Why It Pays to Get a Costco Membership — Even if Prices Go Up This Year

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Costco might raise membership fees. Read on to see why it’s worth joining regardless. 

Right now, a basic Costco membership costs $60 a year, while an executive membership costs $120. In exchange for that higher price, an executive membership also gives you 2% back on all Costco purchases (including those made online), the same way a credit card might give you cash back on the things you buy.

But while these numbers apply right now, they have the potential to change — and soon. See, Costco hasn’t raised its membership fees in more than five years. So at this point, the warehouse club giant really is due for an increase.

If you’re thinking about joining Costco, that may not be news you want to hear. But actually, it could still very much make sense to get a Costco membership this year, even if it ends up costing you more.

It’s just a matter of when

During its most recent earnings call, Richard Galanti, Costco’s Chief Financial Officer, said that June would be the sixth anniversary of the current membership fee structure. And so when it comes to raising fees, Galanti said, “In our view, it’s a question of when, not if.”

In other words, Costco is making plans to raise the cost of an annual membership. Whether that happens in mid-2023, late 2023, or even 2024 is still yet to be determined (or at least it was as of the company’s last earnings call).

Now, we don’t know what a Costco fee hike will look like. But chances are, it won’t be all that substantial.

It’s likely that the cost of a basic membership will rise from $60 a year to $65, while the cost of an executive membership will increase from $120 a year to $130. All told, that’s $5 to $10 more per year than what it costs to join Costco right now. So if you can justify a membership at today’s fee levels, you can probably justify one for a bit more money.

A Costco membership could more than pay for itself

People who join Costco but rarely shop there might be throwing their money away. But if you’re convinced you’ll do plenty of shopping at Costco, and you have a warehouse club store located close to your home, then what you spend on a membership, you might more than make up for in the form of savings on groceries and household essentials.

In fact, let’s say you’re able to shave $20 off of your monthly grocery bills by shopping at Costco. Let’s also assume the cost of a basic membership rises to $70, and that’s the membership you opt to get. Even so, you’re looking at spending $70 to save $240, thereby saving $170. So all told, you stand to come out ahead financially, and you’ll potentially have an opportunity to put more cash into your savings account.

Nobody wants to see their expenses go up. And that extends to paying for a Costco membership. But even with a modest price increase, you’re likely to find that a membership is more than worth the cost involved.

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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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