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Is Costco membership still a good deal?

The warehouse store is raising its membership fees for the first time in 5 years.

By Karen Datko Oct 5, 2011 3:26PM

Groceries have been putting a bigger dent in your checking account, and now so will the privilege of buying them in bulk at America's largest warehouse store. Costco is raising its membership fees by 10%.

 

Some basics:

  • U.S. individual (Gold Star) memberships and business memberships in the U.S. and Canada will cost $55 a year, up $5.  It's the first fee increase since 2006.
  • Executive members, who earn cash back on what they spend in the stores, will pay $110, up by $10, the first fee increase for them since 1997. Also, The Seattle Times reports that "the maximum 2% reward tied to the executive membership will rise from $500 to $750."
  • The higher rates go into effect Nov. 1 for new memberships, so if you're planning to join, do it now.
  • For current members, the higher rates take effect whenever they renew after Jan. 1.
  • All told, 22 million members will be paying higher membership fees.  
  • BJ's Wholesale Club increased its membership from $45 to $50 in January. Sam's Club's is hanging steady at $40, The Wall Street Journal reports.

Will people drop their membership because it costs more? Costco doesn't think so. The Seattle Times quoted Costco chief financial officer Richard Galanti:

"Historically, we have very little falloff from it," he said. "We don't take it lightly. ... Every time we do it, we look at ourselves in the mirror and figure we've increased the value of that membership by more than that. Maybe we're fooling ourselves, but we don't think so."

What do consumers think? An online poll at The Street registered 168 voters who said the higher cost is worth it, and 154 who said they'd shop somewhere else. No comments were left, last time we checked. Mass outrage over the price increase was not apparent in other locations -- even at Costco's Facebook page.

 

A few called the company "greedy" and a slave to Wall Street's expectations. There is a bit of truth to that. Reuters says:

While the increased fees could add 20 cents to 25 cents to earnings per share over the next two years as memberships are renewed, Janney analyst David Strasser expects roughly half of the fee increase will be used to hold down prices.

Other Facebook posters said if you don't like it, you know what to do. Kristin Kauno said:

… I have been a customer since day 1 and I think the fee was only $40. Now 20+ years later it will be $55 and worth every penny! You can easliy shop elswhere if you don't like it and think you can save more money somewhere else.

An online discussion we found was also tame. "Since that's less than an extra 42 cents per month, I think I will be renewing my Costco card even if it does go up to $55 per year. It's still worth it to me," one commenter said.

 

A  former member, I'd happily pay the higher fee if I still had a Costco nearby. You'll still save money if you apply some basic tips: Post continues after video.

  • Check the unit price. You really have to know the unit price to compare what you would spend at Costo vs. other stores and see how much you'd be saving (or not). 
  • Don't buy more than you can store or use before it goes bad.
  • Stick to what you need. However, I must say that the hugely discounted waterproof Sorel boots I hadn't expected to buy are still my standard winter shoes 12 years later. Sometimes you have to be smarter than your shopping list.

Costco is doing brisk business, by the way. U.S. sales in the fourth quarter were up 10%. But not all the news was sweet. Bloomberg says:

The retailer's profit margins have narrowed this year as costs climb for gasoline and food items such as coffee and cheese. The company said the rising cost of inventory reduced profit by $32 million, or 4 cents a share, last quarter.

More on MSN Money:

145Comments
Oct 6, 2011 1:31PM
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It all boils down to personal choice. If you like Costco, continue to shop there. If it's not your thing feel free to shop elsewhere. Personally, the $5.00 doesn't bother me. Costco works for our family and I like the convenience of going to one store. Some folks enjoy the hunt and love to drive all over the area to save a dollar. Now if they could just get those free sample carts out of my way ...............
Oct 6, 2011 1:23PM
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This is the first year I didn't re-new my membership since 1995.  It had nothing to do with the 5.00 since that wouldn't have pertained to this years membership.  All my children moved out of the house and I don't need all the food anymore.

My sister and I share an account now, and go to Costco every friday for the same produce.  You can't beat the price on the produce, and the eggs at our Costco for two dozen that come from the hen house 40 miles away.

Over the years I have saved so much, and I see people saying they waste the food and it goes bad.  No one owns a freezer?  I have always bought in bulk (if the savings were there) and put it in smaller packages when I got home.

Costco saves money especially when you use it right.  Food prices are going up every where these days, and the packaging is getting smaller, but that is not Costco's fault for the packaging that is the manufacturer's. 

