Costco to Implement First Membership Fee Increase in 7 Years
- Costco is raising its membership fees for the first time in 7 years.
- The price hike for both gold and executive options will take effect on September 1.
- Customers are advised to consider getting a membership before the increase.
In a recent announcement, Costco Wholesale revealed its plans to raise annual membership fees by $5 to $10 in the U.S. and Canada, effective September 1. This marks the first increase in seven years for the retail giant, with the annual fee for "gold star" and business members rising to $65 and executive members seeing an increase to $130 from the previous $120. The fee adjustments will impact approximately 52 million memberships, with over half being Executive members, out of the 133 million total members Costco boasts. Despite the rise in membership fees, Costco has been praised for maintaining low prices amidst inflation. Felipe Caro, a professor at UCLA Anderson School of Management, noted that while the fee increase was inevitable, it aligns with the perceived value customers receive from their Costco memberships. Following the announcement, Costco's stock price saw an increase, indicating market approval of the decision. The company reported $24.48 billion in net sales for the June retail month, up 7.4% from the previous year, with membership fees contributing significantly to its revenue. Costco's decision to raise membership fees comes after rival Sam's Club implemented a similar increase in 2022. Costco's Chief Financial Officer, Gary Millerchip, had hinted at an impending fee hike during an earnings call in May, emphasizing that it was a matter of when, not if, the fees would be raised. The retailer, with 882 warehouses, including 609 in the U.S. and Puerto Rico, relies on membership fees as a substantial revenue stream, generating $1.12 billion in the most recent quarter. While the popular $1.50 hotdog combo remains unchanged for now, the membership fee adjustments are set to take effect soon. With Costco's proactive approach to maintaining financial stability and market competitiveness, the fee increase is positioned as a strategic move to sustain the company's growth and continue providing value to its millions of members across North America.