Market Kâr Marjları Bu Kadar İnceyken Costco Nasıl Para Kazanıyor?

Costco barely makes money on the things it sells you — and that's exactly how it earns more than nine billion dollars a year. A hot dog and a soda at Costco cost a dollar fifty. That's the same price since nineteen eighty-five. A whole rotisserie chicken costs four ninety-nine. In its latest fiscal year, Costco sold about two hundred ninety-seven billion dollars' worth of merchandise. It also collected five point nine billion dollars in membership fees. That's only about two percent of its revenue. But those fees were equal to about half of Costco's entire operating income. Its own chief executive put it plainly: "The most important item we sell is the membership card." So how does a store that promises to save you money turn sixty-five dollars a year into one of the most reliable businesses in retail? And is the membership actually worth it for you? Let's follow the money.

The idea isn't Costco's. It started in nineteen seventy-six in San Diego, with a retailer named Sol Price. His store, Price Club, sold in bulk out of a warehouse — a former manufacturing building once owned by Howard Hughes — and at first, only businesses could become members. That original San Diego warehouse is still open today, as Costco location number four-oh-one. The deal was simple. Members paid an annual fee up front. In return, the store sold everything with a markup so thin that a normal retailer couldn't survive on it. Seven years later, in nineteen eighty-three, Jim Sinegal — a protégé of Sol Price — opened the first Costco warehouse in Seattle with Jeff Brotman. Then, in nineteen ninety-three, the two rivals merged. Today, Costco runs nine hundred thirty-nine warehouses. Six hundred forty-seven are in the United States and Puerto Rico. The rest are in Canada, Mexico, Japan, Britain, Korea, Australia and seven other countries. And next year, it plans to open about thirty more. The model hasn't changed much since Sol Price. You pay to get in. And then the store tries very hard not to make money on what you buy.

Here's how thin that is. In fiscal twenty twenty-five, Costco's gross margin — what's left of each sales dollar after paying for the merchandise — was about eleven percent. Walmart's was about twenty-four percent. Back in twenty fourteen, Costco's chief executive at the time, Craig Jelinek, said the company's average markup was in the eleven percent range, while other retailers mark things up anywhere from about twenty percent to more than a hundred. So how does a store survive on margins that thin? Part of the answer is what it doesn't sell. A typical American supermarket carries more than thirty-three thousand different items. A Costco warehouse carries fewer than four thousand. Fewer items means each one sells in enormous volume — and that gives Costco huge buying power with suppliers. The warehouses themselves are stripped down: concrete floors, products stacked on pallets, no bags. And Costco's own annual report says it relies on high volume and fast turnover, not high margins. But even with all that efficiency, the merchandise itself earns very little. In fiscal twenty twenty-six, Costco's operating income without the membership fees came to about two cents on every dollar of sales. The real profit is somewhere else.

It's in your wallet. A basic Costco membership in the U.S. costs sixty-five dollars a year. The Executive membership costs twice that, a hundred thirty dollars, and pays back two percent on most purchases — up to twelve hundred fifty dollars a year. Costco raised those fees in September twenty twenty-four, for the first time since twenty seventeen. Rivals run the same playbook: this May, Walmart's Sam's Club raised its basic membership from fifty dollars to sixty. By the end of fiscal twenty twenty-six, Costco had eighty-four point one million paid members, and more than one hundred fifty million cardholders. Forty-two point three million of those paid members had upgraded to Executive. And the Executive members do most of the shopping. In fiscal twenty twenty-five, they accounted for about seventy-four percent of Costco's worldwide sales. Then there's the number that matters most. In the U.S. and Canada, about ninety-two percent of members renew every year. Worldwide, it's almost ninety percent. Very few businesses can count on nine out of ten customers paying them again next year. Costco can.

Now put it together. In fiscal twenty twenty-six, Costco's total revenue was about three hundred three billion dollars. Its operating income — the profit from running the business — was about eleven point seven billion. Membership fees brought in five point nine billion. So the membership fees alone were equal to about half of the company's operating income. And unlike groceries, a membership fee has no merchandise to pay for behind it. That's why Costco can treat the merchandise as a way to keep members happy, rather than the main way to make money. It also explains something many members noticed. In twenty twenty-three, Costco started asking for photo ID at self-checkout, and then began testing card scanners at the entrance. Its explanation: "We don't feel it's right that non-members receive the same benefits and pricing as our members." For a business built on the membership fee, a borrowed card is a lost sale — not of a cart of groceries, but of the membership itself.

