24/7 Wall St. Insights
- Costco Wholesale Corp. (NASDAQ: COST) has announced a new policy about sharing membership cards.
- The popular retailer thinks it has found a way to make more money beyond selling products and services.
- Also: Dividend legends to hold forever.
People who share memberships without paying for them can cost membership-based companies a lot of money. Netflix Inc. (NASDAQ: NFLX) recently addressed the problem of people sharing passwords and added substantial revenue.
Netflix started to eliminate the use of passwords by more than one household in the United States in May 2023. While the company did not give specific results of the decision, it added over 9 million subscribers two quarters after the decision. Netflix management called the new rules a success.
Costco Wholesale Corp. (NASDAQ: COST) has taken Netflix’s lead with a new policy about sharing membership cards. The retailer released its new policy: “Over the coming months, membership scanning devices will be used at the entrance door of your local warehouse. Once deployed, prior to entering, all members must scan their physical or digital membership card by placing the barcode or QR Code against the scanner.” People who are not members or using inactive accounts will need to get an account or be turned away.
The decision will not substantially change Costco’s total revenue because membership fees are about 2% of its top line. However, it is part of a broader effort to increase that number. Costco made another membership policy decision recently. It raised membership fees for the first time since 2017. Individual annual fees went up by $5 to $65, and executive membership fees rose $10 to $130.
Costco’s new membership plans may not radically increase its total revenue. However, they show that Costco thinks it has found a way to make more money beyond selling products and services.
How to Get the Biggest Bang for Your Costco Membership Buck
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.