Sunk cost
In one sentenceA cost paid in the past that cannot be recovered whatever the next decision is, so it must not influence the choice between alternatives.
Simply put
Money that has been spent and is gone does not come back whichever alternative you choose. The right decision compares what will happen from now on: the future revenues and costs that differ between alternatives.
The common mistake: “we have spent a lot on this project, so let's finish it,” even when the cost of finishing it is greater than its benefit.
Example
A restaurant owner spent 30,000 SAR on decor that cannot be moved or recovered, then found another location where he expects higher profit after counting the moving costs. The 30,000 is a sunk cost: he should compare the two locations on future profits and costs only.
Don't confuse it with
Opportunity costOpportunity cost enters the decision because it is a benefit you will give up, while a sunk cost does not.