Examples of Sunk Costs
Some instances of sunk costs include:
1. Purchasing a year gym membership but realizing midway that you lack the time to utilize it. The money already invested in the membership fee is considered a sunk cost because it cannot be recovered regardless of whether you continue attending the gym.
2. In the business realm if a company allocates resources to a project that ultimately fails the funds expended on that project turn into sunk costs. Attempting to inject capital into the project to recoup the initial investment would be an error.
3. In 2001 Kodak, a player, in the film photography industry invested in digital cameras. Unfortunately, they struggled to keep pace with market shifts. It was ultimately declared bankrupt in 2012. Their reluctance to let go of investments, in technology impeded their progress in embracing the digital photography era.