about deciding what the cancellation fee should amount to at different points in the project? Do I just estimate the % of the total work that I have completed and bill them on that? This doesn't seem very set in stone and it is the reason why I ask.

Answer 1

When going 50/50, it's very hard to be covered as you would. So maybe 50/50 is not a good plan for larger projects. It's better for a smaller tasks which you can finish in 1 week or so.

I would rather go with a milestone plan. It's still a fixed-price project, but you are paid after each milestone.

This is the flow: Milestone 1 finished -> Client test and verifies -> you do bug fixes -> client tests again and confirms that all is ok -> milestone 1 money is paid -> you start working on milestone 2

This way, the most you can lose is the money from the last milestone.

You can put all kinds of covering clauses in the contract, but it will be very hard to determine if you finished 50% or 75% of the disputable milestone. This does not mean that you should not put this clause, I am just telling you how hard it to determine the percentage.