The meaning of sunk cost is money, time, or effort that has already been spent and cannot be recovered. In decision-making, it should usually be ignored because it does not change what happens next.

Simple example

If you bought a movie ticket but then realize you’d rather stay home, the ticket price is a sunk cost. The better question is what choice is best from now on , not how to “get your money’s worth” from the past.

Related idea

People often talk about the sunk cost fallacy : continuing with something just because you already invested in it, even when stopping would be the smarter choice.

Plain-English version

  • Past cost = sunk cost.
  • Not recoverable.
  • Should not drive future choices.

If you want, I can also give you a one-line definition or a business example.