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Nope, you must be thinking about hotdogs. Hotdogs are a loss leader for Costco. Memberships make them money. "The most important factor about membership fees i
by fma 9y ago
Nope, you must be thinking about hotdogs. Hotdogs are a loss leader for Costco. Memberships make them money.
"The most important factor about membership fees is that they go straight to the company's bottom lines. Costco operates its warehouses on essentially a breakeven basis, making its profits on memberships instead of merchandise. "
https://www.fool.com/investing/2016/08/18/what-do-membership-fees-mean-to-costco.aspx https://www.fool.com/investing/2016/08/18/what-do-membership...
- emodendroket 9y agoNot that they lose money (they hardly give you anything besides the right to shop at the store) but that they cause people to buy more than they otherwise would because they feel like they've made an investment and would otherwise be wasting the money they spent on the membership.
- LgWoodenBadger 9y agoI haven't done the math, but I don't know how accurate this is given that 2/3 of their sales are to members who receive 2% cash back ($110 executive members). The executive membership would need to average $5500 in purchases to wipe out any Costco profit on their memberships. $8250 average to wipe out ALL membership profit. I'll have to come up with a formula based on the numbers in your article. It'll be interesting to see how accurate that "profit from memberships" statement really is.
- fma 9y agoPlease post if you figure it out :) I've heard the statement for a while and am curious as well.