News
Costco increases membership fee for first time since 2017
Customers leave a Costco store in Teterboro, New Jersey, on June 28, 2023.
Kena Betancur | Corbis News | Getty Images
Soon you will have to pay more if you want to shop in Costco.
The membership-based warehouse club said Wednesday it will raise its membership fee by $5 in the U.S. and Canada starting Sept. 1. That’s an increase from $60 to $65 for annual memberships. Its top-tier plan, called “Executive Membership,” will increase from $120 to $130 per year.
Costco said the rate hikes would affect about 52 million memberships, of which just over half are executive memberships.
Shares rose about 2% in extended trading Wednesday.
It’s Costco’s first membership fee increase since June 2017. On average, the company raises fees roughly every five and a half years, which would put Costco on track to raise the fee in late 2022 or early 2023.
However, Costco has delayed raising fees before. In interviews with CNBC, then-CEO Craig Jelinek previously said that it wasn’t the right time as consumers grappled with high inflation. The company’s now-former CFO Richard Galanti made similar comments on previous earnings calls.
Costco relies on membership fees to generate most of its revenue and help keep merchandise prices low. Its rival, Walmart-owned Sam’s Club, increased its own membership rate in 2022 for the first time in nine years. However, even after the rate hike, a Sam’s Club membership was cheaper, at $50 for club members and $110 for members of its highest tier, “Plus,” on an annual basis. At BJ’s Wholesale, annual membership fees are $55 and $110, for club members and its own highest tier, respectively.
Costco said this strengthening law enforcement last year to ensure that shoppers weren’t using other members’ cards. It added an extra check for subscriptions in self-checkout lanes. The moves were reminiscent of Netflix, which also cracked down on people who use their service without paying.
Don’t miss these insights from CNBC PRO
Clarification: This article has been updated to clarify that Craig Jelinek is the former CEO of Costco and Richard Galanti is the former CFO.