Last updated on December 8th, 2018
The next time you’re looking to spice up a boring party or get together with friends, all you have to do is bring up the Costco membership fee and then sit back and watch the fireworks.
I recently learned this firsthand myself.
A few weeks ago we went to a housewarming party for one of my wife’s girlfriends and someone mentioned the cheesecake they brought had come from Costco (it was delicious by the way).
Well, that’s all it took to send one disgruntled couple into a rant about how much they hate Costco.
I sat back in wonder as they shared (raged) their opinion that Costco is a scam, that the store is like an impersonal airplane hanger, and that they would never pay for a Costco membership.
They strongly believed that no one should have to pay a fee for the privilege of shopping and spending even more money, and that Costco members like me are all a bunch of suckers and there’s no way we save enough money to cover the membership fee.
Now, I’ve been a Costco member for at least fifteen years and I love shopping there. So obviously I don’t agree with this cantankerous couple’s assessment.
So today I’m going to prove without a doubt that the Costco membership fee is actually the bargain of a lifetime.
I’ll share a real-life example of actual purchases to prove that Costco prices beat other stores like the Hulk giving a beat down.
But first let’s review the different membership options Costco has and what each one costs.
How Much Does The Costco Membership Fee Cost?
There are three different membership levels for you to choose from…
Gold Star Membership ($60) is the basic household membership which is perfect for the average family to do their shopping. You get two membership cards so you can keep one for yourself and give the other to a family member.
With the Gold Star Costco membership you can shop at any Costco warehouse worldwide and at Costco.com. You’re also eligible to shop at Costco gas stations, Costco Optical, Costco Pharmacy, and Costco Travel.
Business Membership ($60) allows business owners and managers to purchase products for business, personal, or resale use. This also comes with two cards so if you own a small business you can keep one card for yourself and let one of your employees use the other. You also have the option of adding up to six additional cards if you need them.
Executive Membership ($120) is an upgraded version of either the Gold Star or Business membership levels. It comes with two cards, and you will also earn a 2 percent reward on purchases.
Obviously, you’d have to spend enough money to make your rewards worth the added cost. To be precise, you’d need to spend at least $3,000 ($250 per month) to cover the added cost of executive membership.
That may sound like a lot but if you have a large family and shop wisely you can probably top that.
Still, I’m pretty frugal so we still have the $60 membership option.
Executive membership is an especially good deal for small business owners who purchase products to resell them.
For example, there’s a hot dog stand not far from my office and the woman who owns it does most of her shopping at Costco. She can purchase a 32-count package of Coca-Cola soda for just $7.99 (about a quarter a can) and then resell them for a dollar each.
The more you spend the more your two percent rewards will add up, but there is a limit. The reward is capped at $1,000 per year.
To put that in perspective, you’d have to spend $50,000 a year at Costco to reach that cap.
How Does The Costco Membership Fee Compare To Other Warehouse Clubs?
There are other warehouse clubs like Costco, the two I know of are BJ’s and Sam’s Club.
Sam’s Clubs are owned and operated by Walmart. We have them in New Jersey but none are near me and I’ve never actually been inside one.
The basic Sam’s Club membership fee is $45, so it is cheaper than Costco. That will get you in the door and allow you to shop to your heart’s content.
They also have a Sam’s Plus membership option which costs $110. Like Costco’s Executive membership, Sam’s Plus members earn cash rewards on their purchases.
The reward itself works out to 2 percent like Costco’s, but it is structured differently.
Costco is a flat 2 percent on all purchases, while Sam’s is $10 on each $500 spent.
Theoretically they work out to be the same, but with Sam’s you could get screwed if you came up just short of a $500 increment.
For example, if you spent $480 in Costco you’d earn $9.60 in rewards.
But in Sam’s you would get nothing because you didn’t reach $500.
You might only miss out on a few extra dollars but suddenly the price difference between Costco and Sam’s disappears.
The other popular warehouse club is BJ’s, which mostly operates on the East Coast. If you’re west of the Mississippi this isn’t even an option for you.
The basic BJ’s membership costs $55, just a few bucks cheaper than Costco.
If you want to earn 2 percent rewards on your purchases you need to upgrade to the BJ’s Perks Rewards membership for $110.
Why Does Costco Charge A Membership Fee?
Costco follows a different business model than typical supermarkets and retail outlets. While other stores earn all their revenue from the spread between the amount they pay for products and what they sell them for, Costco relies on their membership fees to maintain profitability.
Costco’s goal is to provide the lowest price possible for their customers. That means fewer sales people on the floor and no shopping bags to lug home your stuff.
But it also means prices that are often significantly lower than you’ll find elsewhere. There are several items (scroll down a bit to see the table breaking down Costco prices and my family’s savings) that my family only purchases at Costco because they are so much cheaper than at other stores.
