Have you ever spent months on a project or course, only to feel unsure halfway through, but kept going because you already put in time or money?
Many professionals in India find it difficult to cut losses or shift paths because of what they’ve already invested. Whether it’s your career path, business investment, or even a daily work decision, making the right call is tough when your past efforts cloud your judgment.
That twist of abandoning what you’ve poured effort into? That’s where the sunk cost comes in. And its smarter sibling? Opportunity cost.
In this blog, we’ll break down what holds people back, what you might be missing out on, and how the smartest decision-makers think differently, especially if you’re aiming to become a Chief Operating Officer or take up a leadership role.
What is opportunity cost?
In microeconomics, opportunity cost means the value of the best alternative you give up when you must choose between different options, all competing for limited resources.
Many people confuse the terms or treat them the same. But they work differently.
- Sunk Cost: It’s gone. Whether it’s money, time, or energy, you can’t get it back.
- Opportunity Cost: It’s what you’re giving up when you pick one choice over another.
Ask yourself: “If I continue this, what am I missing out on?” That’s the real question.
Understanding what is opportunity cost lets you shift from emotion-based choices to result-driven thinking.
Why People Hold Onto Sunk Costs (Even When It Hurts)
People hate to waste. That’s a natural bias. You’ve spent money on a degree or time building a role. Even when better options show up, you stick around. The loss feels personal.
For example:
- You joined a certification course but hate it now. Still continuing?
- You hired a team member who isn’t working out. Afraid to let them go?
In both cases, you are making choices based on what you’ve already spent, not what could benefit you now.
That’s where smart COOs and leaders pause. They look ahead, not behind. You must, too.
How Opportunity Cost Changes Decision-Making
Imagine you’re choosing between staying in your current job or applying to a leadership programme. On the surface, your current job feels safe. However, the opportunity cost is the missed chance to build new leadership skills and grow into a Chief Operating Officer role.
Opportunity cost example:
| Choice | Short-Term Gain | Long-Term Miss (Opportunity Cost) |
| Stay in the same job. | Stability, no risk | Miss promotion, low salary growth |
| Enrol in a leadership programme | Learning investment | High-level roles, better pay, COO path |
Knowing your opportunity cost makes the trade-off clear. You’re not just saying “no” to something. You’re choosing what really matters.
How to Calculate Opportunity Cost
To work out opportunity cost, use this formula:
Opportunity cost = FO – CO
Where:
FO is the return from the best option you didn’t choose (foregone option)
CO is the return from the option you chose (current option)
You calculate the difference between what you could have earned and what you actually chose.
Let’s break it down with an example. Say you have two choices.
Option A: You invest your money in the stock market, hoping to earn capital gains.
Option B: You reinvest the same amount into your own business to buy new equipment that boosts production efficiency. This would cut down your operational costs and increase your profit margins.
If you go with Option B, the opportunity cost is the potential return you missed from the stock market. By doing this calculation, you make decisions based on logic, not just assumptions.
Where You See These Costs in Everyday Work
Let’s break this down with daily scenarios.
Project decisions:
- Sticking with a failing project because it’s halfway done? Sunk cost trap.
- Dropping it to focus on a better opportunity? Smart move. That’s you considering opportunity cost.
Career shifts:
- Holding onto an old role that isn’t aligned with your growth?
- Moving into a learning programme (like the Imarticus Learning COO course) can open higher-level paths.
Resource allocation:
- Keeping money in a marketing channel that’s not working?
- That budget could deliver better results elsewhere. Always ask: what’s the opportunity cost?
When to Let Go: 5 Signals You Should Not Ignore
- No growth in current role for over a year
- New skills are needed, but you’re not learning
- Better opportunities show up, but you hesitate
- You feel stuck even when things are “stable.”
- The gut says move on, but your mind says, “But I already spent so much.”
If you see 3 or more signs, pause. Reflect. You might be stuck in a sunk cost mindset.
Comparing the Two: Quick Summary Table
| Aspect | Sunk Cost | Opportunity Cost |
| Definition | Past expense, can’t recover | Future gain you give up |
| Focus | What you’ve already spent | What you could be getting |
| Emotion involved | Regret, guilt | FOMO, curiosity |
| Smart approach | Acknowledge, move on | Evaluate, choose better |
Smart leaders don’t just plan. They re-evaluate. They choose ROI over regret. They learn fast and pivot faster, especially in operations where time, money, and resources are tight.
To become a Chief Operating Officer, you must master this mindset. Stop justifying old choices. Start choosing based on what adds value today and tomorrow.
Step Into the Role of a COO with Real-World Business Learning
The Global Senior Executive Leadership Programme Chief Operating Officer by Imarticus Learning and IIM Nagpur is for aspiring leaders.
This intensive 6-month learning experience, created by IIM Nagpur and delivered through Imarticus Learning, helps you lead from the front.
It combines strategic modules, leadership case studies, and direct sessions with top operational heads. You’ll also have campus sessions to meet peers and faculty face-to-face, plus personalised Chamber Consulting.
From process improvement to people management, this programme gives you the hands-on knowledge to operate like a COO from day one. And yes, it ends with a prestigious certificate from IIM Nagpur.
- Learn directly from seasoned COOs in India.
- Deep dive into operational strategy, process optimisation, and supply chain leadership
- Get Consulting from IIM Nagpur faculty and join global peers on campus.
Whether you’re transitioning into operations or already leading a team, this 6-month programme gives you real-world case learning, industry access, and a recognised certificate to build your COO journey.
Enrol now and reshape your future with Imarticus Learning!
FAQ
1. What is opportunity cost?
It’s what you give up when you choose one thing over another.
2. Can you give an opportunity cost example in career growth?
Choosing to stay in a low-growth job instead of joining a leadership course.
3. Why do people fall into the sunk cost trap?
Because they don’t want their past efforts to feel wasted.
4. How do leaders make decisions using opportunity cost?
They compare long-term benefits, not past expenses.
5. Why is it important to understand the difference between sunk and opportunity costs?
It helps you avoid bad decisions and focus on future gains.
6. Is sunk cost always bad?
No, but continuing just because of it often leads to poor outcomes.
7. What course should I take to become a Chief Operating Officer?
The Global Senior Executive Leadership Programme Chief Operating Officer by Imarticus Learning is a top choice.
