Why Costco Doesn’t Do Membership Discounts

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Hoping to snag a discounted Costco membership? Read on to see why that opportunity is unlikely to arise in the near term. 

If you’ve been thinking of joining Costco, you may be hoping to sign up at a time when memberships are on sale. The cost of a basic Costco membership is currently $60 a year. And an executive membership will set you back $120 a year, but in exchange, you’ll snag 2% cash back on all of your Costco purchases. And to be clear, that extends to online purchases and travel booked through Costco as well.

But if you’re going to hold off on a Costco membership until it goes on sale, you may end up waiting a long time. Costco doesn’t tend to offer discounted memberships for a few big reasons. So if you feel that joining is a smart move for you, expect to pay full price.

Why Costco memberships don’t tend to go on sale

Membership fees are commonly a huge revenue driver for Costco. In fact, Costco uses the revenue from its memberships to help offer low prices on the items it sells. For that reason alone, Costco doesn’t tend to discount memberships.

But another big reason we’re unlikely to see a membership discount from Costco anytime soon is that the warehouse club giant doesn’t need to go that route. That’s because Costco membership sales have, in recent months, picked up nicely even without a discount.

During the company’s most recent earnings call, Costco CEO Richard Galanti said, “The biggest thing that we don’t do is in any big way discount our membership…And we’re still getting, as I mentioned on the call, year over year 7% increase in new memberships with about just under a 3% increase in number of new warehouses. So we’re still getting people indoor.”

Galanti then went on to say, “I’d like to think we’re pretty good at what we do, and that’s why more people are signing up.” And he’s totally right.

Since Costco offers such great value to customers, many people don’t mind paying $60 or $120 for a membership. And also, those fees are pretty low to begin with, amounting to just $5 or $10 a month. Given the amount of savings shopping at Costco can lead to, it’s easy for many consumers to justify the cost of a membership because they more than make their money back by loading up on inexpensive groceries and household essentials.

If anything, membership costs might increase

The last time Costco raised the cost of a membership was June 2017. Since the company tends to raise membership costs about every 5.5 years, there’s a higher chance of seeing membership fees rise in the near term than go on sale. So if you’ve been thinking about signing up for Costco, you may not want to wait.

It’s always nice to feel like you’re getting a deal, so you may be bummed to learn that Costco doesn’t tend to offer promotions on memberships or new membership discounts. But the simple act of shopping at Costco means getting access to a world of deals. So that should hopefully help soften the blow.

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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 and Gala. The Motley Fool has a disclosure policy.

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