Costco has announced its first increase in membership fees since 2017. Starting September 1, the retailer has raised the annual cost for its "Gold Star," "Business," and "Business Add-On" memberships by $5, bringing the fee to $65. Meanwhile, the premium "Executive Membership" saw a $10 increase, now costing $130 per year.
The fee adjustment, impacting over 52 million memberships, reflects Costco's effort to manage rising operational costs and maintain its low-price promise amidst persistent inflation. "The price change will help to offset operational costs so we can keep our prices low," Costco stated. The adjustment marks a strategic response to the financial pressures that have been mounting in recent years.
The fee hike comes as Costco ramps up its efforts to curb unauthorized use of memberships. Alongside the price increase, the company is instituting stricter policies to prevent card sharing. By implementing new membership scanning devices at store entrances, Costco aims to ensure that only paying members have access to its warehouses. "Over the coming months, membership scanning devices will be used at the entrance door of your local warehouse," Costco announced. Members will need to scan their physical or digital membership cards before entering, a move designed to tighten access control.
The decision to raise membership fees and tighten entry requirements appears to be a strategic measure to bolster revenue and reduce the incidence of card misuse. Costco's move reflects broader trends seen in other subscription-based services, which have also sought to manage inflationary pressures and operational costs by adjusting their pricing structures.
In addition to the fee increases, the new policies will require guests to be accompanied by a valid cardholder to gain entry into Costco stores. This policy change is aimed at addressing issues of non-members using borrowed cards to gain access, a practice that has become increasingly problematic as the company grows.
Costco's last fee increase occurred in 2017, when the annual cost of memberships was raised by $5. This latest increase comes at a time when inflation has led to higher costs across various sectors, prompting many companies to adjust their pricing strategies. For Costco, membership fees are a crucial revenue stream, helping to offset operational expenses and support its low-price business model. Last year, the company generated $4.6 billion from membership fees, an 8% increase from the previous year.
The premium "Executive Membership," which now costs $130, offers members enhanced benefits, including the potential to earn up to $1,250 in rewards annually, up from $1,000. This adjustment reflects Costco's attempt to add value for its high-tier members while addressing the financial pressures faced by the retailer.
Despite the increase, Costco will continue to offer one free additional card for a designated person in the same household who is at least 16 years old, maintaining a key benefit for its members. The company's focus on customer service and maintaining membership value underscores its commitment to retaining a loyal customer base even as it adjusts its pricing.
