So, you’ve decided to take the plunge and join a warehouse club. You think that for your family, the low prices on household staples will more than pay for the membership fee. The only question now is, which one?
There are many good reasons to choose Costco. Becoming a Costco member gives you access to all kinds of additional benefits aside from the pricing on bulk goods. With a Costco membership, you can save on gasoline, eyewear, and more.
However, these perks aren’t equally good for every family. To figure out whether Costco offers a better value for you than other warehouse stores, you need to take a closer look at the top benefits this store offers and weigh them against the cost of membership.
Cost of Costco Membership
The most obvious downside of choosing Costco is its higher membership fees. It costs a minimum of $60 to become a Costco member. By contrast, a basic membership to rival chain BJ’s costs $55, and Sam’s Club charges only $45.
Costco offers two membership tiers:
- Gold Star Membership. This basic membership costs $60 per year. It comes with two household cards that get you in the door at all Costco locations. It also gives you a discount on purchases at Costco.com.
- Executive Membership. For $120 per year, you can become an executive member and get 2% cash back on all Costco purchases. This tier also gives you discounts on Costco services and a subscription to Costco’s member magazine.
If you’re a business owner, you can choose a business membership instead. You have the same two tiers to choose from, with the same pricing and perks. However, you can also buy items for resale and add extra membership cards at $60 each.
It’s sometimes possible to join Costco for less than full price. Daily deal sites like Groupon and LivingSocial occasionally offer discounted memberships or package deals. For instance, your $60 fee could get you a membership plus a gift card or a book of coupons for extra savings.
Costco also offers special deals on membership for members of certain professions. These include first responders, military service members, medical professionals, government employees, teachers, and students. Check their website for details.
Membership Versus Online Shopping
You don’t actually need a membership to shop on Costco.com. However, nonmembers pay a 5% surcharge on all purchases, on top of shipping fees.
Also, prices on Costco.com are often higher than they are at the store. An analysis by the San Francisco Chronicle found that in-store prices were an average of 20% cheaper. Or, to put it another way, prices on the website were 25% higher.
That brings the total cost premium of shopping on the website as a nonmember up to 31.5%. At that rate, if you’re spending $192 or more per year on the website, it’s cheaper to become a member and shop in the store.
Regular Versus Executive Membership
It’s fairly easy to calculate whether it’s worth upgrading from a regular Gold Star membership to an Executive membership. Simply put, it’s worth it if the 2% cash back on purchases offsets the extra $60 per year.
If you buy $3,000 worth of stuff at Costco every year, your Executive membership will pay you $60 in cash back — just enough to pay for itself. If you spend more than that, the higher-tier membership is a good bargain. If you spend less, it’s not worth the money.
But this just raises another question. If you spend $3,000 at Costco every year, will you really be saving money? Will you buy products that would cost more than $3,000 if you bought them elsewhere? Or will a lot of that $3,000 be money you wouldn’t spend otherwise?
Top Reasons to Consider a Costco Membership
The answer to this question depends on your current household expenses. There are some categories in which Costco can really save you a lot of money. If you’re currently spending a lot in these categories, you can definitely save enough at Costco to offset your membership fee.
There are several types of goods and services cheap enough to make a Costco membership pay for itself — at least, for the right person.
1. Baby Bargains
If you have a new baby at home, Costco can save you a bundle on baby expenses. At the top of the list: disposable diapers.
Diapers from Kirkland, Costco’s store brand, cost only $0.17 to $0.19 apiece. That’s about on a par with diapers from Mama Bear, Amazon’s house brand. But with Costco diapers, you don’t have to wait for delivery — a major concern when your supply is running low.
Kirkland baby wipes are also a bargain at roughly $0.02 each. That’s a little over half the cost of Mama Bear wipes.
But perhaps the best baby bargain Costco offers is formula. Powdered formula costs as little as $0.48 per ounce, compared to $0.78 per ounce for the cheapest brand at Amazon. Each ounce makes about 5 ounces of prepared baby formula.
In its first year, a baby goes through about 10,767 ounces of formula. Making that amount from Costco’s powder would cost about $1,033. The cheapest competing brand would cost $1,679. So on this item alone, Costco could save you $646 — more than 10 times the membership fee.
