Costco membership fees are going up for the first time since 2017
Jul 11, 2024, 6:56 AM | Updated: 6:59 am
FILE: Shopping carts are lined up in front of a Costco store on Feb. 25, 2021, in Inglewood, California. (Photo by Mario Tama/Getty Images)
(Photo by Mario Tama/Getty Images)
NEW YORK (CNN) — It’s soon going to cost more money to get your foot in the door at Costco. But the good news is your hot dog is still $1.50 — for now at least.
The retailer is raising membership fees by $5 to $65 a year in the U.S. and Canada, Costco announced Wednesday. This marks the first time in seven years Costco is raising membership fees.
Additionally, Costco’s premium “Executive Membership” is going up by $10 to $130 a year. But those members will soon be able to earn a maximum of $1,250 in rewards annually versus $1,000 currently.
The company estimated that 52 million memberships will be impacted, a little over half of which are Executive members, Costco said.
Costco has announced it is raising its basic membership fee for the first time in six years by $5 to $65 a year. pic.twitter.com/73nISpXCTa
— TODAY (@TODAYshow) July 11, 2024
Annual fees have been one of the biggest profit-generating areas for Costco, helping it offset expenses to keep its prices down. Last year, Costco earned $4.6 billion in revenue from membership fees, an 8% increase from 2022.
The fee hikes are also occurring as Costco, like streaming companies, has been taking more measures to ensure fewer people are hitching a ride on other customers’ memberships.
Costco’s hikes, which go into effect on Sept. 1, come more than two years after key rivals Sam’s Club and Amazon raised their membership fees.
On Wednesday, Costco also announced that net sales were up 7.4% for the five weeks ended on July 7 compared to last year.
Shares of Costco jumped over 2% in after-hours trading following the news.
What about the $1.50 hot dog?
“To clear up some recent media speculation, I also want to confirm the $1.50 hot dog price is safe,” Costco CFO Gary Millerchip said on an earnings call with analysts in May.
If Costco’s hot dog deal kept pace with inflation, it would be three times as expensive today — nearly $4.50. But Costco’s $1.50 combo is a strategic decision, known as a loss-leader: The company is willing to lose money selling the hot dogs at that price as long as it helps Costco draw in and retain customers.
