Costco Membership Fees Are Set To Remain The Same ... For Now
Whenever Costco has a quarterly earnings call, some fans wait for the other shoe to drop. Will this be the time the company finally hikes up the membership price? As of the earnings call this past Tuesday, the answer remains the same: Not yet, but it will happen.
Chief Financial Officer Richard Galanti told the analysts on the call, "You'll see it happen at some point," but now is not the time. The company had previously been on a price increase schedule of an average of five years and seven months, with a bump of $5. The last time Costco implemented a price increase was in June 2017 — six years and three months ago. Galanti noted that the company doesn't need to increase the basic membership fee if it can upsell members to the Executive account, which brings in double the revenue.
This echoes the same sentiment as the September 2022 earnings call, which cited a high renewal rate among existing members, good top-level sales, and increased revenue from membership fees — plus high inflation in the U.S. Although inflation has come down from 9% to 3% at this point in 2023, the public sentiment around cost of living has not changed in tandem. It's possible that Costco executives may be factoring this into its decision to hold steady, but all Galanti said was that "now is not the time."
Read more: All The Benefits Of A Costco Membership
Speculation Among Members
Analysts weren't the only ones speculating that Costco would announce an increase during this earnings call. A Reddit thread in the r/Costco channel asked if members would be willing to pay an extra $10 or $20 per year or if that kind of fee increase would have them bailing. That kind of increase would put Costco $25 and $30 above the BJ's and Sam's Club memberships, after all. Would brand loyalty and rotisserie chicken keep these members at Costco?
The feeling among commenters really seems to depend on how much they shop at Costco already and how many Costco membership rewards they feel the effects of. One self-proclaimed "low-volume buyer" agreed with another that at $5, they'd certainly renew; at $10, they might renew but were "leaning to no," but a $20 increase would have them ditching their membership. Others, particularly those buying a lot of pet food and gas, would absolutely renew at a higher price point. One even said they wouldn't blink until the membership fee crossed $100. There's good reason to believe these folks have nothing to worry about; even when the price does eventually go up, it's very likely to rise the seemingly standard $5 — and the $1.50 Costco hot dogs will, of course, be $1.50 forever.
Read the original article on Daily Meal.
