June 20, 2024

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A $1.50 Costco hot dog is safe. But what about membership fees?

A $1.50 Costco hot dog is safe.  But what about membership fees?
Young woman eating hot dog

Image source: Getty Images

Costco It is known for its amazing prices. But if you’ve been to a store recently, you’ve probably noticed that the prices you see are higher than they were a few years ago.

Unfortunately, this is part of the general trend. Over the past three years or so, stubbornly high inflation has been pushing up the cost of living across the board. So, you’re probably paying more for everyday expenses like groceries and utilities now than you did not long ago. Frankly, this is frustrating.

But one thing for you wont You’ll have to pay more in the near term is Costco’s popular $1.50 hot dog and soda combination. Although some rumors surfaced that Costco was looking to raise the price of this combo for the first time since its introduction in 1985, during the company’s latest earnings call, new CFO Gary Millership confirmed that the $1.50 price point that customers love is here. To stay.

However, there has also been talk of higher membership fees. So you might be interested in what Millership had to say about those too.

The hot dog deal is still pending

An analysis by CNN found that if Costco adjusted the price of its hot dog and soda combo to today’s dollars, it would earn customers about $4.50. Instead, Costco has kept its $1.50 price the same for nearly 40 years.

Costco’s intention is not to make money from the hot dog deal. If anything, he loses money there. But if that narrative gets shoppers in the door, the company will win in the end.

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think about it. Let’s say Costco can get away with charging $4.50 for a hot dog and a soda, but you can get it for $1.50. If you then go and spend $200 on store merchandise, Costco wins — so they’re willing to let you keep the $3 and pay less at the food court.

Recently, some rumors have been circulating about Costco raising the price of a hot dog deal. But Millership said on May 30: “To clear up some of the recent media speculation, I also want to confirm that the $1.50 hot dog price is safe.”

Are Costco membership fees safe too?

Costco has historically raised and changed the cost of membership about every five years. At this point, we are well past that point. The last time Costco increased membership fees was in June 2017.

Since the current cost is out of control, at this point, raising Costco’s membership fees could push cash-strapped consumers over the edge. But the good news is that Costco has no immediate plans to increase its membership costs, which currently stand at $60 per year for a basic membership and $120 per year for an Executive membership that gives you 2% Cash back on your purchases.

“We feel really good about our membership renewal rates,” Millership said. “We feel really good about testing whether we’re providing significantly more value to members than we have been or have done since the last time we increased membership fees…but we’re still evaluating those considerations to determine when and when we do that to get to that point where we feel “This is the right time, of course, we will be very open and direct and communicate with you about that.”

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In other words, Costco’s fee increases are not out of the question. But it’s clear that it won’t happen anytime soon.

Just because the cost of a Costco membership isn’t going up doesn’t automatically mean you have to keep paying the $60 or $120 annual fee. If you notice that you’re visiting Costco less often or that your circumstances have changed in a way that makes Costco less convenient (for example, you’ve moved further or no longer own a car), you may want to reconsider your membership.

But if you plan on continuing to shop at Costco, you can rest assured that you’re not looking to pay more for hot dogs or Your membership in the near future.

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We firmly believe in the Golden Rule, which is why editorial opinions are ours alone and have not been reviewed, approved or endorsed by the advertisers listed. The upside does not cover all offers in the market. The Ascent’s editorial content is separate from The Motley Fool’s editorial content and is created by a different analyst team.Maury Bachman He has no position in any of the stocks mentioned. The Motley Fool has posts on and recommends Costco Wholesale. The Motley Fool has Disclosure policy.

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A $1.50 Costco hot dog is safe. But what about membership fees? Originally published by The Motley Fool