Key takeaways
- Сostco collected $5.91 billion in annual membership revenue
- Worldwide membership renewals remain close to 90%
- Low prices encourage customers to keep paying annually
Before buying a single carton of eggs, television or household essential, millions of Costco customers make an unusual financial commitment: they pay the retailer for permission to shop.
That arrangement generated $5.91 billion in membership fees during Costco's 2026 fiscal year, while the company finished August with 84.1 million paid memberships and 150.4 million cardholders.
Most remarkable is how many customers return. Costco's worldwide membership renewal rate reached 89.8%, while the figure in the United States and Canada stood at 92.3%.
Why 84 Million Costco Members Keep Paying Every Year
According to Costco's 2026 annual report, membership revenue increased 11% from $5.32 billion in fiscal 2025, supported by new sign-ups, fee increases and upgrades to its Executive tier.
In the United States, a standard annual membership costs $65, while Executive membership costs $130 and offers a 2% reward on eligible purchases, subject to an annual cap.
Customers therefore have a reason to evaluate how much they save over an entire year rather than during a single shopping trip.
Someone paying $65 annually needs to save roughly $5.42 per month compared with available alternatives to offset the fee. That calculation is illustrative: actual savings depend on products purchased, local prices and shopping habits.
The attraction is reinforced by bulk purchasing, discounted fuel and the company's private-label Kirkland Signature products.
Costco's decision to return much of a $184 million tariff refund to shoppers through lower prices illustrates how management attempts to preserve that value proposition.
Costco Earns Billions Before Customers Reach Checkout
Most retailers depend heavily on the difference between what products cost and what customers pay.
Costco operates with unusually narrow merchandise margins. Its fiscal 2026 gross merchandise margin was 11.09%, while annual merchandise sales reached $297.25 billion.
Yet its membership-driven economics provide recurring revenue alongside those purchases.
Membership fees represented approximately 64% of Costco's $9.23 billion annual net income. That comparison does not mean fees generated 64% of profit, since revenue and net income are different accounting measures.
Unlike retailers relying exclusively on individual transactions, Costco has a customer relationship that continues between purchases.
Its model also differs from digital subscription companies such as Spotify, where recurring payments must cover substantial ongoing licensing expenses.
Costco's fees are not cost-free revenue, but customers still purchase merchandise separately, allowing membership income to complement the company's retail earnings.
The Business Risk Behind Costco's Membership Success
The model depends on customers continuing to believe that access is worth paying for.
Higher prices, weaker product selection or deteriorating service could undermine that perception, especially when households become more selective about spending.
That pressure is evident across discount retail, where smaller grocery chains have struggled with competition and operating costs.
Costco is also exploring additional reasons for customers to remain members, including a proposed healthcare partnership involving services for older Americans.
Recurring payments can attract scrutiny, as demonstrated by the Amazon Prime settlement involving subscription enrollment and cancellation practices.
