Membership Fee is the Most Important to Costco

Costco is going to increase its annual membership fees from $55 USD to $60 USD for its basic and from $110 USD to $120 USD for its executive in 2017. Actually every 5 or 6 years, Costco increases membership fee, the last time was in November 2011.

Costco earns from membership fee

We should know the membership fee is the most important revenue for Costco. In 2016, Costco has around 87 million members worldwide, they paid $2.6 billion membership fee. However, Costco’s net income in 2016 is only $2.35 billion. So we can see if there were no members, Costco could not earn. So membership fee is their most important revenue.

Win-Win

But, customers get benefits from Costco too. Costco sell items at lower price than other stores, normally Costco set profit 15%, but other stores would set 25% ~ 50%.

Also, Costco's customer server is the best in North America. Even Walmart is the biggest super market in the world, but customers think Costco’s customer service is better than Walmart. At least, if customer want to return item, they will feel more friendly and easier in Costco.