Sunk Cost: The Branding Lie You Need to Overcome
After investing time, money and creative energy into your brand name, it’s only natural to feel deeply attached to it. But if trademark issues come up, that attachment can cloud your judgment and lead to costly decisions.
That’s the trap of sunk cost: believing you have to stick with a (wrong) decision because of resources you’ve already spent in reaching that decision.
Where the Term Comes From
The concept of sunk cost comes from economics. It refers to any investment that has already been made and cannot be recovered. In 1985, psychologists Hal R. Arkes and Catherine Blumer explored this concept in their paper The Psychology of Sunk Cost, stating:
“The sunk cost effect is manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made.”
They found that people often let past investments influence future decisions, even when it’s irrational. It’s refusing to fix a mistake because it feels wasteful to abandon that mistake instead of learning from it and walking away
Why Clinging to a Name Can Cost You More
Say you’ve developed a restaurant concept called Southeats. You’ve paid for marketing, packaging, signage, uniforms and a website. But then you find out there’s already a registered trademark for Southern Eats, a similar name in the same industry.
You face a decision: rebrand and start fresh, or keep going and risk the legal and business consequences.
It’s intuitive to want to protect what you’ve already spent on, but clinging to a legally risky brand can lead to lawsuits, forced name changes, reputational damage, market confusion and brand dilution… things that can seriously weaken your business over time.
How to Avoid the Trap
Sunk cost is a psychological trap. You need to sober yourself with data and good advice. Smart businesses know when to cut their losses and move forward. Letting go of all that baggage makes space for new, fresher, and better ideas.
Here’s how to stay on track:
- Do a trademark search to check if your name is available
- Check online and on social media for similar names
- Register your trademark before you launch
Owning a branding mistake doesn’t mean defending that mistake endlessly. It means learning from experience and taking the best step forward, even if it involves discarding valuable resources and starting over. It’s not failure… just one of the first chapters of your brand story.