Companies in every industry have to spend money to make money. A company budget may allow for investing money in employee salaries, inventory, office space or any other cost of doing business. Once the company's money is spent, that money is considered a sunk cost. Regardless of what money is spent on, sunk costs are dollars already spent and permanently lost. Sunk costs cannot be refunded or recovered. For example, once rent is paid, that dollar amount is no longer recoverable -- it is 'sunk.'