Why Your Costco Membership Cost May Rise Soon
As many know, Costco operates on a fairly common business model called a warehouse club or wholesale club, where products are often sold in wholesale quantities at discounted rates to customers who pay for an annual membership (via Encyclopedia Britannica).
For a lot of people, this probably isn't new information. However, there is something new, or rather something that could be changing, about the company that might take effect in the next few months: The price of a Costco membership may soon rise. According to an analysis done by Yahoo! News, the price for an entry into the warehouse-style grocery market could go up by $5 to $10 before the end of the year. "We believe we are now 8-9 months away from a likely membership fee increase," John Heinbockel, a Guggenheim analyst, told the publication in December 2021.
Let's dive into why this could happen and what it would mean for Costco shoppers.
Inflation is the key factor in the potential price increase at Costco
The simplest way to explain what's going on is one word: Inflation. Inflation is at a record high in the United States and is expected to spike again (via Time). This means that things that were one price two years ago, now cost more money. As it relates to Costco, increasing membership dues will allow the wholesale club to overcome the higher cost of its expenses, supplies, and labor.
Inflation aside, there's also a historical analysis at play. Costco tends to raise its membership dues about every five-and-a-half years. The last increase was in 2017, according to Costco Insider, which means 2022 is right on track for an increase should the trend continue. In 2017, Gold Star memberships increased by $5 to $60 and executive membership fees were raised to $120, a $10 increase. If the increase does happen, it's likely these two tiers will soon cost $65 and $130, respectively.
As Yahoo! News explained, the increase would affect about 35 million members and might also increase the value of Costco stock prices. Membership dues aside, Costco remains a strong company and has performed well during the pandemic as more people spend time, cook, and eat at home.