Costco announced an increase in its annual membership fees for the first time since 2017. The prices for three of its plans – “Gold Star,” “Business,” and “Business Add-On” – rose by $5 to $65 a year in the US and Canada. New members signing up on or after September 1 and renewals after that date will be subject to the new fees. Additionally, the price for the premium “Executive Membership” also increased by $10 to $130 a year, with members soon being able to earn a maximum of $1,250 in rewards annually, up from $1,000 currently. The company estimates that 52 million memberships will be affected, more than half of which are Executive members.
Annual membership fees are a significant source of revenue for Costco, contributing to the company’s ability to keep prices low and offset expenses. In 2021, Costco earned $4.6 billion in revenue from membership fees, representing an 8% increase from the previous year. The fee hikes come at a time when Costco is implementing measures to prevent non-subscribers from taking advantage of other customers’ memberships, similar to the strategies employed by streaming companies. By enforcing stricter policies and requiring shoppers to scan their membership cards to enter stores, Costco aims to crack down on membership mooching.
In response to the new measures, Costco is introducing membership scanning devices at the entrance of its warehouses. Members will be required to scan their physical or digital membership cards, either by barcode or QR code, before entering the store. For members with cards lacking a photo, they are encouraged to bring a valid photo ID or visit the membership counter to have their photo taken. The new rule also mandates that all guests must be accompanied by a valid cardholder to enter Costco stores, making it more challenging for non-members to gain unauthorized access using borrowed cards.
The implementation of stricter membership policies reflects Costco’s efforts to protect the integrity of its membership program and prioritize the experience of paying members. By requiring all members to scan their cards upon entry and ensuring proper identification, Costco aims to reduce membership fraud and prevent non-subscribers from enjoying the benefits reserved for paying customers. These changes come in conjunction with the fee increases, as Costco looks to maintain the value proposition of its memberships while safeguarding against abuse of its services.
Overall, Costco’s decision to raise membership fees and implement tighter membership controls underscores the company’s commitment to maintaining a sustainable business model and protecting the loyalty of its paying members. As the retail landscape evolves and competition intensifies, Costco is focused on enhancing the membership experience, driving revenue growth, and effectively managing its cost structure. By adapting to changing consumer behaviors and leveraging technology to enforce membership rules, Costco aims to strengthen customer relationships and reinforce the value of its membership program in the long term.
