“The most important item we sell is loyalty cards,” Costco CEO Ron Vachris told Fortune in an April interview.
Costco’s membership base continues to grow.
“Membership fee revenue grew 5% to $4.8 billion, and our membership base grew to nearly 137 million cardholders with a 90% renewal rate,” the chain said in its 2024 annual report.
The chain raised membership fees in September 2024.
“In July, we announced our first membership fee increases in seven years, increasing Gold Star membership fees by $5 and Premium membership fees by $10,” the chain said. “We are committed to investing in these incremental membership fees to provide a better experience for members and associates.”
Membership fees are important to Costco because approximately 60-70% of its operating profits come from membership fees.
“This model generates predictable, high-margin revenue primarily through membership fees, which account for a significant portion of its operating profits, insulating the company from fluctuations in discretionary spending,” Inyo Register said.
Now that membership growth has slowed, Costco has taken some steps to address the issue.
During Costco’s first-quarter earnings call, Wells Fargo analyst Edward Kelly asked about the chain’s membership status.
“You’ve had significant growth over the last few years. The model is clearly resonating. 5% this quarter is still very good. But over the past few quarters, growth has slowed a bit. I was wondering if you could discuss what you’re seeing there,” he asked.
Chief Financial Officer Gary Millchip’s answer was clear.
“Overall, we’re very pleased with the results we’re seeing in the quarter, including the new members and the younger demographic that we’re recruiting, the acceleration in upgrades and the overall 9% growth that you mentioned just over 5% and execution. So, we’re pleased with the overall results,” he added.
Millerchip did note that Costco has seen some weakness in membership growth.
“I think your point is accurate, if you look at year-over-year growth, you’ll see it’s slowed down a bit from the past few years. I think some of it just started showing strong growth in the last year or so. But we’re still very pleased with the health of our membership growth,” he added.
Having been a Costco member in the past, it’s easy to see the value: the savings on gas and regular shopping alone are enough to cover the $60 membership fee.
Back in 2019, I calculated the value of a Costco membership just for gas. Using 10 gallons per week, at an average of $2.67 per gallon, Costco’s $0.18 per gallon discount adds up to about $94 per year. Even this simple example shows that for some people, membership is worth it. “
Costco’s membership growth slowed slightly.Shutterstock
Despite modest fee increases and slower growth, a Costco membership continues to provide strong value to members.
Costco has been working to steadily increase the value of its memberships. Millerchip also touched on this during the conference call.
“Then we’re committed to continuing to increase the value of our membership. We’ve obviously made some big changes recently, including extended hours, Instacart benefits and a 5% gas fee on credit cards,” he said.
The CFO said that’s not going to stop.
More retail:
“We’re going to continue to look for ways to add value to our membership. So I think it’s accurate to say it’s a little bit slower than it was before, but we feel good about the momentum and the opportunity to continue to grow,” he added.
Many retail analysts believe a Costco membership will still provide value even after the price increase.
“The Costco brand is so valuable to customers that they are willing to pay more for the privilege of brand ownership. When I look around at the sorry retail brand category, Costco stands out (like IKEA) because it actually owns a brand that matters. Exploring, having fun, and feeling smart are the Costco brands. How valuable is that? To quote Mastercard from years ago: priceless,” think tank member Tom Dougherty wrote on Retailwire.
His colleague Zel Bianco echoed the sentiment.
“The price/value at Costco is very good and for my money, I think they do a great job,” he shared.
Lee Kent, another think tank member, agreed.
“As a long-time Costco member and fan, I don’t really think about the cost and the benefits I get from it. On the other hand, I do know that I will pay more for Costco than Sam’s or BJs. Why? The quality is there, the staff is friendly and helpful, and the value is added,” he posted.
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This article was originally published by TheStreet on January 1, 2026, and first appeared in the Retail section. Click here to add TheStreet as your preferred source.