2. Discount Medications
You don’t need a Costco membership to use the store’s pharmacy. However, being a member gives you access to the store’s prescription drug discount program.
The Costco Member Prescription Program (CMPP) offers savings on prescription drugs of anywhere from 2% to 40% or more. For instance, if you take a drug that costs $50 per month and the program saves you 15%, that adds up to $90 per year.
Of course, that isn’t a real savings if you can get the medication for less at another retailer. But chances are, Costco has the best price in your area.
A 2018 Consumer Reports analysis found Costco’s prices for a “market basket” of seven drugs beat Sam’s Club, Walmart, and four other large pharmacy chains. Only Health Warehouse, an online pharmacy, was cheaper.
The CMPP provides discounts on medications for pets as well. Savings on these are potentially even bigger because they’re not usually covered by insurance.
Costco has good deals on over-the-counter medications too. For instance, the generic version of Zyrtec costs $0.04 per tablet at Costco — one-third of the price at Walgreens or Target. At those prices, just one or two daily meds could pay for your whole Costco membership.
3. Optical Department
Like the pharmacy, Costco’s optical department is open to nonmembers. But while you don’t need a membership to get an eye exam, you need one to buy glasses or contacts. And the amount you can save on glasses makes your Costco membership worth the cost.
It was Costco’s eyewear deals that finally convinced my husband and me to become Costco members after toying with the idea for years. We took the plunge in 2017, when he got his first prescription for progressive lenses.
Based on past experience, we knew our eye doctor’s office would charge over $400 for these glasses. We could have bought them for under $100 from an online eyewear retailer, but for a complicated prescription like this, he wanted to be able to try the glasses on.
So we joined Costco and got the glasses for $180 — less than half our eye doctor’s price. The savings on that one purchase paid for our annual membership fee more than three times over.
4. Organic Foods
Since we joined Costco, we’ve discovered our membership can be a great way to save on organic foods. Organic sugar is a particularly good deal at $0.80 per pound. That’s less than half the price we used to pay, and buying 10 pounds at a time means less packaging waste.
Our experience isn’t unique. Several healthy-living bloggers have estimated that they save between $100 and $150 per month buying natural and organic foods at Costco. At that rate, a membership would more than pay for itself in just one month.
One downside to buying organic groceries — or any groceries — at Costco is that they often come in large quantities. That’s no problem with staples like our organic sugar and raisins. We just stock up and stash them in the pantry until we need them.
However, when you buy perishable food in bulk, there’s a risk some of it could go bad before you can eat it. So buying organic meat and produce at Costco is only a good value if you have a large family that can eat it all quickly — or a stand-alone freezer to store the excess.
5. Affordable Wine
Costco is one of the top wine sellers in the entire world, with billions of dollars in annual sales. The secret of its success: good vintages at affordable prices.
Most retailers charge a markup of around 50% on their wines. In other words, a bottle they bought for $10 wholesale would sell for $15. But Costco marks up its wines by only 14% on average, so that same $10 wine would sell for just $11.50 on its shelves.
On some wines, the price difference is even steeper. A sommelier interviewed by the Seattle Times says you can buy a Gran Reserva for $16 at Costco that’s as good as bottles that sell for $50 or more. Its $18 Chateauneuf-du-Pape is equivalent to a $35 vintage.
If you’re a big wine drinker, these savings can really add up. Say you go through three bottles per week. If you paid $35 per bottle at a boutique wine store, that would come to $5,460 per year. Switch to an $18 Costco vintage, and you pay $2,808 per year — a $2,652 savings.
In some states, you don’t need to be a Costco member to enjoy the store’s low prices on wine. It’s illegal to require a store membership for alcohol purchases in these 13 states:
- Arizona
- California
- Colorado
- Connecticut
- Delaware
- Hawaii
- Indiana
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New York
- Texas
- Vermont
If you live in one of these states, you can buy wine without a member card. (Be prepared to talk to a manager, though, because cashiers don’t always know about the law.) In other states, you can save more than enough on wine to pay for your Costco membership.
6. Restaurant Gift Cards
One of the most amazing deals Costco has to offer is restaurant gift cards. The selection is limited, but the price is phenomenal — from 20% to 30% off their face value.
