The long-awaited Costco membership fee increase has finally gone into effect.
As of September 1, the warehouse retailer’s standard membership price has increased by $5 per year, from $60 to $65.
The Executive tier – which offers a 2 percent discount on all Costco purchases for the year up to a total value of $750 – will increase by $10 to $130 per year.
The changes, which affect members in the United States and Canada, represent the first fee increase since June 2017.
Costco said membership numbers will grow to 52 million, with about half of those being top members.
Since June 2017, Costco has been charging between $60 and $120 per year for membership
Costco membership allows customers to purchase groceries and electronics at the store at discounted prices.
It also provides access to services such as hearing tests and building insurance.
Many Costco fans had expected a fee increase – since the retailer typically increases its fees every six years or sooner.
Costco stock, which has risen more than 37 percent this year, has been rewarded by investors who pushed for higher membership fees.
In the three months ended Feb. 18, Costco generated $1.11 billion in membership fees — nearly 2 percent of its total revenue for the quarter.
That means Costco is earning over $4 billion annually from fees—a figure that will likely rise even further with the increase.
Until this latest increase, there have been seven increases in membership fees since Costco was founded in 1983 – each time by $5 for standard membership. On average, this has happened about every five years.
The longest period during which the annual membership fee remained unchanged was between 1983 and 1992.
The annual fee of $25 in 1983 would be about $78 today, according to inflation data from the U.S. Bureau of Labor Statistics.
After 1992, the intervals between increases were about two to three years. Since 2006, however, they have been between five and six years.
Richard Galanti, who had been CFO since the early 1980s, left the company earlier this year.
He had promised to keep membership numbers constant as Americans struggled with rising costs and stagnating wages in recent years.
His successor, Gary Millerchip, took over in March – and was widely expected to raise prices.
The increase is likely due to years of inflation and Costco’s desire to maintain a steady revenue stream through fees.
Costco CFO Richard Galanti (pictured) left the company earlier this year
Costco recently announced a crackdown on people who try to gain access to its stores without a valid membership card.
The retail giant recently announced that it will require customers to scan their physical membership card when entering its stores.
In addition, they must visually match the photo displayed on the scanned card.
The scanners, which have already been spotted at some locations in California, are intended to prevent bargain hunters from borrowing a friend’s membership card without paying the annual fee themselves.
