Costco’s CFO recently said that a price increase was a “question of when, not if.”
While Black Friday is commonly associated with trying to score a discounted blender or TV, core personal finance rules show that one saves most not by scoring a sale but making long-term changes in spending habits.
One such habit is bringing down the cost of food by eating more at home and buying staples in bulk. Launched out of Washington State in 1983, Costco (COST) – Get Free Report quickly became a godsend for large families by offering everything from grocery staples to imported cheeses and popular snacks in bulk.
When bought in bulk, purchases often end up costing a fraction of what the same products would have cost at a regular store. But the key caveat is that shopping at Costco requires both a paid membership and the ability to haul bulk items from a warehouse that is usually outside city limits.
That’s why single people and urban dwellers without a car have been known to latch on to friend’s offers to tag along on a weekend shopping trip to Costco.
A Costco Membership May Soon Get More Expensive
At the moment, a Costco membership comes in two main tiers — $60 a year for a basic version and $120 a year for an expanded one that offers 2% cash back annually.
The price is quickly absorbed in the wider savings for those who make Costco a regular shopping destination but news of a price increase always sends shockwaves among consumers. That’s especially true for Costco which, over the three decades that it’s been around, has built a reputation for both low prices and consistency.
But while Costco once promised to keep its cafeteria hot dog combo (another cult favorite) price at $1.50 “forever,” it does periodically raises prices on the membership to keep up with inflation — and, as CFO Richard Galanti said during the fourth-quarter earnings call, another one is “a question of when, not if.”
“If you look at the last three increases, on average, they were five years and seven months apart,” Galanti told investors. “If you look at June of ’17, plus five years and seven months, you’re talking roughly January ’23.”
Lock In That Low Membership Price Now
Along with the usual Black Friday discounts on everything from clothing to popular electronics, Costco is offering those who buy the $60 Gold Star membership a $30 online gift card.
Those who commit to auto-renewal for another year could get $45 in cash but one needs to be a new member or have had one’s old membership expire more than 18 months ago.
The promotion is one that crops up regularly even outside of Black Friday but is kept somewhat off the radar. To get the gift card, one needs to enter a promo code from Groupon when signing up online.
Along with that little bit of spending money as enticement, the promotion can be a good way to lock in one’s membership before prices increase. The last analyst call more or less dismissed any possibility of that being avoided.
“Now I’m not suggesting it’s January ’23,” Galanti said in the call. “I’m just saying it’s not there yet anyway. And our view is, is we are confident in our ability to do so.”