“The most important item we sell is the membership card,” Costco CEO Ron Vachris told Fortune in an April interview

Costco has steadily added to its membership base.

“Revenue from membership fees increased 5% to $4.8 billion, and our membership base grew to nearly 137 million cardholders, with a 90% renewal rate,” the chain shared in its 2024 annual report.

The chain raised its membership fees in September, 2024.

“In July, we announced our first membership fee increase in seven years, increasing our Gold Star Membership by $5 and our Executive Membership by $10. We are committed to investing these incremental membership fees to provide a better experience for members and employees,” the chain shared.

Membership fees matter to Costco because it generates roughly 60-70% of its operating profits from them.

“This model generates predictable, high-margin income primarily from membership fees, which account for a significant portion of its operating profit, insulating the company from the volatility of discretionary spending,” The Inyo Register shared.

Now, membership growth has slowed, and Costco has taken some steps to address that.

Costco sees slowing membership growth

During Costco’s first-quarter earnings call, Wells Fargo Analyst Edward Kelly asked about the chain’s membership.

“You’ve had remarkable growth over the last few years. Model has obviously resonated. And 5% this quarter is still very good. But it has slowed a little over the last few quarters. I was wondering if you could just maybe discuss what you’re seeing there,” he asked.

CFO Gary Millerchip was clear in his answer.

“In general, we’ve been really pleased with the results that we’ve seen in the quarter with the new members and the younger population that we’re recruiting, the acceleration in upgrades and overall growth that you mentioned just over 5% and exec up 9%. So we’re pleased with the results that we’ve seen overall,” he added.

Millerchip did note that Costco has seen some weakness in membership growth.

“I think your point is accurate that if you look at the year-over-year growth, it has slowed a little bit from where it’s been over the last couple of years. And I think some of that is just starting to cycle some strong growth in the last year or so. But we still feel really good about the health of the membership growth,” he added.

Costco membership is a good value

Having been a Costco member in the past, it’s easy to see the value: savings on gas and regular purchases alone often cover the $60 membership.

Back in 2019, I calculated the value of a Costco membership just for gas. Using 10 gallons a week at the average $2.67 per gallon, Costco’s $0.18 discount per gallon adds up to about $94 a year. Even this simple example shows that, for some, a membership pays for itself.”

Costco has seen a slight slowdown in membership growth.

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Costco makes changes to improve membership

Despite modest fee increases and slowing growth, Costco memberships continue to deliver strong value to members.

Costco has worked to steadily improve the value of its membership. That’s something Millerchip also talked about during the call.

“And then we’re committed to continuing to improve the value of the membership. We’ve made obviously some major changes recently with the extended opening hours and the Instacart benefits and 5% gas on the credit card,” he said.

That’s not going to stop, according to the CFO.

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“We’ll continue to look for ways to add greater membership value. So I think it’s accurate to say that it’s a little bit slower than it has been, but we feel good about the momentum and the opportunity to continue to grow,” he added.

A number of retail analysts believe that a Costco membership offers value even after the price increase.

Analysts see value of Costco membership

“The Costco brand is so valuable to customers that they would pay significantly more for the privilege of brand ownership. When I look around the very sorry retail brand category Costco stands out (like IKEA) in actually owning an important brand. Discovery, fun and feeling smart ARE the Costco brand. How valuable is that? To quote MasterCard from years ago: Priceless,” Brain Trust member Tom Dougherty wrote on Retailwire.

His colleague Zel Bianco echoed those sentiments.

“The price/value at Costco is excellent, and for my money, I think they are doing a good job,” he shared.

Lee Kent, another Brain Trust member, agreed.

“Being a long-time member and fan of Costco, I have not really thought much about the fee and what I get for it. On the other hand, I do know that I would pay more for Costco than for Sam’s or BJs. Why? The quality is there, and the staff are friendly, helpful, and an added value,” he posted.

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