So where do the hot dog and the chicken fit in? The dollar-fifty hot dog combo has been the same price since nineteen eighty-five. According to former chief executive Craig Jelinek, when he once suggested raising it, co-founder Jim Sinegal told him: "If you raise the effing hot dog, I will kill you. Figure it out." This year, Costco let members swap the soda for a bottle of water. The price stayed at a dollar fifty. Then there's the rotisserie chicken. It's been four ninety-nine since two thousand nine, and the Financial Times reported that Costco now sells about one hundred fifty-seven million of them a year. To protect that price, Costco backed a four-hundred-fifty-million-dollar poultry complex in Nebraska, built to process about two million birds a week. Costco estimated that raising its own chickens could save up to thirty-five cents a bird. Costco also sells gasoline — about ten percent of its sales. None of these are designed to make much money. They're designed to make you feel your membership paid for itself — and to get you through the door, past everything else.

The other secret weapon has a name: Kirkland Signature. Costco launched its own brand in nineteen ninety-five, named after the Seattle suburb where the company was based. Today, about six hundred products carry the label. According to the Wall Street Journal, Kirkland brings in about eighty-six billion dollars a year — roughly a third of everything Costco sells. For comparison, the supermarket chain Kroger sold about thirty-two billion dollars of its own brands, around a quarter of its sales excluding fuel. Costco's rule for Kirkland is simple: as good as the national brand or better, for less money. On a recent earnings call, Costco said Kirkland items usually save members at least fifteen to twenty percent versus the national brands. And Kirkland gives Costco leverage. One of its top merchandising executives told the Wall Street Journal she sees the brand as "a tremendous negotiating tool." If a big brand won't lower its price, Costco can put its own version on the pallet next to it. Either way, the member gets a lower price — and has one more reason to renew.

There's one more test of the model playing out right now. In twenty twenty-five, sweeping new import tariffs raised costs for retailers. Then, on February twentieth, twenty twenty-six, the Supreme Court ruled that the President had exceeded his authority by using emergency powers to impose them. Costco is among more than two thousand companies asking the government for their tariff money back. In March, chief executive Ron Vachris said any refunds would go toward "lower prices and better values" for members. But a shopper has filed a class action in federal court in Illinois. The lawsuit alleges that Costco passed tariff costs on to customers in higher prices — and that keeping the refunds would be a windfall. Costco hasn't been found to have done anything wrong. In the last quarter of fiscal twenty twenty-six, it recorded one hundred eighty-four million dollars in tariff refunds and interest, and said it reinvested part of that in lower prices. How Costco handles the rest of that money is a quiet test of the promise the whole business runs on: that the member comes first.

So who comes out ahead? Costco, obviously: a business where most customers pay you again every year, before they've bought a single thing. In fiscal twenty twenty-six, Costco earned nine point two billion dollars. Its workers share some of that: in twenty twenty-five, Costco raised its top hourly pay for store clerks above thirty dollars. But what about you? Is the membership worth it? Do the math. A basic membership costs sixty-five dollars a year. If you save even a few dollars on each trip, a regular shopper can earn that back. The Executive upgrade is different. It costs another sixty-five dollars, and pays two percent back. Sixty-five divided by two percent is three thousand two hundred fifty. So unless you spend more than about three thousand two hundred fifty dollars a year at Costco, the upgrade doesn't pay for itself. And the biggest risk isn't the fee. It's the bulk. A deal on thirty rolls of paper towels is a deal. A giant tub of something you throw away is not. Compare unit prices, not package prices. Buy what you'll actually use. And remember who Costco really serves: members who renew. As long as you're getting more out of it than you put in, so are you.

Next time on Margin, we follow the money into a business you probably use every day — and have never paid a cent for. If you want to understand how money actually moves before the headlines catch up, subscribe — and follow the money.