Costco's CFO Richard Galanti on March 2 announced that come June 1, the company will be incorporating a $5 hike in its membership plans.
Based on the plan, fees for "Gold Star" members, both individual and business, have been hiked to $60 from $55, and executive members will have to pay $120 annually post the increase.
However, with the announcement of the new annual membership fee, Costco suffered a setback as its shares took a dip by 4.3 percent and closed at $170.26 per share. This news has kept people wondering whether the price hike from the company is worth it.
The hike in the fee will reportedly affect Costco's 35 million members. The wholesaler has 508 warehouses in the United States and Puerto Rico.
Why The Increase Is Worth It
Paying $5 annually along with the average cost of the Costco basket at checkout won't be an issue for affluent customers, according to Sucharita Mulpuru, the chief retail strategist at Shoptalk.
"These are customers who will pay $5 for a latte and not think twice about it," says Sucharita.
Courtney Jespersen, the retail expert at the personal finance company NerdWallet, also supported Costco's price hike in a positive tone. According to her, shoppers with large families will be saving enough over the year to cash out the fees for the annual membership plan.
Why The Membership By Costco Is Still The Best
According to Brent Shelton, an online shopping expert at deal aggregator FatWallet.com, the Costco membership is extremely profitable for families having a large quantity of prescription purchases. Shelton said that Costco offers quite a huge rate of discounts on its pharmacy items for its members, so the inconsequential annual hike won't really matter at the end of the day.
Prescription medicines are so costly that sometimes even with insurance added in the bill, the whole cost is not covered.
Apart from this, the second largest wholesale corporation, Costco, also provides its consumers with items, which none of the other star-stores offer like car rentals discounts, trip packages and even gasoline.
Kyle James, the founder of Rather-Be-Shopping.com, mentioned that products like Tires, Nutella, extra virgin olive oil, wine, movie tickets, gift cards, and pure vanilla extract, are few of the best-sold items at Costco.
Comparison In Prices For Big Box Stores
Costco's price increase will be $15 more than Sam's Club's $45 membership plan and $10 more than Bj's stores $50 membership plan. Few products like bacon, meat and chicken breasts are some of the hottest selling products at warehouse stores, whereas other items like kitchen appliances, books, DVD's are found cheaper online.
Photo: Mike Mozart | Flickr