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Once upon a time, grocery stores were dramatically different. Shoppers stood behind counters as the butcher or baker brought their fares. That method changed in the 1930s, with the onset of supermarkets. It gave shoppers choice, autonomy, and allowed stores to scale up — offering wider variety and larger quantities at a better price. But still, these stores relied on warehouses to store the goods, distributing them to individual supermarkets. Every time the goods exchange hands, it adds to the end cost of the product. Especially during times when money is tight, consumers look for any chance to save, and Costco presents members with this opportunity. 

What Is Costco?

Costco revolutionized the shopping experience with the first shop opening in Seattle in 1983. Cutting out the middlemen, it offered warehouse-to-consumer services on an unprecedented level. It’s a wholesaler, meaning it sells in bulk. It has a proven track record of success in the face of economic uncertainty, with its business actually rising from the fifth to the third most successful retailer in the United States in 2009 (right after the market crash). 

This company also has a hand in international shipping, enabling Costco to optimize prices for customers. Now a multinational company, it has 103 locations across Canada. Its warehouse locations vary based on population density, so it is typically easy to find a store nearby in most major cities. 

Costco is a membership-based wholesaler that operates out of warehouses, integrating the storage and retail processes. Along with the grocery offerings, most locations also have pharmacies, small-scale restaurants, clothing, and electronics. Thanks to the bulk-focused nature of this company, it offers products at competitive prices. However, it comes with a price by way of membership. In fact, membership fees made up roughly 72 percent of Costco’s operating income in 2016.

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Costco Membership

Now, as with any good business model, Costco membership is a two-way street. It profits Costco through the price and members through discounts. When managed properly, it can be a fruitful arrangement for both parties. So long as you opt for the right membership fit, you can optimize your savings. 

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Membership For Individuals

There are two categories from which individual consumers may choose. These include: 

  • Costco Executive Gold Star Membership – This annual membership costs $120 and it comes with a household card. Annual rewards are set to two percent, meaning you can get up to $1,000 in value. The membership includes access to the Costco Connection Magazine. 
  • Costco Gold Star Member – Costing only $60 per year, this plan comes with fewer perks. It includes a household card, but there are no rewards points or extra perks. 

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Membership For Business Owners

Business owners can select from two different membership categories, including: 

  • Costco Executive Business Member: Similar to the individual plan, it costs $120 per year and includes several benefits. It comes with a free household card, a two percent annual reward, and access to exclusive offers and discounts. The company sends out its magazine by mail. While it’s similar to the individual plan, the business executive membership lets you resell the membership as well as add people to the account.  
  • Costco Business Member: This membership costs $60 every year and is a scaled-down version of the Executive arrangement. It comes with a free household card, though no extra discounts. Moreover, as it is a business card, you can resell it or add people to your account
Yearly Membership Fee
Executive Gold Star Member$120
Gold Star Member$60
Executive Business Member$120
Business Member$60

Benefits Of The Costco Membership

Costco is a widely-favoured retailer for good reason. This company offers a lot of benefits in terms of both safety and convenience. Among the perks of getting a membership with Costco are:

  • Access to Services While You Shop: Costcos are typically equipped with a pharmacy and small-scale restaurants. It lets customers check more items off their to-do lists without investing unnecessary time in travel. Have your car serviced or get your photos developed while you grocery shop. 
  • Kirkland Signature Brand Products: This label quickly became a big name, largely due to its high quality and affordability. You can find everything from Kirkland soda to toilet paper to coffee. The items come in bulk; and, because it’s available directly through Costco, the mark-up is even lower. 
  • Costco Perks And Discounts: With your membership, you get access to any Costco in the world. Even the basic membership comes with discounts at Costco gas stations, pharmacies, its photo center, and travel agency
  • Convenient Payment Options: You can pay for your membership in person or online. The site includes a renewal option, so your membership won’t lapse. Since you need to maintain an Executive membership to reap the two percent annual rewards, this is particularly useful. 
  • Return Policy: Costco is known for its well-structured return policy on large items like electronics. It limits the risks associated with making a large investment and ehances customer satisfaction. 
  • Great Food Quality And Choices: The impressive variety and high-quality food available at Costco gives it a competitive edge. It offers name brand and Kirkland selections in all food categories. With everything from electronics to clothes to jewelry, Costco aims to be a one-stop shop. 

Did you know Costco has life insurance? Find out if the Costco life insurance policy works for you.

