Costco Members: Expect to Pay More to Get in the Door

Analysts say the warehouse chain is preparing to bump up its membership fees, but they don't see it deterring bargain shoppers.

Costco Members: Expect to Pay More to Get in the Door Photo (cc) by JeepersMedia

Shopping at Costco is about to get more expensive.

Analysts at financial services company UBS expect Costco to hike its membership prices by about 10 percent by late 2016 or early 2017, Money reports. If the analysts’ predictions prove accurate, a Gold Star membership at Costco will increase from $55 to $60 and an Executive membership will be raised to $120 from its current price of $110.

“If [Costco] comp were to dramatically slow in the meantime or if there were some major macro disruption, it might delay this increase,” analysts wrote. “But, it sounds like that’s not likely.”

The popular warehouse club last increased its membership fees in November 2011, from $50 to $55 for a Gold Star membership and $100 to $110 for an Executive membership. Costco typically bumps up its membership fees every five to six years, so the UBS projection of a 10 percent membership increase is on track with past fee hikes.

According to the Huffington Post, a hefty piece of Costco’s revenue is generated from its membership fees. In 2015, nearly 70 percent of Costco’s operating income came from the $2.53 billion it collected in membership fees.

UBS analysts anticipate the bump in membership fees to provide a foundation for solid growth for the warehouse club in the next year. Membership levels are not expected to take a hit as the result of the price hike.

“We believe Costco’s price transparency, limited [product] offering, and attractive membership structure have helped lend it a level of consistency that’s rare in the world of hardline and broadline retail,” analysts wrote. “While its traffic has lost some luster as of late, there’s a good case it can sustain 3-4 percent growth for a while.”

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