Sunk cost is a term from economics which represents the money you have spent that you have no way to get back. Since the money is already spent it should not impact future decision making. It is primarily used to avoid sticking to something just because you have already spent a lot of money on it.
Sunk cost in decision making
The point of considering sunk costs separately from potential future costs is to make better decisions. Your choice should be based on the expected value of any costs you have not paid yet, not the money you have already spent that you can’t get back.
Sunk costs in WoW
In goldmaking you will typically incur sunk costs whenever you buy an item. Once you have bought an item you will be put in situations where the price decreases. This should not happen too often, but it is unavoidable in the grand scheme of things.
In these situations you should avoid feeling too attached to the gold you have already spent. Focus on how you can maximize the value of the gold and items you do have.
Ultimately this ties back to the concept of making decisions with positive expected value. If your decisions backfire your goal is to maximize the gold you can get.
Dealing with price decreases
So how do you deal with it if the price moves against you? I usually try to maximize the value I can get from the items I have. What is the highest price I can sell the item for? How do I sell it to maximize the value?
These are the questions you should focus on and none of them are based on the price you actually paid. This is also why I prefer to not use avgbuy in my operations, but rather just use the market value. This will automatically adjust my prices down if needed or up if possible. Avgbuy will in some contexts represent a sunk cost so I think it should be kept out of any future pricing decisions.