Costco’s long-awaited membership fee increase has finally gone into effect.
Since September 1, this wholesaler’s standard membership has increased by $5 per year from $60 to $65.
The Executive level, which offers 2 percent off all Costco purchases that year up to a total of $750, increases by $10 to $130 per year.
The changes, which affect members in the US and Canada, are the first rate increases since June 2017.
Costco said the increase will reach 52 million memberships, about half of which will be at the top end.
Costco has been charging between $60 and $120 per year for membership since June 2017
With a Costco membership, customers can get discounts on groceries and electronics in the store.
It also provides access to services such as hearing tests and home insurance.
Many Costco fans had expected the rates to increase, as the retailer normally raises rates every six years or sooner.
Costco’s shares, which have risen more than 37 percent this year, have been rewarded by investors eager to see higher membership prices.
In the three months ended Feb. 18, Costco generated $1.11 billion in membership fees, nearly 2 percent of total revenue for the quarter.
This means that Costco makes over $4 billion annually on these costs, a figure that is likely to increase as costs rise.
Until this latest increase, there had been seven membership fee increases since Costco was founded in 1983—each by $5 for the basic membership. On average, they occurred once every five years.
The longest period in which the annual contribution remained unchanged was between 1983 and 1992.
According to inflation figures from the U.S. Bureau of Labor Statistics, the annual contribution was $25 in 1983 and would now be about $78.
After 1992, the periods between increases were about two to three years. After 2006, however, they are between five and six years.
Richard Galanti, who had been CFO since the early 1980s, left earlier this year.
He had promised to keep membership steady as Americans have struggled with rising costs and stagnant wages in recent years.
His replacement Gary Millerchip took over in March and was widely expected to raise prices.
The increase is likely the result of years of inflation and Costco’s desire to maintain a steady revenue stream through fees.
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Costco CFO Richard Galanti (pictured) left the company earlier this year
Costco recently announced a stricter policy against people entering its stores without a valid membership card.
The retail giant recently announced that customers will be required to scan their physical membership card when entering stores.
In addition, they must visually match the photo that appears on the scanned card.
The scanners, which have already been spotted in several locations in California, are an attempt to discourage bargain hunters from borrowing a friend’s membership card without paying the annual fee themselves.