Customers leave a Costco store in Teterboro, New Jersey, on June 28, 2023.
Kena Betancur | Corbis News | Getty Images
Soon you will have to pay more if you want to buy in Costco.
The membership-based warehouse club said Wednesday it will raise its membership fee by $5 in the U.S. and Canada starting Sept. 1. That means an increase from $60 to $65 for annual memberships. Its top-tier plan, called “Executive Membership,” will rise from $120 to $130 a year.
Costco said the fee increases would affect about 52 million memberships, just over half of which are executive memberships.
Shares rose about 2% in extended trading Wednesday.
This is Costco’s first membership fee increase since June 2017. On average, the company has raised fees about every five and a half years, which would have put Costco on track to increase the fee in late 2022 or early 2023.
Costco, however, has refrained from raising fees until now. In interviews with CNBC, CEO Craig Jelinek previously said the timing was not right as consumers faced high inflation. The company’s chief financial officer, Richard Galanti, made similar comments in previous earnings calls.
Costco relies on membership fees to generate most of its revenue and help keep merchandise prices low. Its rival, Walmart-Sam's Club, the city's largest retailer, raised its own membership fee in 2022 for the first time in nine years. However, even after the fee increase, Sam's Club membership was cheaper, at $50 for club members and $110 for members of its top tier, “Plus,” on an annual basis. At BJ's Wholesale, annual membership fees are $55 and $110, for club members and its own top tier, respectively.
Costco said it stepped up enforcement last year to make sure shoppers didn’t use other members’ cards. It added extra monitoring for memberships in self-checkout aisles. The measures were reminiscent of those at Netflix, which has also cracked down on people who use its service without paying.
