How Costco Manages To Keep Their Prices So Low

Since 1983, Costco has built its reputation as the place to go for big items at low prices. The warehouse club, which launched in Seattle, Washington, has become an international force. As of 2018, Costco has 768 warehouses worldwide, and has more than 94 million members across the globe.

Shopping at Costco is an experience unlike any other. Where else can you shop for great deals, grab a cheap lunch, and fill up your gas tank in one place? But those great deals aren't for everyone. Costco's famously low prices are only available to members who pay to have access to the warehouse club. For $60, a Gold Star Membership gives members exclusive access to shop at any Costco location worldwide. In addition to shopping privileges, upgrading to a $120 Executive Membership makes members eligible to receive 2 percent cash back on qualifying purchases.

And those membership fees are going a long way to help the company's profit margins. Because Costco earns so much income from membership fees, there's less incentive for the business to mark up prices like its competitors.

Watch the video for more about how Costco manages to keep their prices so low!

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Membership fees balance it out | 0:23
Smaller inventory | 1:12
Treating employees well | 2:02
No advertising | 2:50
No-frills design | 3:56
Low-cost food | 4:54

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