Short #54 – Sunk (Podcast)
In this short podcast episode, Bryan covers the basics of sunk costs. He explains what they are and what they mean for you and HVAC businesses.
Sunk costs are costs to decisions that have been made in the past. You've “sunken” money, time, or effort into a decision. Let's say you invest in tools; after you make that purchase, the cost of the tools will become a sunk cost. The cost merely occurred in the past.
It is a good idea to reflect on these costs as something that is already over; you can reflect on these costs as a lesson for how you invest money in the future. It is not particularly helpful to view sunk costs as a past cost that keeps you down.
The same mindset applies to employment. Someone may hire you, and you may realize that the job is exactly what you thought it was; other times, the job may be a poor fit. If you can look back and say, “If I could redo the choice to take this job with what I now know about it, I wouldn't take it,” then you may want to consider finding another job. In other words, sunk costs allow you to reflect; they aren't a specific category of costs like overhead.
Very few situations require us to take pause and reject attachment to sunk costs. In short, viewing past decisions in terms of sunk costs can help us make logical decisions about buying tools, hiring employees, and accepting employment offers. Sunk costs factor your experiences into decision-making, but we have the choice to cling to those costs or detach ourselves from them.
Learn more about Refrigeration Technologies HERE.