How Sunk-Cost Bias Can Affect Building Product Specifications

Posted On: 
Sep 22, 2022

Why would smart, passionate, hard-working product manufacturers continue investing in programs that lose money and offer little return? An example of “Sunk-Cost Bias” is when a company continues to invest time, money, and resources to a losing program simply because they have already incurred or sunk a cost that cannot be recouped.

Nobody wants to admit that they wasted money and time on a failed specification program. If you find yourself in a hole, stop digging. Sunk-Cost Bias can turn into a vicious cycle for building product manufacturers. The more they invest into a failed program, the more they hold on and want to see it through.

Example Of Sunk-Cost Bias

One of the most famous examples of Sunk-Cost Bias is the Concorde Jet. The French and UK government spent over $2.8 billion on developing the world’s mass transport supersonic jet. The plane could fly from New York to London in 2 hours and 52 minutes. However, the French and British governments continued to lose money for more than 40 years investing in the Concorde jet and never turned a profit. The more money they spent, the more difficult it was to pull the plug.

Sunk-Cost Bias Traps

In his book “Essentialism”, author Greg McKeown identifies several Sunk-Cost Bias traps that companies may fall into. We’ll review the traps from the point of a product manufacturer.

  1. Don’t overvalue failing specification programs


  1. Get over the fear of waste


  1. Be quick to admit failure so you can start over


  1. Beware of the status-quo 

How many of you have invested into a specification program cooked up by you and your sales and marketing team that ultimately failed to live up it its expectations? Month after month, year after year, you cling onto this failing program because of the ownership you have in it. You may be getting few products specified but subconsciously you value this program because you were the team leader on it.

Another hang-up for product manufacturers is the fear of waste. We’ve had it drilled into our heads since we were kids that waste is bad. We become susceptible to Sunk-Cost Bias when we fall back on the “Don’t Waste” mentality. Abandoning an upcoming tradeshow that you’ve invested time preparing for feels like wasted time. Creating a new AIA course to help your product reps can be challenging. However, leaving your old AIA course on an outdated AEC platform will only doom you to more failures.

Product Specification Solutions

The good news is that once you’ve identified the problem and admitted you’ve fallen into one of the Sunk-Cost Bias traps, you can change course and head in a successful direction. Successful specification programs are built on avoiding the mistakes of the past. be aware of the status quo. Just because your company has always attended a specific tradeshow or hosted their CE course on a particular site for years, doesn’t mean you can’t question the system. Many sales and marketing professionals don’t question commitments because they have already been established as tradition by the company. Sunk-Cost Bias can have long-term negative effects for a product manufacturer.

Programs That Manufacturers Should Review

So, where should product manufacturers avoid Sunk-Cost Bias? What specification strategies might be vulnerable to Sunk-Cost Bias? Here’s a few programs to consider . . . 

  • CE Courses


  • AEC Firm Visits


  • Tradeshows

Probably no other category aside from tradeshows, suffers from Sunk-Cost Bias than education programs. There is the old attitude, “this is the way we’ve always done it.” Well, what if the way you’ve always done it was producing low ROI, wasting resources, and decreasing specification opportunities? After producing education courses for over two decades, we’ve seen it all. From brilliant video case study courses that generate thousands of leads annually to lousy Powerpoint presentations that made architects fall asleep or in some cases even fall out of their chairs.

Don’t commit to a losing strategy. Whatever happens, be able to pull the plug if the education course you want and more importantly need is not happening. Most AIA courses are developed by product reps, sales and marketing folks, and consultants. It’s critical that you don’t pawn off the development of your course to a random employee. Just because product rep Bob doesn’t have a heavy schedule and says he knows Powerpoint might not make him the ideal choice. Don’t hand off the course to an intern or the front desk assistant out of desperation or to save money.

Tradeshows are very vulnerable to Sunk-Cost Bias. Your company may have attended the same industry trade show for the past 10 years. It’s been a tradition. You visit clients, make new deals, and your team enjoys the experience. However, what if that industry tradeshow has seen plummeting attendance? What if you no longer see the leads and opportunities you used to? With the onset of the COVID-19 pandemic, many manufacturers have had to re-think tradeshows as a necessary component of their sales and marketing strategies.


Often product manufacturers are overwhelmed on a daily basis, putting out fires, calling on contractors, putting in bids, and don’t have time and resources to spare. Manufacturers don’t have the time to invest in creating education courses or setting up virtual AEC firm presentations. Removing obstacles can help increase specification opportunities. What is the main obstacle preventing you from reaching your specification goals?

For more information or to discuss the topic of this blog, please contact Brad Blank