My wife and I are having a disagreement as to what it means. She says that it means the cost of something you purchased some time ago, and had you not purchased it the money would be gone anyway.
Basically, 3 years ago we decided to purchase something to hold onto and sell later on when the value goes up. She says that the purchase price can be considered as profit since it was so long ago. I disagreed. Anyway, she calls it “sunk cost”.
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I’ll give an analogy with video games.
You’re playing World Of Warcraft and you really want to get a turtle mount, but it has a .01% drop rate from the boss. You spend hours grinding the boss, getting angrier every time the mount doesn’t drop.
The time you’ve spent grinding the boss is sunk cost because you can not get it back.
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