For instance, you can buy $60 worth of gift cards to Krispy Kreme for $45. That’s a savings of $15 a pop. If you consume $20 worth of coffee and doughnuts each month, you could pay for it with four of these packs and save $60 — enough to cover your membership fee.
On Costco.com, you can find gift cards for eateries ranging from the modest Boston Market to the upscale Sullivan’s Steakhouse. Costco stores can offer cards for other restaurants, but the selection varies by location.
7. Dog Food
If you share your home with a dog, Costco is a great place to save on pet food.
Professional reviewers consistently give Costco’s Kirkland dog kibble high marks for nutrition. One site gives it the same rating as Blue Buffalo Wilderness, which sells for $2.28 per pound on Chewy. But the Kirkland food is about half that price — as little as $1.12 per pound.
A 30-pound dog goes through about 2 cups of food per day, or roughly half a pound. If you fed it the Blue Buffalo food, that would come to $416.10 worth per year.
But the same amount of Kirkland food would cost only $204.40, saving you over $210 annually. That’s more than three times the cost of your Costco membership.
Costco sells cat food as well, although its prices for that aren’t as outstanding. It offers a variety of other products for pets, such as beds, treats, and toys. And, as noted above, its pharmacies carry medicines for your pet at bargain prices.
8. Cheap Gasoline
One product just about every Costco customer needs is gasoline. And Costco gas stations officially offer the lowest prices on it nationwide. In a 2020 comparison of gas stations by CSP, Costco gas came in at nearly $0.25 per gallon below the typical price.
To see how those savings on gas adds up, suppose you drive 12,000 miles per year in a car that gets 30 miles per gallon. That works out to 400 gallons of gas per year. By buying all your gasoline at Costco, you could save $100 per year — $40 more than the cost of membership.
In practice, though, not everyone can save this much. If gas stations in your area offer better-than-average prices, Costco’s price advantage shrinks or even disappears.
For example, our local Costco’s gas is only $0.10 less per gallon than the price at a station that’s much closer. So for us, the gas we’d burn going to and from Costco would eat up our savings at the pump. To see how your local gas stations stack up on price, check GasBuddy.
Even if you don’t buy all your gas at Costco, you can save by filling up whenever you’re already visiting the store for other things. However, if you plan to do this, make sure to allow extra time for it. Because of their low prices, Costco gas stations often have extremely long lines.
9. Car Tires
While you’re filling up your car’s tank at Costco, you might take the opportunity to check the tires. If they’re looking a bit worn, you can head into the store to look for bargains on car tires.
Costco mainly carries three brands of tires: BFGoodrich, Bridgestone, and Michelin. It’s easy to find tires to fit your vehicle on its website. When I ran a tire search for my car, I found five models with prices starting at $112 per tire.
On top of that, Costco periodically offers discounts on certain brands of tires. For instance, in November 2021, it offered $150 off a complete set of Bridgestone tires with installation.
Costco’s tire installation service costs as little as $20 per wheel. That price includes pressure checks, rotation, balancing, and flat repairs for the life of the tire. However, there’s often a long wait for this service.
Although Costco’s tire prices are good, they’re not always the lowest available. Online tire sellers like TireBuyer and TireRack charge as little as $75 per tire for certain models. So before buying tires at Costco, it’s worth checking prices and ratings online.
10. Car Buying
When it comes time to replace your car, Costco can help you with that too. Its car-buying service, Costco Auto, offers special member pricing on both new and used vehicles.
A Costco Auto employee interviewed by Business Insider in 2018 claims that the average car buyer saves over $1,000 shopping through its service. That’s compared to the average price other buyers paid for the same car.
If you’re good at negotiation, you might be able to save more than this on a car by bargaining with the dealer yourself. However, if you hate haggling, Costco’s service can get you a good price without the hassle.
11. Jewelry
Another big-ticket item with big savings potential at Costco is jewelry. The store’s selection of high-end watches, earrings, necklaces, and rings isn’t as vast as a full-service jeweler’s. But the prices can be pretty dazzling.
Take engagement rings as an example. Costco offers a simple 0.7-carat diamond solitaire ring with a platinum band for $2,400. Putting together a comparable ring at online diamond retailer James Allen would run you $2,950.