Costco does put their money where their mouth is and they are even willing to drop a product if they can’t provide the best possible price to their customers.
Back in 2009, they actually pulled Coca-Cola products off the shelves because they felt the wholesale prices were too high. Within a month Coke was back on the shelves at a new, lower price.
Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members.” -Jim Sinegal, Costco’s Co-Founder and Former CEO
Proof That Costco Prices Kick Serious Ass
Here we have a breakdown of a recent “stocking up” trip we made to Costco. We usually do these a couple times a year to stock up on the staples that will last us for a while.
|Item||Costco Price||Stop and Shop Price||Savings|
|4C Breadcrumbs - 92 oz||5.69||9.58||3.89|
|Bisquick 96 oz||5.49||9.26||3.77|
|Cascade Complete Dishwasher Pacs - 90 count||15.99||24.99||9.00|
|Cello Parmesan Cheese - 3 pounds||14.49||26.97||12.48|
|Duracell AA Batteries - 40 count||15.99||26.65||10.66|
|Eggo Homestyle Waffles - 72 count||9.99||17.37||7.38|
|Kirkland 80/20 Ground Beef||18.64||23.98||5.34|
|Kirkland Signatrue Greek Non-Fat Yogurt - 64 oz||5.79||7.58||1.79|
|Kirkland Signature Basil Pesto - 22 oz||7.89||8.13||0.24|
|Kirkland Signature Bath Tissue - 30 rolls/425 Sheets each||15.99||52.46||36.47|
|Kirkland Signature Canola Oil - 192 oz||7.99||10.34||2.35|
|Kirkland Signature Canola Oil Spray - 34 oz||4.99||16.11||11.12|
|Kirkland Signature Minced Garlic - 48 oz||4.79||10.52||5.73|
|Kirkland Signature Organic Saffron - 1 gram||11.89||49.98||38.09|
|Kirkland Signature Pacific Bold Coffee - 120 count||39.99||52.64||12.65|
|Kirkland Signature Paper Towels - 12 pk - 1026 sq ft||15.69||33.62||17.93|
|Krkland Signature Contact Lense Solution - 48 oz||9.99||23.96||13.97|
|Nabisco Ritz Cracker - 61.65 oz||8.59||14.93||6.34|
|Pepperidge Farms Goldfish Crackers - 58 oz||8.99||17.38||8.39|
|Polly-O String Cheese - 48 Count||8.99||15.98||6.99|
|Pure Vanilla Extract - 16 oz||34.99||71.96||36.97|
The math speaks for itself. In one trip to the store we saved $251.55! That’s enough money to cover four years of Costco membership fees.
If that’s not a no-brainer I don’t know what is.
But wait, I already know what you’re about to say:
Mike, you handsome devil. You cherry-picked those items to only show things where Costco prices were significantly cheaper.”
Isn’t that what smart consumers do?
I don’t do ALL of my shopping at Costco and I’m not recommending you do so either.
Smart, frugal shoppers know they need to shop around for the best deals. That’s exactly what I’ve done and this list is made up of the items I’ve found to be priced way better at Costco.
Now let’s review some more Costco complaints I’ve heard from all the haters out there and my own thoughts on each.
Other Common Costco Complaints
They don’t even supply bags for me to carry my stuff home.
This doesn’t bother me at all. Many of the packages are too big for bags anyway and it is easy enough to bring along a few reusable bags for the smaller stuff.
Or just toss a big plastic bin in your car before you head to the store. When you leave the store place your purchases in the bin and you can carry it right into the house when you get home.
Not providing shopping bags helps keep prices down and it is environmentally friendly too.
There are almost never any employees on the floor…good luck finding help if you need it.
If you’re looking for someone to walk around and show you where to find everything, Costco probably isn’t for you.
But personally I don’t like being bugged every 15 seconds by someone asking if I need help.
I just want to get in, grab what I need, and get the hell out as fast as possible.
You’re forced to buy in bulk. You’ll throw away anything that goes bad.
Savvy shoppers know that buying in bulk is usually cheaper than purchasing smaller versions of the same item. Of course, you won’t save any money if products go bad before you have a chance to use them.
Larger families have an advantage here since they’re more likely to use their entire purchases.
But smaller families and individuals can always shop with a friend or neighbor and then split up the bulk packages at home.
Prices are not always better than other stores.
In my experience, the everyday prices at Costco are better than regular prices at other stores. Of course, there are times when another store could have the same item at a cheaper price.
This is especially true if the item is on sale and you can combine a manufacturer’s coupon with a digital coupon from Ibotta.
It’s always good to consider the per unit price when shopping and compare prices before just assuming Costco is cheaper, but as I showed above there are some serious savings available at Costco if you do your homework.
So what’s your opinion? Are you a Costco member? Do you think the Costco membership fee is worth it?