Oct 6, 2011 1:22PM
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The thing that really gets me is the extreme bias in politically focused books.  It might be just the local management that choses what to sell, but at the local Costco all they have are radical right wing books by Palin, Beck, etc., and nothing balanced or objective at all.  I am not political, but Costco should not be pushing a political agenda, especially one so counter to reason and humanity.  Other than that, the prescriptions cannot be beat (that alone pays for the card several times over), and the pizza is the best anywhere. 

Oct 6, 2011 1:14PM
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A few years ago they use to post the savings vs. joining, and if you calculated a breakeven cost it came out that you would have to spend $600 per year to break even with paying the membership, now that cost would likely be higher to break even. Most of the time unless you have a big family or buy a major item, like TV or tires it is not worth it.
Oct 6, 2011 1:13PM
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No, I am not unless my Costco savings dollars points are enough to cover the cost of  renewal.  
Oct 6, 2011 1:11PM
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I have been a member for 26 years and Costco could give a rats rear end!!! At 25 years I thought perhaps they might say--- "THANKS"  but nothing.

 

I will not renew my membership. Has ANYONE totaled up what 22 million customers @ $55.00 is?

 

P U R E    G R E E D   as is rampant in MOST all businesses today!!!

Oct 6, 2011 1:07PM
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My wife and I have been carrying both a SAMS Club membership and a Costco membership for some time.   We may just go with SAMS Club from now on.  There is little difference between the stores and what they offer.
Oct 6, 2011 1:07PM
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Costco treats their employees well. They don't exploit their suppliers. As an "executive" member (anyone can be an "executive"), I make more $ back every year than it costs to join. Perhaps non-executive members have a legitimate beef with a 5% increase, but they should just become executives and they will get it all back, and then some.
Oct 6, 2011 1:01PM
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Oh yeah, another thing.  A lot of people are commenting that you can get just as good of a deal at your local grocery stores if you look for the deals.  I'm sorry, I'm a busy mom working full-time, plus out of the home and I don't have time for scouring ads for the best deals and going to three different grocery stores to get what I need.  I appreciate the cost and quality at Costco for the things we consume most and there are two very near my house.  The employees have been wonderful and so has the customer service.  Plus, you can get some great deals on beer!  Wine not so much, they pretty much just stock the really expensive wines for a little less expensive, although I did find the one more expensive label that I like (typically $28 to $36, depending on the store) and I got it at Costco for $18.  That one is my splurge.
Oct 6, 2011 12:53PM
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I'm an american living in the Philippines and we have a store here like Costco called S&R and they sell american products by bulk and their Gold card membership fee is 700 peso a year, and their Business  card membership fee is only 900 peso a year  so it's only costing us americans who's living here $16.00 to $20.00 a year respectfully to join.  YOU GOTTA LOVE IT!!!!!
Oct 6, 2011 12:52PM
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With an executive membership I buy personal and business items at Costco...I also gave an executive card to my daughter who has four kids...Every year we get back more than enough money to pay the annual fee and make additional purchases...I understand that I am not the typical customer but expanding the reimbursed limit to $750. may be beneficial for me and for other business persons who buy in mass with their executive membership....
Oct 6, 2011 12:50PM
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In the news Costco's profits up 11 % so they raise the memberships fees 10 %??. Do they respect their customers ?? I've done a lot of price comparisons between Costco and sales of other stores. Costco rarely beats the sale prices. Many times their more expensive. Only savings is on OTC drugs. Not worth the increased memberships fees. I will not renew. I want to save money and not feed their CEO's excess income.

Oct 6, 2011 12:46PM
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For everyone that said they don't see the benefit, then you are right to drop your membership.  That doesn't mean its stupid and other's haven't found a way to get good deals.  I have two small children, the older is out of diapers now, but you can't beat their prices on diapers, pull-ups and wipes.  We also stock up on paper towels, tissues (nose and rear) and the food choices are pretty good, especially considering their organic offerings.  You can't buy organic for cheaper anywhere else.  I think we get our membership fee's worth in the items I've already mentioned, but the other good deals are bread, ground beef, chicken breasts, veggies (specifically red, orange and yellow bell peppers and salad mix) and fruit (grapes and blueberries), oatmeal and granola bars.  If these are items that you buy consistently, you're going to save.  Milk and eggs are also a good deal as is yogurt and shredded cheese.  Of course some things aren't going to be better than a traditional grocery store, you just don't buy those things!  I've often gone there with a coupon for a brand name item, but the store brand was still cheaper and just as good quality-wise.  Its about having the choices and making it work for you, especially if you have the freezer space.  I don't usually look for clothes there, but I've happened across some great deals on brand names clothes for the kids now and then also.
Oct 6, 2011 12:45PM
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Does anyone remember "GEMCO" back in the day? I remember when I was a kid going there with my parents going through the turn stile having to show our card. They had to pay for their membership too a lifetime membership I believe it was a whole dollar. It was an amazing store. Then a hostile take over of Lucky stores then it became Target Stores. No more one stop shopping till Costco came about then Costco became a hit along with Sam's club which ever came first. Who's counting at this point. But who cares?