One caveat, though: if $2,400 is still too much for your budget, Costco can’t help you. It focuses on high-end pieces and doesn’t offer any engagement rings below $1,000. You’ll have better luck with a large jewelry chain that offers a wider selection of smaller stones.
12. Food Court
Many visitors to Costco make a point of stopping off at the food court for lunch. Where else can you get a quarter-pound hot dog and a 20-ounce soda for just $1.50? Despite inflation, that price hasn’t changed since 1985. No wonder the chain sells over 150 million combos per year.
Costco is one of the nation’s biggest pizza chains, too. Its $1.99 pizza slices are huge — 700 calories each — and always fresh. Any slice that doesn’t sell within an hour gets discarded.
Just one slice of Costco’s pizza is as much food as four slices at California Pizza Kitchen. That’s two-thirds of a $15 pie, or $10 worth. So, in theory, each time you choose Costco over CPK, you save $8. Eight trips in one year would pay for your membership all by themselves.
Until recently, you didn’t need a Costco member card to dine at the food court. However, in March 2020, the Instagram account Costco Deals posted an image of a sign at an unnamed store warning that the food court was now open to members only.
This isn’t a chain-wide policy, so your local Costco may still allow you to visit the food court as a nonmember. But you can’t be sure of it.
13. Costco Credit Card
Visa is the only credit card accepted at Costco warehouse stores. And while any Visa card will do, there are good reasons to consider the store’s Costco Anywhere Visa® card. Available only to Costco members, this card offers cash-back rewards at Costco and everywhere you shop.
The Costco Anywhere card doubles as your membership card, so you don’t need to carry a separate card. Costco Anywhere cardholders enjoy the following perks:
- 4% cash back on gas purchases up to $7,000 per year (and 1% cash back after that)
- 3% cash back on travel and restaurant purchases
- 2% cash back on all purchases at Costco or Costco.com
- 1% cash back on all other purchases
- No annual fee
- No foreign transaction fees
Few other cash-back credit cards can match these rewards. Some cards offer discounts of up to 5% on certain purchases, but usually for a limited time only. Costco’s cash-back deals are good as long as you have the card.
The first full year that my husband and I had our Costco Anywhere card, we earned $57.35 in rewards. I calculated that if we’d made the same purchases with another cash-back card, we’d have earned only $16.38.
Thus, using this card netted us $34.26 in rewards over the year — nearly half the cost of our Costco membership. And we’re not particularly big spenders. We spent nothing that year on travel, less than $100 at restaurants, and less than $1,000 on gas.
Anyone who spends heavily in these categories can expect to earn even bigger rewards. If you spend just $1,000 on gas and $1,000 on travel and restaurants, your cash-back rewards will more than pay for your Costco membership fee.
Worst Reasons to Get a Costco Membership
Clearly, there are some great values at Costco. However, some of the store’s deals — including some of the ones that attract most attention from fans — are highly overrated.
These “bargains” definitely won’t save you enough to pay for the cost of membership, and may not save you anything at all. So if you’re considering a Costco membership mainly to save in these categories, you might want to reconsider.
1. Paper Goods
The top-selling item at Costco is toilet paper. You can buy 30 rolls of the Kirkland Signature brand for $19.99, or $0.18 per 100 sheets. That’s a pretty good price, but it’s not the best you can get.
You can find two-ply TP on Amazon for as little as $0.13 per 100 sheets. The store brand at Trader Joe’s costs just $0.17 per 100 sheets, and you only need to buy 12 rolls at a time. That’s a plus if you don’t have a lot of storage space.
Costco’s paper towels are an equally so-so deal. Kirkland Signature towels cost $19.99 per dozen, or $1.04 per 100 sheets. But the lowest price on Amazon is $0.97 per 100 sheets. And switching to reusable cloth dish towels or rags costs far less per use.
2. Electronics
When you walk in the doors of a Costco store, one of the first things you’re likely to see is a beautiful display of the latest TV sets, phones, and computers. The wares look fantastic, but the prices are nothing to write home about.
For instance, one of Costco’s Black Friday deals for 2021 was a 65-inch, 4K LED smart TV from Samsung for $700. But a quick search turns up a model with comparable features for $570 at Best Buy.
