Sunk cost
Money, time or effort already spent and unrecoverable — and therefore irrelevant to what you should do next.
A sunk cost is anything already spent that cannot be recovered: the eight months on a product nobody wanted, the money paid for tooling you no longer use, the two years in a market that never opened. The economics are unambiguous — a sunk cost is gone under every possible future, so it cannot rationally influence the choice between them.
Knowing that changes very little, which is the part worth spending words on. The pull is not an arithmetic error; it is that abandoning the investment requires admitting it was a mistake, and continuing lets you defer the admission for another quarter. That is why "we have come too far to stop" is the most expensive sentence in a business, and why it is spoken most confidently at the exact moment the evidence is worst.
The working correction is a question that removes the history: knowing what you know now, and starting from today with these resources, would you begin this? If the answer is no, the only remaining question is how much more you will spend before acting on it.
Worked: $40,000 and nine months into a build with no users. The choice is not "lose $40,000 or continue". The $40,000 is lost either way. The choice is whether to spend the next $15,000 here or somewhere with evidence behind it.
Also known as
- sunk cost fallacy
- unrecoverable cost
Relevant for
- Founders
- "We have come too far to stop" is the most expensive sentence in a business, and it is said most confidently when the evidence is worst.
- Creators
- The years you put into a format you have outgrown do not transfer by continuing; they transfer by taking the audience with you to the next one.
- Business owners
- A client relationship that has been unprofitable for two years is not an investment maturing — ask whether you would sign it today at that price.