Costco recently made big news headlines in the retail industry by raising fees on its memberships for the first time in years. Starting Sept. 1, 2024, Costco membership fees are going up by $5 per year for Gold Star memberships (which will cost $65 per year), or $10 per year for Executive memberships (for a new fee of $130 per year).
I’m going to make a bold prediction: Costco will keep its membership fees at this same level for the next few years. Based on previous history, and overall trends in the retail industry, it’s reasonable to expect that Costco won’t raise fees for memberships again for at least another five years.
Let’s look at a few reasons why Costco’s new $65 and $130 membership fees are likely here to stay — at least until 2029.
It took Costco seven years to raise fees last time
Costco doesn’t raise membership fees often. I’ve been a Costco member for 20 years, and there have only been four membership fee increases during that time. Here’s a quick breakdown of when the most recent Costco fee hikes happened:
- September 2024
- June 2017
- November 2011
- May 2006
Based on this recent history, Costco hikes membership fees about every 5.5 to 7.33 years. Increases in Costco membership fees are not a regular occurrence, or even an “every four years” event.
Inflation is going away — companies have less pricing power
Based on the latest economic data, the post-pandemic inflation problem seems to have mostly gone away. Inflation has cooled off quickly in 2024. Consumer prices have slowed significantly, and some companies are even cutting their prices. The possible end of the recent high inflation is good news for consumers, and could lead to the Fed cutting interest rates.
If inflation was still high, if inflation was sticking around and forcing the Fed to leave interest rates higher for longer, that would be a sign that retailers might keep raising prices — including the price of Costco memberships. Companies have to cover their costs and make a profit. They’ll charge whatever prices consumers are willing to pay — but slower inflation makes companies re-evaluate their pricing strategy.
If inflation stays low for the next few years, Costco won’t want to push people too far and raise its fees to an uncomfortable level, to the point that higher fees cause people to cancel their memberships. Lower inflation could be a win-win for Costco and its members: if Costco can get lower prices on its wholesale inventory, the company can still be profitable while offering lower prices for Costco shoppers.
Costco wants to keep customers happy
Costco doesn’t raise fees lightly; the company tries to keep costs down and keep customer renewal rates high. As of the latest Costco annual report, approximately 90% of Costco members renew each year.
Unless inflation rises again, or unless Costco’s competitors raise their prices, it’s unlikely that Costco will raise membership fees for the next few years. Costco values its goodwill with members, and it has a hard-earned brand reputation for operating in a customer-friendly way. So it doesn’t seem like Costco would want to make news headlines for raising membership fees again anytime soon.
Especially if the rest of the retail industry is cutting prices or showing signs of near-zero inflation, Costco probably wouldn’t want to be the only company in the warehouse retail industry that hikes prices in this way.
Bottom line
Costco has a previous track record of raising membership fees every five to seven years. Based on overall economic trends toward lower inflation (and less pricing power for retailers), it seems likely that Costco won’t raise its membership fees again for at least another five years.
Costco wouldn’t want to be an outlier in the retail industry or make headlines for jacking up prices; it would rather see 90% of its members keep happily renewing their memberships and using their Costco credit cards. Don’t expect another Costco fee hike until 2029 — or beyond.
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