If Costco Raises Membership Fees, How Expensive Will They Get?

Costco's business model is unique compared to that of other retailers in that it requires you to become a member of the store in order to shop there. And a big reason is that Costco uses its membership fee revenue to offset the cost of procuring goods. That's partly how it's able to offer such low prices to its members on items ranging from groceries to household essentials to electronics.

Right now, a basic Costco membership costs $60 a year, while an Executive membership, which gives you 2% cash back on all Costco purchases, costs $120. But it's been more than six years since Costco last raised fees. As such, many people are anticipating a near-term price hike. But just how expensive will Costco fees get if that happens?

It's a question of when, not if

Costco's last fee hike took place in June of 2017. During the company's December 2023 earnings call, CFO Richard Galanti was asked when the warehouse club giant expects to raise fees next. And Galanti's answer was, "It's a question of when, not if" -- meaning, he wouldn't commit to a timeline but made it clear that Costco fees are likely to go up eventually.

Whether that happens in 2024 is yet to be determined. However, since it's been, as Galanti acknowledged, longer than usual since Costco last raised fees, a near-term increase is something members may want to gear up for.

How much will fees rise?

Just as Costco hasn't given a date for a fee hike, so too has it not committed to a specific fee increase. But the last time Costco raised fees, the cost of a basic membership rose by $5 and an Executive membership rose by $10. And the time before that, in late 2011, Costco fees also went up in similar increments -- a basic membership fee rose by $5 and the cost of an Executive member rose by $10.

As such, there's a good chance Costco will follow the same pattern this time around. If so, that would make the new price of a basic membership $65 and the new price of an Executive membership $130.

Should you keep your Costco membership if fees increase?

If you're someone who uses your Costco membership often, then it probably pays to keep it even if the cost goes up. And if you can't remember the last time you shopped at Costco, then you may be wasting your money on a membership. In that case, it certainly wouldn't pay to maintain one at a higher cost.

All told, any Costco fee hike that comes down the pike is likely to be modest. So if it currently makes sense to hold onto a membership, that's likely to be the case following Costco's next increase -- whenever it happens to hit.

That said, one thing you may want to do before Costco raises fees is upgrade to an Executive membership if your spending at Costco has increased. Once you spend more than $3,000 in a year at Costco, the Executive membership pays for itself, since the cash back you get will exceed the $60 upgrade fee -- that's an easy personal finance decision. So crunch the numbers to see what you've been spending recently, and consider an upgrade while it's still cheaper to put one in place.