That’s not to say you’ll never find an unbeatable electronics deal at Costco. But it’s always worth doing a quick search before you buy to make sure it really is unbeatable. You’re likely to find a better price at a store that specializes in electronics.
3. Travel Deals
Being a Costco member also gives you access to travel deals through Costco Travel. It offers specially negotiated rates on hotels, rental cars, cruises, theme parks, and vacation packages. Plus, Executive members get 2% back on Costco Travel purchases.
But using Costco Travel isn’t always the best way to save on a vacation. When I browsed travel deals on the site, I found a four-day trip to Waikiki Beach for two for $3,300 total. That included round-trip airfare, a room at the Hyatt Regency Waikiki Beach, resort fees, and airport shuttle.
Then I searched Expedia for deals on the same airfare and hotel. I found a package deal including both for only $2,402. So unless the airport shuttle adds nearly $900 to the cost, Expedia has the better deal.
Even the travel deals on Costco’s Hot Buys page aren’t all that hot. I found weekend trips for two to San Diego, California, starting at $829. But Expedia found me trips to the same area, including airfare and hotel, starting at $576.
4. Grocery Shopping
If you think you can save by doing all your grocery shopping at Costco, think again. While Costco offers great deals on some pantry staples, its fresh foods aren’t noticeably cheaper than the offerings at most grocery stores.
In a 2019 comparison test at Cheapism, Costco had better prices than Kroger on most grocery items. But it couldn’t beat Kroger’s price on fresh foods like chicken, tomatoes, grapes, onions, and milk.
Even when fresh foods were cheaper at Costco, the savings were usually trivial. Its prices for bananas, potatoes, baby carrots, and ground beef beat Kroger’s by less than $0.02 per ounce.
We’ve found similar results at our local Costco. We stock up there on dry foods like nuts, raisins, and quinoa. But we skip the refrigerator section, because the almond milk and free-range eggs are significantly pricier than the selections at Lidl, our favorite discount grocery store.
And there’s another risk of buying perishable items at Costco. Since they come in such large packages, your purchases could go bad before you’re able to use them up. This is true not just for fresh foods but for other items you shouldn’t buy in bulk, like brown rice, spices, and even some cleaning supplies.
Plus, if you’re a regular coupon user, your stash will do you no good at Costco. The store doesn’t accept any manufacturer coupons.
5. Rotisserie Chicken
One item that keeps Costco customers coming back is the $5 rotisserie chickens. They’re actually a loss leader for the store — that is, they sell for less than they cost to buy. But Costco makes up the loss with all the other things shoppers buy when they come in for cheap chicken.
However, Costco isn’t the only store that offers birds this cheap. ShopRite, for instance, sells roasted chickens under its house brand, Bowl & Basket, for the same $5 price.
Moreover, there has been a lot of controversy lately about the quality of Costco’s birds. In 2020, an animal-rights group went undercover to film conditions at one of the chicken farms that supplies the store. Its video of a dark, filthy warehouse crowded with injured and deformed birds makes that $5 price seem a lot less appetizing.
The group, Mercy for Animals, has challenged Costco to adopt the Better Chicken Commitment for animal welfare. Over 200 companies, including giants like Burger King and Subway, have signed this pledge. But Costco says it has no plans to do so and that its current animal-welfare standards are appropriate.
Final Word
So, is a Costco membership a good choice for you? It depends on your situation.
Your membership will almost certainly pay for itself if you need to make a big-ticket purchase like a car, an engagement ring, a set of tires, or a pair of eyeglasses. And it will probably pay off if you have a baby or a dog.
Regular restaurant-goers can also save big by taking advantage of Costco’s deals on restaurant gift cards. And people who consume a lot of organic foods, wine, or pricey prescription meds can also see major savings.
But Costco isn’t the best deal for everyone. If you’re planning to pay for your membership with savings on travel, electronics, or grocery shopping, you’ll probably be disappointed.
If you’re not sure whether Costco’s deals justify the cost of membership for your family, the best way to find out is to check them out in person. You can tag along with a friend who’s a member or ask them to buy you a Costco Shop Card, which gets you in the door. Then you can check out the prices on things you buy and compare them to what you normally pay.