Think about it people!! .. We are PAYING to SHOP !

                                            We are PAYING to WATCH TO TV

                                            We are PAYING to USE OUR MONEY

                                            We are PAYING to CARRY OUR LUGGAGE

                                            We are PAYING to FILL POCKETS OF MILLIONAIRES &
                                                                                                                 BILLIONAIRES

Next will be charged to PAY ATTENTION if we don't start standing up and doing something about it instead of griping about it.


You can find food cheaper at other outlets and you can find gas as cheap if not cheaper at other places as well.

Oct 6, 2011 12:33PM
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LyleKellogg, sorry but you're a moron.  If you and your wife are both paying for separate memberships, you deserve to lose your money.  It's pretty well known that you can get extra membership cards on the same account for the people in your house, especially your wife.  And you don't need the executive membership if you're concerned about the cost of the membership.  So instead of the $220 you're using to make this seem like a big deal, you could be paying $55.  And it is VERY easy to make that up over the course of a year if you shop smart.  Sure you can sometimes find products for the same price or even cheaper from other stores or websites, but there is plenty of savings to be had on many of the items they sell.  It's absolutely ridiculous for you people to be throwing your arms up and making such a big deal over a $5 per year increase.  You're probably all the same fools that overreact to all the media hype surrounding the economy and just make things worse by reducing your spending and selling off all your investments.  GET A GRIP PEOPLE!!!

Oct 6, 2011 12:25PM
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I will gladly spend a few bucks more to stay with Costco as Sams Club does not care about it customers, long lines, mismarked items.

 

I left Sams and will never shop there again....Costco will unload your cart, box your items, and is all around helpful.

 

Scams could close and I wouldnt care...they couldnt even pay me to shop there after shopping at Costco.

Oct 6, 2011 12:25PM
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Costco raise your fee and I'm out of there, I'm tired of getting nickel and dimed to death by some retailers it STOPS right here for me!
Oct 6, 2011 12:17PM
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U.S. individual (Gold Star) memberships and business memberships in the U.S. and Canada will cost $55 a year, up $5.  It's the first fee increase since 2006.

 

WHAT?............We canceled our membership in January because Costco wanted another $5.00 increase back then! We had 6 increases over a 10 year period. We went to Sam's Club instead at the $40.00 fee.

Oct 6, 2011 12:17PM
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The only thing that is cheap is the hot dog and soda.  I don't need a membership to buy. (in most places).  Some will tell you it is the gasoline.  That isn't true I have seen gasoline stations across the street to be the same price or cheaper.  I don't need a card!  My wife and I cards will cost two hundred and twenty dollars a year.  Even if I went to costco five times a day to stand in line for samples it still wouldn't cover the cost of the cards.  As for Sam Club is the same price that I would get at any Wal-Mart.  The only bulk store I would recommend is Smart and Final. No membership required and prices are cheaper. The major problem with Costco is HERE TODAY GONE TOMORROW.  Brain dead will continue to pay ask Bank of America they are counting on it. 
Oct 6, 2011 12:15PM
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It has been just the two of us for awhile, so it is not worth buying at Costco as it is more than what we can use, plus the distance to drive isn't worth it anymore for the 5 cents in savings for gas.  Like everyone is saying,  the store is for a sm. business or large families. I found if I just take the time to read the ads from other stores I do just as well or even better. Smart & Final has chicken the same price along with the bulk paper towels and tissue paper.  All tires stores will match each other prices and Sears will even go lower to get your business.  I will not renew my card, but that won't hurt them as I don't shop there enough and always walk out under $100.00 in purchase, which is hard to do. As for the Hot Dog & soda lunch...you don't need a card to purchase.  Jennifer from CA... stay away from the stuffed T-Bears or any other stuffed items, as they are dust collectors and are creating allergies in children. 
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