Costco is pushing up the prices of its customer loyalty programme for the first time in seven years. The North American retailer intends to increase the price for its gold star membership to $5 a month and its executive membership to $10 a month.
The price changes will impact 52 million members, more than half of whom are executive members.
The pricing changes are due to come into effect in autumn 2024.
Last year, Costco’s membership fees generated $4.6 billion in revenue. The proposed changes will increase their revenue to $400 million, nearly all of which will turn profit for the company.
With only a small percentage increase (now up $5 for Gold Star members, an $10 for Executive members), the large retail company will see a maximised profit as a great result.
Although Costco doesn’t profit only primarily from membership fees, it’s hard to see how it isn’t a large portion of it. It is a lot easier to mail out membership cards than sell televisions, gold bars, or even food, which generally leads to more profit.
Keeping customers means making them feel valued and treated well; this move will undoubtedly impact Costco’s customer retention and raise concerns about acquiring new ones.