Costco's Manufacturer Coupon Policy, Explained

Costco is known for a few things — the massive selection, the iconic food court, and of course, some incredible savings on your favorite foods and other items. But can you save even more using those manufacturer coupons found in newspapers and elsewhere? The answer may, unfortunately, disappoint some budget-minded shoppers.

Costco's official policy is that it will not accept manufacturer coupons for any products sold at its stores. The company notes that it already negotiates the best possible prices from vendors, which typically represents savings beyond normal retail costs due to Costco's size and prestige. Costco argues that the discounts provided by manufacturer coupons are essentially added on to the price of goods purchased elsewhere, a procedure it doesn't allow vendors to carry out at its stores.

Still, those looking to save even more on Costco's everyday prices aren't completely out of luck. The company produces a Costco Savings Booklet each month that lists current and upcoming discounts on a variety of products, from electronics to grocery items. Members can have this mailed to them or access it online. Costco claims this is an advantage over manufacturer coupons, as there's no need to clip coupons and bring them with you — savings are automatically deducted at check out.

A different model for savings

Costco's financial numbers provide some additional proof and justification for the company's coupon policy. Costco's really low prices result from low markups, averaging around 11%, or about half to a third of big-box competitors like Walmart and Home Depot. There's simply not much more room for discounts from coupons if the company is hoping to be profitable! Instead, Costco primarily makes its profits from the membership fees paid by shoppers at $60 or $120 per year. The company's membership fees generate about $4 billion per year, making up roughly 80% of its overall profit. With this structure, infrequent shoppers help subsidize the ultralow prices for regular Costco buyers.

Costco would be quick to point out that it is not alone in not accepting manufacturer coupons: In fact, it's the standard practice of stores running on a similar model. Warehouse club competitor Sam's Club has a similar policy of not accepting manufacturer coupons. Other budget-focused stores (including those without membership fees) like Aldi don't accept coupons, either. Luckily, those shopping at these spots have plenty of other ways to save.