Last I read, memberships were like half their profit or something. It's certainly not like CostCo makes no more profit if people buy twice as much. Setting prices to that level would be insane.
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.
> Last I read, memberships were like half their profit or something. It's certainly not like CostCo makes no more profit if people buy twice as much. Setting prices to that level would be insane.
You're wrong.
> Through two quarters of its fiscal 2017, Costco has reported $1.06 billion in income (profit). That number is slightly smaller than the $1.26 billion it collected in membership fees.
> If you examine the company's sales, it brought in $56.59 billion in net sales with a merchandise cost of $50.21 billion and sales expenses of $5.92 billion. That's a small loss when it comes to actually selling goods,
Thanks for the update. While it may be true that they'd be losing money overall without the membership fees, I doubt they sell most products at a direct loss. There's overhead for managing everything, but they surely don't set things up so that each sale of a washing machine or patio furniture or whatever is actually a net loss. I'd be shocked if having all members increase their spending would decrease rather than increase CostCo profits.
CostCo doesn't do weird pricing scheming, but they have higher-profit items and getting people in the stores with memberships does get people to buy more stuff there, even stuff people might have not bought at all otherwise.
Don't get me wrong, CostCo does a better ethical and consumer-respecting business than most, but they DO profit on sales, it's just slim enough profit that they couldn't get by well without the member fees.