For many consumers, Costco is synonymous with value. Joining Costco can be a smart financial decision because the savings you get to enjoy can more than make up for the membership fee you’re charged.
Right now, the cost of a basic Costco membership is $60 a year. For an Executive membership, the yearly fee is $120. However, with an Executive membership, you’ll also enjoy 2% cash back on your Costco purchases.
The last time Costco raised its membership fees was 2017. Back then, the cost of a basic membership rose from $55 to $60, while the cost of an Executive membership rose from $110 to $120.
Since it’s been a really long time since Costco last raised fees, many of its customers have been bracing for a fee hike. But during the company’s most recent earnings call, CFO Richard Galanti had some pretty encouraging comments.
A Costco fee hike may not happen in 2024
During recent Costco earnings calls, the question of membership fee hikes has come up repeatedly. During the most recent call, Galanti gave the same answer he’s given in the recent past: “It’s when, not if, still.”
That said, Galanti confirmed that the company has no concrete plans to raise membership fees. It intends to raise them eventually, but there was no indication given that a fee hike is in the works for 2024.
In fact, in the context of fee hikes, Galanti also said, “I don’t think it would be done simply because, hey, things have slowed down a little bit, let’s do it now. We like the fact that we’re performing well. We like the fact that all — most all metrics are going in the right direction in our business right now. We’ve got plenty of runway left.”
Could new management mean higher fees?
While Galanti made it clear that Costco doesn’t have any firm plans to raise membership fees, he’s also just about to step down as CFO after a 40-year Costco career. His replacement, Gary Millerchip, may decide to take a different approach to Costco fee hikes and implement one sooner rather than later.
That said, CFOs don’t tend to act in a bubble. Costco’s absent fee hikes in recent years haven’t been Galanti’s decision alone. So there’s no reason to jump to the conclusion that Costco fees will rise as soon as a new CFO comes aboard.
However, Costco execs have been very transparent that a fee hike is coming eventually. So at that point, you may need to ask yourself whether it’s worth keeping your membership.
To figure it out, there’s probably only one question you need to answer: “Am I getting good value out of my membership now?”
If the answer is “yes,” then chances are, a Costco membership will continue to make financial sense even if it costs $5 or $10 more (these are the increases we’re likely to see based on past increases). So while you may not love the idea of paying more for Costco access, if fees go up, try to remind yourself that the amount of savings you reap via your membership can more than compensate for the extra sum you’re looking at paying.
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