The sunk cost fallacy in website design

The sunk cost fallacy in website design

Friday, 1 September 2017

What do sitting through a terrible movie, grasping onto a failed long-term relationship and constantly playing social network farming games have in common? Before I answer that, let’s see what “sunk cost” actually means.

What is a “sunk cost”?

In terms of economics, a sunk cost is any past cost that has already been incurred and cannot be recovered. An example of this is a start-up company that invests a sum of money to have an app developed. This doesn’t apply to money exclusively. It can also refer to an emotional investment in a relationship or a time investment playing a game or working on a project.

So, what’s the answer to the initial question?

This is the reason we follow a phased approach with all our projects…

You might now realize the answer is the actual investment: whether it be financial, emotional or time. Humans have grown to be very vigilant to loss. Over time, the prospect of loss has become a more powerful motivator on the way you make decisions than the promise of benefit.

Behavioural economist Dan Ariely did a fascinating experiment on this. He set up a booth in a busy part of town and offered Lindt Truffles for 26c and Hershey’s Kiss for 1c. The majority of the people went with the truffle. He then set up another booth with the same two choices but lowered the price by 1c, making the truffles 25c and the kisses free. In this instance, a vast majority of people chose the free kisses instead, even though the price of both products essentially decreased by the same amount of 1c.

The same principle is applied to the scenarios above: it’s more challenging to break off a relationship when you’ve invested so much time and energy into it. You’ve already watched half of the movie so you keep watching it even though you hate it. You keep playing the farming game because you’ve put so much time and effort into it that you don’t want all of it to go to waste when your crops die!

But how is this all relevant to web?

Very often clients approach us after having had a terrible experience with another web agency. They kept funding the project, hoping that at some point it would become salvageable. Because of the time, money and effort they end up putting in, they were unwilling to cut their losses and break free early. Unfortunately this thinking costs them dearly in the end, resulting in incomplete projects, money wasted and soured business relationships.

This is the reason we follow a phased approach with all our projects. As a client, you are involved every step of the way: from the initial wireframing, planning and design right through to the HTML and development. This ensures we’re all on the same page from the start, eliminating potential problems and disagreements further down the line.

If you’ve been burnt by another web agency or currently in the middle of an irrecoverable disaster, feel free to contact us. We’ve helped many a client out of this situation in the past and we’re always willing to see how we can help you bring your website to production.

Like what you see?

Get in touch