Costco derives the majority of their revenue from the membership fee, followed by services. They actually make very little on the products themselves as they have a hard cap on markups at like 11% or something around there.

The membership is the whole reason they can offer the deals they do.

The annual membership fee is about customer selection, for me.

What it buys for me is, "not Walmart People". Totally worth the investment.

On the contrary, the fact that they exclude free riders is what makes the whole thing possible.

I occasionally go into a Walmart. If a modest membership fee keeps those people out, I'm all for it.

I know what you're thinking, but if a Costco membership is elitism, then fine you can call me elitist. Along with apparently 30% of the American population over the age of 18. We're the big bad 30-percenters, I guess.

But the fee isn't an initiation ritual. It's what partially subsidizes the low prices, often at the expense of people who buy the membership and underutilize it, spending more money upfront than they save on later purchases.

The yearly fee is $65. If you save $5/month on what you buy you break even. Personally I save over $5/month just buying butter there vs buying from my local supermarket.

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