Orlando, Florida – Costco announced that membership fees will be increasing for the first time since 2017, starting September 1. The company is optimistic that this move will not only boost profits but also maintain its loyal customer base. Gold Star, Business, and Business add-on members in the United States and Canada will now have to pay $65 annually, up from the previous $60 fee.

Executive members will see a $10 per year increase, bringing their annual fee to $130. This fee hike will impact 52 million members, with over half of them being Executive members. In return for their loyalty, Executive members are offered rewards of up to $1,250 for their purchases, up from $1,000.

Despite the challenges of a struggling economy with inflation, Costco has remained committed to providing low prices to its customers. The company’s decision to maintain the $1.50 price for its famous hotdog-soda combo, unchanged since the 1980s, has garnered widespread appreciation.

Gary Millerchip, Costco’s chief financial officer, hinted at a possible fee increase during an earnings call in May. He mentioned that Costco typically considers raising membership fees every five years. While the fee increase may concern some customers, Professor Felipe Caro from UCLA Anderson School of Management believes this move makes sense given the value Costco offers.

Following the announcement of the fee increase, Costco’s stock price rose by more than 2.5 percent. The company reported a net income of $1.68 billion in a 12-week period, with membership fees accounting for $1.12 billion. Membership fees have been a significant source of revenue for Costco, with nearly $4.6 billion earned in the previous fiscal year.

However, some experts, like Dinesh Gauri from the University of Arkansas, warn that the higher fees could impact Costco’s ability to attract new customers and retain newer members. Gauri emphasized the importance of offering additional services or incentives to justify the fee increase and prevent customers from considering competitors like Sam’s Club.

Sam’s Club, a direct competitor to Costco, also raised its membership fees recently. The landscape of the wholesale market is changing, with retailers like Target and Kroger offering strong pickup and delivery options without requiring memberships. For some customers, the appeal of Costco may diminish if they can find similar services elsewhere without the added cost of a membership.