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BTW, this is basically Costco's model. They do make some money on goods sold, but most of the profit for the company comes from membership fees.
by PantaloonFlames 11y ago
BTW, this is basically Costco's model. They do make some money on goods sold, but most of the profit for the company comes from membership fees.
- bhouston 11y agoCostco has 81M members or so, at $50/yr that is around $4B/yr total in membership revenue. Their profit in the last year was $2.3B. Thus you are correct, Costco would lose money if they didn't charge membership fees. Costco's profit is actually really low. $115B in sales with $2.3B in net income, so ~2% profit margin. I guess they really do have low prices. Walmart for comparison has a 3.3% profit margin in the last year on $445B in sales. Amazon has a -0.3% profit margin on $88B of sales.