Costco has raised its membership fee for the first time in seven years.
The membership-based store announced Wednesday that the increase will take effect on Sept. 1.
It’s the first increase since June 2017, and will increase by $5 a year for the standard membership, taking it from $60 to $65 annually.
The Executive tier, which offers 2 percent cash back on all Costco purchases made that year up to a total of $750, will increase $10 to $130 per year.
Many had expected an increase very soon, as the retailer typically raises rates every six years or sooner.
In the image, a Costco member holds a membership card. Costco charges between $60 and $120 per year for membership as of June 2017.
Costco said the increase will reach 52 million memberships, about half of which are at the top tier.
Shares rose two percent after the news broke, as investors knew that higher fees lead to higher profits.
At old exchange rates, the fees amounted to $4 billion or more a year.
Until this latest increase, there had been seven membership fee increases, each of them $5, since Costco was founded in 1983. On average, they occurred about once every five years.
The longest period during which the annual membership fee remained unchanged was between 1983 and 1992.
His annual rate of $25 in 1983 would be about $78 today, according to inflation data from the U.S. Bureau of Labor Statistics.
After 1992, the periods between increases were between two and three years. Since 2006, they have been between five and six years. So the period up to now is one of the longest.
Richard Galanti, who had been CFO since the early 1980s, left earlier this year.
In recent years, he had pledged to keep membership numbers at the same level as Americans struggled with rising costs and stagnant wages.
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Costco Chief Financial Officer Richard Galanti (pictured) told investors last year that it would not raise annual membership fees for the foreseeable future.
His replacement, Gary Millerchip, took over in March and was expected to raise prices.
While members may have enjoyed lower membership fees, investors have long been hoping that executives would finally raise them in a move that would boost the company’s revenue.
In the three months ended Feb. 18, Costco generated $1.11 billion in membership fees, which accounted for nearly 2 percent of its total revenue for the quarter.
That means Costco makes about $4 billion more a year in commissions, a figure that is likely to grow with the increase.
