Costco Announces First Membership Price Hike in 7 Years
Membership rates for all Costco members will increase on September 1, but executive members will see an added benefit.
You’ll be paying a little bit more to be able to walk into the door at Costco, starting in September.
Costco announced this week that the company will increase annual membership prices as of September 1. The basic membership rate will be hiked from $60 annually to $65. The executive membership will be $130 each year, an increase of $10. The last time Costco raised membership prices was in 2017 when the basic rate went up $5 to $60.
The membership increase will affect about 52 million memberships, according to Costco. Just over half of those are “executive” members. These members get up to two percent back on qualified purchases, offered as a check at the end of the membership year. The maximum amount that executive members can currently receive annually is $1,000. Under the new plan, that jumps to $1,250.
Costco Reviews Membership Fees on a 5-Year Cycle
The news isn’t totally surprising. In a call with investors in late May, chief financial officer and executive vice president Gary Millerchip discussed a potential membership increase.
“We've historically looked at increasing the membership fee every five years or so. And obviously, we're beyond that time period now in terms of what would be the typical cycle,” Millerchip said.
“There's nothing about anything that we see within how the business is performing that's changing our view on that. We feel really good about membership renewal rates. We feel really good about the test of are we delivering significantly more value to members than we were or have since we last increased the membership fee. But I think we are our own probably toughest competitor in that.”
How Costco's Rates Stack Up to the Competition
Costco’s new membership rates will continue to be higher than their big box store competitors. Currently, Sam’s Club charges $50 for the basic membership and $110 for its plus membership. Basic membership at BJ’s Wholesale Club is $55 and the Club+ Card membership is $110.
Costco is the third-largest retailer in the United States, according to the National Retail Federation, behind only Walmart and Amazon. According to the investor report, Costco currently has 882 warehouses, including 609 in the United States.
What About the Hot Dogs?
Costco is well-loved for popular draws like a $1.50 hot dog and drink combo and $4.99 rotisserie chickens. In that same call to investors, Millerchip offered reassurance that at least one of those fan favorites won’t be more expensive anytime soon.
“Oh, and to clear up some recent media speculation,” he said, “I also want to confirm the $1.50 hot dog price is safe.”
