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Costco Raising Membership Fees: It's Been 6 Years Since Last Increase

Image: Costco Raising Membership Fees: It's Been 6 Years Since Last Increase

Costco is raising its membership fees for the first time since 2011. (Georgesheldon/Dreamstime.com)

By    |   Friday, 03 Mar 2017 02:39 PM

Costco is raising its membership fees by $5 a year for the basic membership and premium members paying $10 more for the privilege.

The price of membership to the wholesale club has not increased since 2011, and Costco has traditionally raised the membership cost about every five to six years. The increase of about 9 percent will take place June 1 for the 35 million current members as well as new members coming in after that time.

Quarterly profits for the company were announced Thursday with Costco earning almost $30 billion, a nearly 6 percent increase over last year. The latest earnings numbers for the wholesaler were disappointing, however, with lower-than-expected profits that caused shares of the stock to fall 4 percent in early trading on Friday, Forbes reported.

The company faces tougher competition from Walmart-owned SamsClub and from Target; both have lowered prices recently to try to gain market share. Analysts also pointed to a grocery store price war set off by lower food commodity prices overall, CNN Money noted.

In general, television and electronics prices are also falling, and Costco's profits from gasoline sales have dropped as well, CNN Money reported. Although switching credit card partners from American Express to Citigroup and Visa has helped the retailer boost profit margins, the lower prices on many products more than offset these gains, CNN Money reported.

The increase is expected to add only a small amount to next quarter’s earnings, since membership fees are a small part of Costco’s overall operation, Forbes reported.

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Costco is raising its membership fees by $5 a year for the basic membership and premium members paying $10 more for the privilege.
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2017-39-03
Friday, 03 Mar 2017 02:39 PM
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