Costco raises membership fee for first time since 2017

Customers leave a Costco store in Teterboro, New Jersey, on June 28, 2023.

Kena Betancur | Corbis News | Getty Images

You will soon have to pay more if you Cost price.

The membership-based warehouse club said Wednesday it will raise its membership fees by $5 in the U.S. and Canada starting Sept. 1. That's an increase from $60 to $65 for annual memberships. The higher plan, called “Executive Membership,” will rise from $120 to $130 per year.

Costco said the rate increases would affect about 52 million members, just over half of which are executive memberships.

Shares rose about 2% in extended trading on Wednesday.

It's the first time Costco has raised membership fees since June 2017. On average, the company has raised fees about every five and a half years, which could have caused Costco to raise fees in late 2022 or early 2023.

Costco, however, has waited to raise costs until now. In interviews with CNBC, CEO Craig Jelinek previously said it wasn’t the right time, as consumers were dealing with 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 keep merchandise prices low. Its rival, Walmart-Sam’s Club, for the first time in nine years, raised its own membership fees in 2022. Still, even after the fee increase, a Sam’s Club membership was cheaper, at $50 for club members and $110 for its higher tier, “Plus,” on an annual basis. At BJ’s Wholesale, annual membership fees are $55 and $110 for club members and its higher tier, respectively.

Costco said it stepped up enforcement last year to ensure customers don't use other members' cards. It added an extra check for memberships at self-checkout counters. The measures were reminiscent of Netflix, which has also taken a tougher stance on people who use its service without paying.

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