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How to overcome the sunk cost fallacy and welcome opportunity

If you’ve signed on to a supposedly all-encompassing software solution only to find it a complete dud, then switching to a new system may seem an impossible task. You’ve already run the numbers, had board meetings, talked with payroll, signed off on the funding and began rollout and training with your staff. So how can you possibly back out now?

This type of thinking, however, doesn’t make for a successful business. It’s the companies that continue to invest in a new website only a few years after the original that are the most successful when it comes to growing their business. To think otherwise is to employ the sunken cost fallacy; because I’ve invested in it, I have to continue. 

Irrational thinking.

A sunken cost means that the money has been spent and cannot be recovered. So considering it an asset is illogical. The money already doesn’t exist since it has been spent. The same goes for the time and training. If the original software doesn’t answer the problem, continuing to use it won’t make any difference.

The only actual loss occurs in the future. Most software or web-based applications are rented since you buy the storage space and right to use the software for a set amount of time. So continuing to use software that doesn’t answer the problem runs the risk of incurring a further loss of productivity and business. Instead, switching out the application as soon as possible could mitigate that risk, saving your company in the long run.

Good enough

Continuing to use applications that are ‘good enough’ also falls short of rational thinking. An application that can improve upon procedures means a potential saving of time, which equates to hours of labour paid and potentially the success of winning a job for industries that compete on their ability to finish quickly. 

Another point that’s harder to measure is quality control. A better quality product, particularly one that allows for high levels of client collaboration, is justifiably more expensive. So, if you’re thinking of raising your prices for clients, consider this — can they see the added benefit in your new offer? Chances are they’re already happy with your arrangement, so why should they agree to pay more?


A sunken cost mindset means putting up with barriers or limitations even when better solutions can be found. A good software application should have the flexibility to work around your needs, being customisable enough that it doesn’t become redundant as soon as the next project is on the horizon. It also needs to work alongside your other applications and procedures — otherwise, the sunken cost of your expenditure will affect other parts of your business too. 

Thinking holistically 

At Datanest, we design applications with the single purpose of saving time and improving quality. From experience with our clients, we’ve found that we can save them thousands of hours collecting data, designing maps and presenting reports over a year. The trouble is thinking this far ahead when a project is already underway. 

So how do you overcome the sunken cost fallacy without repeating the same mistake?

Look for a product trial or demonstration.

If you can trial the product for free and test its capability over time, you can get a sense of whether it works for you or not. The trouble is a typical test run will often run slower because of the adjustment to new software or application. But if you can see a clear benefit once the system is fully underway, it may be time to consider a further discussion.

Start with a new project.

Many objections to taking on board a new system come from the fact that doing so would involve shifting a lot of files mid-project. Trialing with a new project gives the freedom of starting fresh anyway so that you can see the system’s performance from the very first.

The provider sticks with you.

A good developer will continue to check in with you past the sale date, not just renew your subscription. When balancing the cost of adding new software or applications to your business, consider the people you’ll be working with. A good working relationship with a strong support network could save hundreds. 

They are continuing to innovate.

Unfortunately, no system is final. Whatever you choose to buy will eventually become outdated as your competition invests in new, faster and more innovative solutions. So if you can buy into a future-proofed product that does the same, you greatly reduce the risk of your investment becoming obsolete in a few years. 

Just like your website, it may need to be refreshed or retouched, but the better you can build it now, the longer it will last.

If you’ve got a new project that requires a unique approach, why not trial it with Datanest? Our application is built to collect a range of data points, construct maps, deliver reports and streamline team communications. 

But don’t just sink your faith into us because you read a blog article. Try Datanest free for 14 days, and then talk to us. 

Sites sourced:

  • CFI Team. “Sunk Cost: Money already spent and cannot be recovered” on CFI. Last Updated: 20th February, 2022. Site Link:
  • Indeed Editorial Team. “Overcoming the Sunk Cost Fallacy in Your Business Decisions” on indeed. Date Published: 16th February, 2021. Site Link:
  • “Is the Sunken Cost Fallacy Hurting your Business?” on Asendium. Date Accessed: 12th July, 2022. Site Link:
  • “Why are we likely to continue with an investment even if it would be rational to give it up?: The Sunk Cost Fallacy explained” on The Decision Lab. Date Accessed: 12th July, 2022. Site Link: