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> And Costco can leverage that by selling mattresses for $50 more than you'd spend somewhere else Costco explicitly commits to never making more than 12% on an
by alasdair_ 7y ago
> And Costco can leverage that by selling mattresses for $50 more than you'd spend somewhere else
Costco explicitly commits to never making more than 12% on anything they sell. It’s a major part of their brand and part of the reason people trust them.
- jjeaff 7y agoWhere is this commitment? I am not able to find it and I am reasonably certain that Costco has a much larger margin than 12% on many of their products. If anything, that sounds like an average, which doesn't tell you anything as they could be screwing you on mattresses while losing money on hot dogs and rotisserie chickens to even it out to a 12% gross margin.
- alasdair_ 7y agoIt’s mentioned quite often in their financial filings but I don’t have an example handy and I don’t feel like digging through a 10K right now. However, here is an Esquire article that mentions it: “Costco has stated that the highest margin they will take on a non-Costco brand is 13 percent and they strive to keep it closer to 10 percent.” https://www.esquire.com/food-drink/drinks/a35749/costco-the-biggest-retailer-of-wine-in-the-united-states/ https://www.esquire.com/food-drink/drinks/a35749/costco-the-...
- blaser-waffle 7y agoI'm with the other comments: where do they say they cap at 12%? Costco brings a lot of value to the consumer, IMO, but I feel like that's deliberately shooting themselves in the foot. And why the arbitrary 12%? Why not 15 or 21?