Costco’s CFO Just Confirmed That Membership Fees Won’t Rise Anytime Soon

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Costco isn’t making immediate plans to raise fees. But that doesn’t mean a fee hike won’t happen eventually. Read on to learn more.v 

American consumers have been feeling the impact of inflation for a good couple of years now. And while inflation has, thankfully, cooled quite a bit in 2023, many households are still having a hard time making ends meet without racking up credit card debt.

Meanwhile, a Costco membership can be a huge source of savings for households who want to stretch their paychecks as far as they can. And right now, a basic Costco membership costs $60 a year, while an Executive membership costs $120. The Executive membership costs double because it rewards members with 2% cash back on their Costco purchases.

At this point, it’s been more than six years since Costco has increased the cost of a membership. And that’s beyond the usual stretch of time between membership fee hikes. As such, if you’re a Costco member, you may be worried that an increase is pretty imminent.

But on the company’s most recent earnings call, Costco CFO Richard Galanti confirmed that the warehouse club giant has no immediate plans to raise the cost of a membership. So if that’s something you were worried about, you can breathe a sigh of relief.

Costco members are in the clear — for now

At a time when prices and living costs are still up, any sort of added expense has the potential to be an issue. But you can rest assured that your Costco membership is not about to get pricier.

During the company’s late September earnings call, Galanti was asked about plans to increase the cost of memberships. And his response was, “We can’t really tell you if it’s in our plans or not. We’ll let you know when we know. We feel good…about all the attributes of member loyalty and member growth…So, you know, stay tuned. We’ll keep you posted. But there’s not a whole lot I can tell you about that.”

That’s pretty much as non-committal as you can get. And it seems to indicate that a Costco fee hike is not going to be in the cards for late 2023 at the very least. If that were the case, Galanti would likely be more forthcoming about it.

Remember, earnings calls are geared toward investors, not consumers. And a fee hike is something investors may want to see out of Costco because it’s likely to add to the company’s revenue, which could then result in a higher stock price.

So when Galanti says that there are no plans to raise membership fees, he’s not trying to appease consumers in this context, because chances are, it’s not everyday Costco shoppers who are listening into the company’s earnings calls. Rather, he’s simply being honest about where things stand.

A fee hike is likely at some point

While there’s no need to worry about an immediate Costco fee hike, Galanti did say that an increase was likely at some point. His words, in fact, were, “It’s a question of when, not if…you’ll see it happen at some point.”

But if Costco’s next fee hike is comparable to its last one, then we’re probably looking at a very modest increase. In mid-2017, the cost of a basic membership rose from $55 to $60, while an Executive membership went from $110 to $120. The company’s next fee hike might follow a similar pattern, where a basic membership rises to $65 and an Executive membership goes up to $130.

Of course, if money is tight for you, even these modest fees can be troublesome. If you’re someone who needs to account for their spending down to the last dollar, then now’s a good time to stick a dollar here or a dollar there into savings so that if Costco’s fees go up at some point next year or the year after, you’ll be ready.

Meanwhile, if you’re someone who’s budget-conscious but you’re not struggling financially, a Costco fee hike probably isn’t something to sweat if you currently get great value out of your membership. If you don’t, then it may be time to consider canceling regardless of whether the cost goes up or not. But if it makes sense for you to keep your Costco membership at the price point of $60 or $120, then chances are, a $5 or $10 increase won’t change that.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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