A sunken cost is a cost that has already been incurred and cannot be recovered. In other words a firm has to pay the cost regardless of the situation. Because of this the Sunk costs are excluded from future business decisions, because the cost is irrelevant to the future decision. There are several costs that can be considered sunk costs, some of which include product research such as focus groups or specialty equipment that the company uses for their exclusive product.

Another type of cost is the opportunity costs, what is the definition and example of these types of cost.