Soon, Costco shopping will come at a higher cost.
The membership-only warehouse club said on Wednesday that, effective of September 1, membership fees in the United States and Canada would rise by $5. That means that the yearly membership fee has increased from $60 to $65. The cost of its most expensive plan, known as “Executive Membership,” will go up from $120 to $130 annually.
52 million memberships, slightly more than half of which are executive memberships, will be impacted by the cost changes, according to Costco.
In Wednesday’s extended trade, shares increased by over 2%.
Since June 2017, this is Costco’s first membership pricing hike. Based on the company’s historical rate-hiking history, which is about every five and a half years, Costco is expected to increase the price in late 2022 or early 2023.
Costco refrained from increasing prices earlier, however. CEO Craig Jelinek previously said in talks with CNBC that the timing wasn’t ideal since customers were coping with significant inflation. Similar remarks were made by the company’s CFO, Richard Galanti, on earlier earnings calls.
The majority of Costco’s income comes from membership fees, which also contribute to its cheap product costs. For the first time in nine years, its competitor, Sam’s Club, which is owned by Walmart, increased its membership cost in 2022.
However, even with the increase in fees, a Sam’s Club membership was still less expensive, costing $50 for club members and $110 for those who subscribed to its higher tier, “Plus,” annually. Annual membership costs at BJ’s Wholesale are $55 for club members and $110 for those in its own higher tier, respectively.
According to Costco, it increased enforcement last year to make sure customers weren’t using the membership cards of other people. For memberships at the self-checkout aisles, it introduced an additional check. Similar actions have been taken by Netflix, which has also taken action against non-paying users of its service.
