Executive Insights
- Membership Update: Fees increased in late 2024 to $65 (Gold Star) and $130 (Executive).
- Secret Codes: Prices ending in .97 are manager markdowns; an asterisk (*) means the item is discontinued.
- Gold Rush: Costco now sells up to $200M in gold bars monthly, offering a unique investment channel for members.
- Kirkland Dominance: The private label brand generates over $90B annually, surpassing many Fortune 500 companies in revenue.
- Expansion: 30+ new warehouses are planned for fiscal year 2026, with a focus on both US and international markets.
The Membership Model: The Engine of Profit
Unlike traditional retailers that rely on marking up goods for profit, Costco generates the majority of its operating income from membership fees. This allows the company to cap its profit margins on merchandise—typically at 11% to 15%, compared to the 25% to 50% seen in standard retail.
Current Membership Tiers (Effective Sept 1, 2024):
| Tier | Annual Fee | Key Benefits |
|---|---|---|
| Gold Star | $65 | Access to all warehouse locations worldwide and Costco.com. Includes one free Household Card. |
| Executive | $130 | All Gold Star benefits plus an annual 2% Reward on qualified purchases (capped at $1,250). Includes discounts on Costco Services (auto, pet insurance, etc.). |
For the Executive Membership to “pay for itself,” a member needs to spend approximately $3,250 annually (or about $270 per month) to recoup the extra $65 cost of the upgrade through the 2% reward.
Kirkland Signature: The $90 Billion Secret Weapon
Kirkland Signature, Costco’s private label, is arguably the most successful private brand in retail history. Generating over $90 billion in annual sales by fiscal year 2025, it outperforms entire companies like Nike and Coca-Cola in revenue. The strategy is simple: create products that are equal to or better than national brands at a price point 15-20% lower.
- Quality Control: Costco famously co-brands or contracts with top-tier manufacturers. For example, some Kirkland coffees have been roasted by Starbucks, and batteries have been linked to Duracell.
- SKU Consolidation: By offering only one premium private label option in a category, Costco reduces decision fatigue for members and streamlines its supply chain.
Decoding Costco’s Secret Price Tags
Savvy shoppers know that the price tag tells a story beyond just the cost. The ending cents and symbols reveal inventory status and markdown severity.
| Price Ending / Symbol | Meaning | Action Strategy |
|---|---|---|
| .99 | Standard Price | Regular everyday price. No rush to buy unless needed. |
| .97 | Manager Markdown / Clearance | Buy Now. This price is specific to that location and indicates a desire to clear stock. |
| .00 or .88 | Manager Markdown (Low Stock/Returns) | Often used for floor models or the last few units of an item. Inspect condition carefully. |
| * (Asterisk) | The “Death Star” | Discontinued. The item will not be restocked once current inventory is gone. If you love it, stock up. |
| .49, .79, .89 | Manufacturer Promotional Offer | Indicates a special deal from the manufacturer, often a trial run. |
The Gold Rush: Precious Metals and Trends
In a surprising pivot to hard assets, Costco began selling 1-ounce gold bars (PAMP Suisse and Rand Refinery) online in late 2023. By 2025, analysts estimated these sales were generating between $100 million and $200 million monthly. Members are typically limited to two bars per membership, and they often sell out within hours of restocking.
Why Buy Gold at Costco?
- Pricing: often sells slightly above the spot price, which is competitive compared to traditional bullion dealers who charge higher premiums.
- Rewards: Executive members get 2% back, and using the Costco Anywhere Visa card earns another 2%, effectively discounting the investment by 4%.
Financial Fortress: 2025-2026 Outlook
Costco’s fiscal health remains robust. In fiscal year 2025, the company reported net sales of nearly $270 billion, an 8% increase year-over-year. The company plans to open approximately 30 to 35 new warehouses in fiscal 2026, balancing domestic growth with international expansion in markets like China, Japan, and Europe.
The company’s “moat” is built on:
- High Renewal Rates: Consistently hovering around 93% in the U.S. and Canada.
- Inventory Turnover: Costco turns over its entire inventory roughly every 30 days, meaning it often sells goods before it even has to pay its vendors.
Digital Transformation and Logistics
Historically a laggard in e-commerce, Costco has ramped up its digital efforts. While the core business remains the physical warehouse, the app has seen significant UI improvements. Costco Logistics now handles the bulk of its big-and-bulky deliveries (furniture, appliances), allowing for better control over the “last mile” and reducing shipping damages.
In-Depth Q&A
Q: When did Costco last raise its membership fees?
Costco raised its membership fees on September 1, 2024. The Gold Star membership increased from $60 to $65, and the Executive Membership increased from $120 to $130.
Q: What does the asterisk (*) on a Costco price tag mean?
The asterisk, often located in the top right corner of the price tag, indicates that the item is pending deletion. It will not be restocked once the current inventory sells out.
Q: Is the Costco Executive Membership worth the $130 fee?
Yes, if you spend more than $3,250 annually (approx. $271/month) at Costco. The 2% reward on that spend ($65) covers the difference between the Gold Star ($65) and Executive ($130) fees.
Q: Can I return gold bars purchased at Costco?
No. Costco’s standard 100% satisfaction guarantee does not apply to gold bullion bars. Sales of gold bars are typically non-refundable.
Q: What items are Costco’s loss leaders?
The most famous loss leaders are the $4.99 Rotisserie Chicken and the $1.50 Hot Dog and Soda combo. Costco maintains these prices to drive foot traffic, even if they make little to no profit on the items themselves.
