Since the warehouse first opened its doors in 1983, consumers have attempted to find creative ways to circumvent the membership fee in hopes that they can take advantage of Costco’s excellent deals without paying into the system. In fact, Costco recently employed strict membership-sharing measures to crack down on those improperly double-dipping by using membership cards belonging to their friends and family members, in a move some have compared to Netflix’s recent streaming purge.
One of the reasons Costco is able to offer such low prices, including loss leaders such as the iconic hot dog meal and the pizza slice, is because the company recuperates losses by collecting on membership subscriptions. Last year alone, the chain reported over $4 billion in revenue from just membership fees, accounting for more than half of the total annual profits.
Although the chain’s current membership fee of $60 clocks in a bit higher than its competitors, many consumers claim that they save so much shopping at the massive warehouse that the price of admission is ultimately negligible. Richard Galanti also expressed during the quarterly earnings call that shifting members from the $60 tier to the more expansive Executive account could help further delay the upcoming price hike.