Sunk cost is a cost that has already occurred and cannot be recovered. In other words, a sunk cost is a sum paid in the past that is no longer relevant to decisions about the future.
You, or a business, should not consider sunk costs when making decisions.
- A business only considers the costs and revenues that will change as a result of its decisions.
It's also known as past cost, embedded cost, stranded cost, sunk capital, or retrospective cost.