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Costco Doubles Membership Fee, Cites Value
21 Jul
Summary
- Costco's Executive membership now costs $130, double the basic fee.
- Executive members receive 2% cash back on purchases up to $1,250 annually.
- Membership fees accounted for 72% of Costco's operating income last year.
Costco is seeing a shift as more shoppers opt for its premium Executive membership, which now costs $130 annually, double the standard Gold membership fee. This price increase is justified by the company through enhanced benefits, including a 2% cash back reward on most purchases up to $1,250 per year, alongside other discounts and early shopping hours.
The increased value proposition is designed to encourage members to consolidate more of their spending at Costco to maximize rewards. Membership fees are a crucial driver of Costco's profitability, contributing approximately 72% to its operating income in the past year. This focus on membership retention and upgrades was evident in the third quarter, which saw a 10.7% year-over-year increase in membership fee income.
