Costs that have already been paid and cannot be recovered. Also known as irrecoverable costs. Rationally, sunk costs should be ignored and decisions should be based solely on future gains and losses, but humans tend to be swayed by the feeling of "what a waste" and cling to past investments.
How Sunk Costs Drive Subscription Retention
The sunk cost trap is particularly evident in subscription services. After paying the 5,900-yen annual fee for Amazon Prime, the psychology of "I need to get my money's worth" kicks in, leading to unnecessary purchases and binge-watching. However, the annual fee is already a sunk cost that cannot be recovered through future behavior.
The same phenomenon occurs with food delivery subscriptions. Because you've paid the monthly fee, you end up ordering even on days when cooking at home would suffice. Even though delivery fees are waived, product prices and service charges still apply, resulting in increased spending. The "get my money's worth" behavior driven by sunk costs is a paradox that actually amplifies losses.
How to Escape the Sunk Cost Trap
To avoid the sunk cost trap, consciously apply the principle of "judging only based on future gains and losses from this moment forward." Continuing an unused subscription because "it would be a waste" is essentially generating new losses every month. Canceling and redirecting the saved monthly fee elsewhere is more rational.
Sunk costs also affect listing decisions on Mercari. You might hesitate to sell a jacket you bought for 30,000 yen at 5,000 yen because "it feels like a waste," but the purchase price is a sunk cost. The decision should be based on which is more valuable to you right now - the closet space or 5,000 yen in cash.
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