Is a Costco Membership Good Value for Money?


There are two things I regularly buy where Costco saves me a bundle: office paper and contact lenses. Those are the only items that keep me shopping there, as I am not a fan of paying a membership fee in order to shop and it takes a lot of savings to offset the $55 a year membership fee. There aren’t a lot of places selling 100% recycled paper, and Costco’s price is at least $15 a case cheaper than the equivalent at Staples. I could save a lot of money if I used regular paper, but it’s important to me, with the volume I use as a lawyer, that it be recycled.

I have learned that you can’t always assume that because something is sold at Costco that it is cheaper than anywhere else. Quite often I can buy it for less at Superstore and not have to buy in mega-quantities. I find that if I buy things like the tzatziki or cream cheese in the mega pack, I only get through about half of it before it goes bad.

I have definitely noticed that a lot of the fruits and vegetables (in the giant packs with the inherent danger of going bad before they are finished) cost less at my local fruit and vegetable market. In fact, I rarely see anything in that department that is cheaper than the local market.

I’m also not crazy about how some of their bulk packs are put together: I could definitely go through a box of 48 granola bars, but they have their mix of about 4 different varieties in a box and inevitably 12 of the granola bars in the box are the a type I don’t like and probably won’t eat.

If you brave the crowds and go there between noon and 5pm, the food sampling is wonderful. There’s often enough on offer that I don’t need to buy lunch.

I have also figured out why a shopping trip seems to have a $200 minimum: there is hardly anything for sale at Costco for less than $10, so adding one or two unplanned items into the cart gets very expensive. It highlights the importance of sticking to a list.

Costco has some great frozen treats like mozzarella sticks and other appetizers, but the boxes are always so big that it takes great skill at Tetris to get it all in the freezer at home.

One year I paid extra for the Executive Membership for $110 because it offered me 2% cash back on my purchases. A new television and a set of tires were on the shopping list that year. I got a great deal on a flat screen TV, but I ended up not being able to buy the tires. The price was great, but it was just such a difficult process that I gave up. My nearest Costco didn’t have the ones in my car’s size in stock. They were at another store, but they would not order them for me. Nor would they call me to let me know when they arrived. The other problem was that they don’t take appointments for installing tires, it is always first come first served and I am not very good with that. I ended up going to my local tire shop instead, where they WILL order what I need and give me an appointment time to have my tires installed so I don’t spend a whole afternoon there. The prices weren’t dramatically different in any event. Costco would have been cheaper but it just wasn’t worth the runaround and the time spent waiting.

To Costco’s credit, if you don’t spend enough in a year to justify the more expensive Executive Membership, they will refund you. So there was no harm in trying and I was quite happy with it, I ended up being given about $30 in cash back as a refund for the unused portion of the $110 membership. It would take $2,750 a year in spending at Costco to justify that more expensive membership.

I end up going to Costco every month or so for paper and a few other items. They sell postage stamps at a small discount. It’s just not the most pleasant of experiences, too crowded, the lineups to pay can be excessively long. But they do have some neat stuff and the impulse spending can be fun as long as it doesn’t get out of hand.

From what I can tell, Costco’s profit margins are quite low, and according to  this this 80% of Costco’s profits come from membership fees and the remaining 20% from product sales. I have looked at the stock but never bought it. I just can’t see how they can continue to grow and consumer goods stocks tend to make me nervous because the margins are so low. Surely, people will grow tired of Costco, clue in that they really aren’t saving that much and membership numbers will sag. In hindsight, it would have been a better buy than some of the oil and gas stocks I bought in the past year, mind.



  1. I see that Costco is good for large families where your bulk buying might save the annual cost of $55 or $110 as the case of membership is. One of the hidden problem in Canadian grocery stores run by Loblaws or Walmart is that there are no limit on quantity, at times Loblaws restrict discount pricing on limited quantities but still its not beneficial for busy malls like Metrotown where to checkout on Saturday afternoon takes about 20 – 30 minutes and what you see is just few stuff or no stuff left on the rack.
    I complained to Walmart few years ago on this matter where small retailers seem to buy stuff full of carts containing basic stuff like milk and eggs (even happens today) but according to them they don’t put any restriction as retailers are also consumers. (kind a reminds me the video of BC customers grabbing milk at Costco, Bellingham :) ) I believe that’s one of the reason where for-sale items are gone on day 1 may be within few hours.
    But as a consumer I don’t want to be depressed with no quantity left, so signing up at Costco pinches me 55 bucks for the cost of yearly membership but atleast I am not deprived of “Sold out” banners.

  2. To deal with the not being able to finish the large quantity of a food I bought at Costco before it goes bad, split it with a friend! That way you both get to save (for those items where Costco is actually cheaper than other stores), but you get a more reason amount of food!

    • Wow, I should have proofread that before I posted it! Should say “I split it with a friend” and “more reasonable amount”.

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