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Your Costco Membership Is About to Get More Expensive

If you've been thinking about joining Costco, fantasizing about all the foods and other bulk goods that you can buy at rock-bottom prices, you can actually start saving money right now. Just by signing up.

Membership fees are going up. Maybe not today. Maybe not tomorrow. But soon. That much is clear, following the wholesale giant's latest earnings call on Thursday. "It's a question of when, not if," Costco's Chief Financial Officer Richard Galanti said repeatedly during the call.

RELATED: Suddenly, You Can't Get A Mobile Phone at Costco Anymore—Here's Why

Galanti has been hinting at a fee increase for months now, while keeping everyone guessing about when it will actually take place. His comments yesterday were the clearest indication yet that a rate hike is imminent. He spoke in terms of months, not years, while being intentionally vague about the details.

"We have no problem thinking about doing it—and doing it ultimately," Galanti said. "We feel that we're in a very strong competitive position right now, and if we have to wait a few months or several months, that's fine." He added, "I'll be purposefully coy on when that might be."

Costco currently charges an annual fee of $60 for a basic, "gold star" membership, allowing card holders to shop in-person and online, and $120 for executive-level members, which includes added perks. The rate hasn't changed since June 2017, when the yearly fee went up $5 for gold members and $10 for executive members.

Costco competitors Sam's Club and Amazon Prime both raised membership fees earlier this year.

Costco is notoriously stubborn about maintaining its low price points, whether it's the membership fees or the company's famously cheap rotisserie chicken, steadfast at $4.99 despite rising poultry costs. That philosophy is deeply ingrained in the company's business.

Galanti noted that Costco's revenues from fresh food sales decreased during the most recent quarter, partly because the wholesaler refused to raise its prices even with inflated food costs. By holding down prices, Costco expects to sell more, and that higher volume leads to bigger profits. "In our view, people do notice those price differences," he said.

Historically speaking, Costco's most recent fee changes (2006, 2011, 2017) all came about five years and seven months apart on average, Galanti noted. If that pattern holds, the next fee increase could come as soon as January 2023. "That doesn't mean it's going to be January 2023," he stressed.

"There's no analytical framework we use other than we feel very good about our member loyalty and our strength," Galanti said, brushing aside analysts' questions about factors that could trigger a fee increase, such as a sluggish U.S. economy and decrease in shopper traffic. Costco reported over $54 million in net sales this past quarter, an increase of 8 percent but one that fell short of analysts' expectations.

"If we wanted to do it yesterday, we could, and if we want to do it six months from now, we can," Galanti said. "So, we'll wait and see."

Costco earned a cool $1 billion in revenue from membership fees alone during the last quarter, according to Galanti. The wholesale club's current membership stands at 66.9 million worldwide, up 7 percent from last year.

The post Your Costco Membership Is About to Get More Expensive appeared first on Eat This Not That.


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