Drawbacks of the Costco Membership 

While there are plenty of things to appreciate about Costco memberships, it isn’t suited to everyone. Deciding whether to invest in a Costco membership is about identifying the downsides and making sure the benefits outweigh them. Some issues with Costco include:

  • Membership Fee: Costco memberships cost either $60 or $120 depending on the type of membership you get.  Like a credit card, this fee is only worth it if the rewards or savings you get outweigh the costs. Now, if you see savings upwards of the cost of membership, it isn’t an issue. However, if you pay upfront more than you end up saving, it wouldn’t be worth it. 
  • Costs Add Up: Costco deals in bulk; and, as such, you aren’t going to be in and out with just the bread and milk you came in for. It’s virtually impossible to spend only two figures at a Costco. Most items are a minimum of $10 to $20, and to get the best value out of the trip, many opt for extras while in the store. Now, if you were going to buy those items anyway, there’s no downside. The issue is when you buy more items, simply because they are convenient. 
  • Space For Storage: In 2016, 33.5% of the Canadian population lived in apartments. Even if you have the most spacious apartment on the market, it can get cluttered when buying everything in bulk. 
  • Transportation Issues: Statistics for 2020 show that 14% of Canadians don’t have access to a car. Without some trunk space, it can be difficult to transport the bulk items. This would quickly mitigate the benefits in savings due to the time lost in getting the purchases home. 
  • Doesn’t Accept Visa: Costco is one of several retailers that no longer accept payment through Visa or Amex. As such, if you plan to use a credit card for transactions, make sure that you have a Mastercard
  • Food Waste: If you’re feeding a family, Costco makes perfect sense. However, individuals and couples are less likely to consume enough food, prior to the expiration date, to make the bulk nature of Costco worth it. If there isn’t sufficient demand for the products, you’d end up wasting any savings you saw. 
  • Additional Card Cost: Every membership comes with a single free household card, available only to those residing at the same address and of the age of majority. Extra cards cost $60 (the price of a Gold Star membership). 
  • Line Ups: Even before the pandemic, Costco was notorious for long lines. Attributed to its popularity, waiting to make your purchase at Costco is no quick feat. However, as long as you plan ahead for the time in a lineup, it’s far from a deal-breaker. 

How Do You Sign Up For A Costco Membership?

Signing up for a Costco membership is a straightforward process. You can complete the application either online or in person, depending on what’s more convenient for you. If you plan to go in person, you can access the store on the same day. The form is identical whether you do it online or in person. It requests your full name, birth year, residential address, and contact details. You’ll also be prompted to make a Costco.ca account. 

If applying online, simply fill out the form and pay for the service. You will receive an email with your membership number. Bring this email along with a government-issued photo ID to the membership counter. There, you can pick up your new Costco membership card. For those who complete the process in person, the same information is required. Simply go to the membership counter and purchase a membership.

Costco Membership FAQs

How do I renew my Costco membership?

Renewing your membership is just as straightforward as purchasing one. Simply sign into your Costco.ca account and complete the renewal, pay for the next year, and you are set to go. 

How much do I need to spend to make my Costco membership worth it?

For the Executive Gold Star Membership, where you can earn 2% on your purchases, you must spend $6,000 to earn back the fees you paid. That’s approximately,$500 a month. According to Statistics Canada, average household food expenditures were $10,311 in 2019. So, if you use Costco regularly, you can easily make the membership worthwhile.

Can I get a digital Costco membership?

Yes, you can. As the world becomes increasingly paperless, Costco is adapting by letting members use their mobile devices to prove membership. It works as credentials to access the warehouse and at checkout. You can access it by downloading the Costco Mobile App and signing into your account. 

How Do I create a digital Costco membership?

The first step is downloading the Costco Mobile App. Launch the application and click on the membership icon. Sign into the account using your personal credentials. The next step is to get your membership verified in person or over the phone. Go to the customer service desk at a Costco warehouse and show them your identification and membership. They will verify your account. Relaunch the app and your membership card will show up on your screen. Return to the app whenever you need to use your Costco credentials. 

Final Thoughts

Deciding whether or not to get a Costco membership is a matter of cost analysis. Consider all aspects of the price, including transportation and time invested. If Costco is nearby and you have enough mouths to feed, the savings are noticeable. However, if you don’t need the bulk items, you are less likely to actually use the Costco card frequently enough to make it worthwhile. 

There’s a certain novelty to having access to Costco and its quality goods; but, unless you’re feeding a family, it’s probably not a good choice. The Costco setup is designed for those moving through large quantities of consumer goods on a regular basis. If this describes you, then you can get a lot out of your Costco membership.

Corrina Murdoch avatar on Loans Canada
Corrina Murdoch

Corrina Murdoch has been a dedicated freelance writer and editor for several years. With an academic background in the sciences and a penchant for mathematics, she seeks to provide readers with accurate, reliable information on important topics. Working as a print journalist for several years, Corrina expanded her reach into the digital sphere to help more people gain insight into the realm of finances. When she's not writing, you can find Corrina swimming and spending time with family.

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