Fiverr Community Forum

Enough is Enough: Avoiding the Sunk Cost Fallacy

As a seller, no matter what type of gig you have on Fiverr, you’re essentially selling the same product as everyone else: your time. As the saying goes, You aren’t paying for me to do X for an hour, you’re paying for the years it took to learn how to do X in an hour. You have a unique skill that people are willing to pay for, and your only job, apart from actually using your skills, is to maximize how much you can make doing X while minimizing the time it takes to do it.

So what is sunk cost, exactly? One of the easiest examples to understand is a car. Imagine you have purchased a beat-up old car for $100, but it is constantly breaking and needing “band aid” repairs to keep running. First, you have to pay $500 to fix the engine right away. Then, a week later, $300 to patch the brakes. Then, a few days after that, $200 for tire repair. You’ve only owned the car for a month and you’ve had to spend $1000 on it!

Another big repair comes up - now it needs a new transmission, which will cost another $1000. That’s a lot of money, you think to yourself, but I’ve already put $1,000 into it and I don’t want to lose that investment!

This is the sunk cost fallacy, or as some folks call it, “throwing good money after bad.” That car you bought for $100 certainly isn’t magically worth $1100 now that you’ve poured money into it - and it won’t be magically worth $2100 if you get the transmission fixed. It was a bad, broken-down car to begin with and the more money you put into repairs, the more you’re likely to lose in the long run.

As sellers, we need to apply the sunk cost fallacy to our clients. Don’t keep a difficult or troublesome client around just because you’ve worked with them before. Don’t continue with a project where they ask for more and more outside of what you agreed on. None of us like to lose money or miss out on an opportunity, but it’s very important to ask yourself - is walking away from this problematic client really “missing out,” or am I pouring repair money into a junk car and hoping it magically (and illogically) becomes valuable?

Is a client insulting you, making you feel uncomfortable, or not respecting your time (insisting on an instant reply, burying you in messages, belittling you when you don’t respond outside of work hours, etc)? Drop them. The time you’re wasting on dealing with that client (and the emotional turmoil they cause) would be better spent finding other clients, and other profit opportunities, that treat you like a human being.

Is a client insisting on their “old rate” when you’ve upped your rates several times throughout working together? Explain that you’re only working for your new rate going forward, and wish them well if they don’t want to pay it. That just leaves another spot in your work roster for a new client willing to pay your new rate.

Is a client trying to pit you against other sellers, claiming that “X seller offered me X, Y, and Z for half your price?” Wish them well and good luck with those “other” sellers and bow out. Market competition should be kept to listing gigs, not in the message box - again, having to defend your base rates takes productive time off your schedule, costing you money.

Is a client demanding an incredibly fast turnover time, or “picking your brain” with a thousand questions without responding to your repeated attempts to “close the sale” with an offer? Draw a line in the sand. I recommend every seller make a “consultation gig” with their desired hourly earning amount as the price - that way, if a client attempts to get free information, guidance, planning, etc. out of you, you can simply stop the rambling conversation in its tracks by directing them to the gig page. Oh, I’d be happy to discuss that with you during a consultation session - it’s X time for Y cost, shall I send you an offer?

Also, make sure to add a rush fee as an add-on in your gig, if possible, for the same reason. Sure, I’ll be happy to complete that within X time period. It would be Y rush fee on top of Z base gig cost, does that work for your budget?

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What I take from this is that you are not good at buying cars LOL

Nah, it is a really good post and sooooooooo nice to see something intelligent posted here after all the bin hyre fer 10secs und not no sells followed by jest wate, online 24hr, send 10 byre requestes.

The other sunk cost I would add to your list is that of but this is how my Gig is, I have always done it this way, closely related to but this is how everyone does it. If you or everyone are swimming in gold underpants, carry right on. If everyone is scrapping over one moldy crust of bread, staying the same because that is what you have already is a sunk cost. It is done. Do something else.

Sadly when I did sell cars people would try to sell their trades to us using this logic; whole stories like yours which at the end, when they felt they had justified $10,000 for a negative-$150 wrecker special, we had to say you just told us it is an unreliable car we cannot sell under law or we will be out of jobs with my boss in prison. If they were good-natured I might say, look I may be able to convince the boss to give you $100 for it but honestly, I can probably get $250 for you if you promise never to bring this car here again. It would take a few seconds then their eyes would light up as they saw me looking at the wreckers behind us :wink:

What this story shows is that there is probably another way that you hadn’t considered because you were too invested in the sunk cost.

Today after another “friend” pumped me for info on how they could fix the mix they spent $599 on after declining to hire me for any amount, my partner said to me: You have to say no to all this free advice. You are skilled and if they value you enough to ask they can pay. If not they are stealing your life under you when they take but return nothing (she sounds awfully sophisticated when I put words in her mouth doesn’t she).

I set up a Gig (elsewhere seeing I don’t think anyone will buy here - but I may be wrong) where I will listen to your song and give advice. If nothing else, the next person who wants my professional services will now have to decide if they buy a Mix, Advice, or piss off. Being kind and giving more advice was my sunk cost fallacy as people who ask for my help never reward it in any way, doing more of it wasn’t making me the better man, it was just making me time-poor.

:slight_smile:

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