Price jumps are expected to be $10 to $15 a year for Costco customers, according to Lasser. The recent partnership with Visa as well as the expected rise in membership have created the ideal conditions for a price hike. What does the price hike mean for Costco customers?
Costco charges its customers membership fees to shop in its stores. Customers can expect to see the Gold Star Membership to jump from $55 to $60, Lasser predicts. The company’s Executive Membership price is expected to jump from $110 to $120.
Gold Star Membership is the most common membership at Costco and the cheapest. This membership offers a second card for someone else residing in the same household as the person who started the membership. Executive members pay the most expensive membership fees and receive a 2 percent reward on most their purchases.
However much the price hike may be, one thing is for sure, Costco members will continue to pay the fees to shop at the warehouse giant because many customers find that the amount of money they save at the wholesale retailer exceeds the amount of money spent on membership.
According to CNN Money, Chief Financial Officer Richard Galanti said that the company has not announced if, or when, it plans to increase the membership fee. Currently, Costco has not confirmed or denied any plans to increase fees for customers.
The price jumps that Lasser is referring to are not set in stone, however, he says that the conditions are right for an increase (for now). “If its [competition] were to dramatically slow in the meantime or if there were some major macro disruption, it might delay this increase. But, it sounds like that’s not likely,” said Lasser.
Lasser also noted that Costco has raised its membership fees every five to six years. The last increase was in November of 2011 so, staying true to its pattern, Costco is overdue for a membership price increase.
Costco membership has increased by 6 percent in the last year. The company claims a membership base of 81 million people. Of those members, Costco finds that many of them are loyal customers. Ninety-one percent of the Costco customers in the United States renewed their memberships in 2015. UBS analysts expect the membership numbers to rise with recent changes Costco has made to its way of doing business.
The company ended a longtime partnership with American Express last year and announced that it would switch to Visa. Starting June 20, Costco customers will be able to pay with their Visa cards at checkout. Also, any cobranded Costco cardholders will have the option to switch to the new cobranded Costco-Visa card. According to UBS, this switch is likely to add an additional two million members to Costco’s already huge customer base.
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Photo: Flickr: Mike Mozart