Costco Raised Its Membership Fees in 2024, and That Decision Paid Off

We live in a world defined by subscription fees, which also means that those fees sometimes go up whether we want them to or not. Costco's membership program predates our addiction to streaming services, but the brand also doesn't increase the price all that often.

Now, Costco did exactly that, angering many of its customers and leaving some wondering why they did it. Here's what we know.

In 2024, Costco decided to increase its membership fee from $120 to $130. It was the first time they had increased the cost since 2017, and people were understandably upset about the move. It came as concerns about inflation were already quite high, and while it's not an enormous increase, it undoubtedly further strained the budgets of the people who use Costco most frequently.

Two years later, though, it seems undeniable that Costco's decision to increase membership fees paid off. In its Q2 earnings call in March, Costco said that it 40.4 million paid memberships, which was a 9.5 percent increase from last year, and 82.1 million paid members, a jump of 4.8 percent. The total cardholders increased 4.7 percent from last year to 147.2 million. It seems, then, that the increase in the cost of membership did not lead to an overall decrease in members.

Costco also said that membership income had grown 7.5 percent year over year, another sign that the increase in the fee did not lead to fewer members. In fact, 7.5 percent is almost the same as the percentage change in the price of the fee, which was 8.3 percent. The worldwide renewal rate stayed steady at 89 percent, even as the renewal rate in the U.S. and Canada declined.

CFO Gary Millerchip said on the call that the decline “reflects new online members growing as a percentage of our total base and renewing at a slightly lower rate than warehouse sign-ups.”

He added, though, that the company would be focused on finding ways to make sure that online renewals could match pace with the customers who originally signed up for their membership in-store.

“We continue to focus on increasing the renewal rate of these new online members through targeted digital communications and retention strategies, and those efforts partially offset the negative effect of the increased penetration of online sign-ups,” Millerchip added.

On the whole, though, it seems clear that the increase in the cost of membership was the right call by Costco's leadership, in part because they waited so long to do it.

Inflation is real for companies too, and it seems that most members understood that an increase in the membership fee would be unavoidable, but that Costco had waited as long as possible to push one. Costco customers are clearly some of the most loyal consumers out there, and at least thus far, the brand has been at pains not to abuse or take advantage of that loyalty.