Costco’s long-awaited membership fee increase has finally gone into effect.
Starting Sept. 1, the warehouse-based retailer’s standard membership increased by $5 per year, from $60 to $65.
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.
The changes, which affect members in the United States and Canada, represent the first rate increase since June 2017.
Costco said the increase will reach 52 million memberships, about half of which are at the top tier.
Costco charges between $60 and $120 per year for membership since June 2017
Costco membership allows customers to purchase groceries and electronics at a discount in-store.
It also provides access to services such as hearing tests and home insurance.
Many Costco fans had been expecting a fee increase, as the retailer typically raises fees every six years or sooner.
Costco shares, which have risen more than 37 percent this year, have been rewarded by investors who were eager to see increases in membership prices.
In the three months ended Feb. 18, Costco generated $1.11 billion in membership fees, 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.
Until this latest increase, there had been seven membership fee increases since Costco was founded in 1983, each time increasing by $5 for the standard membership. 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, but since 2006 they have been between five and six years.
Richard Galanti, who had been CFO since the early 1980s, left earlier this year.
It had pledged to keep membership numbers the same as Americans struggled with rising costs and stagnant wages in recent years.
His replacement, Gary Millerchip, took over in March and was expected to raise prices.
The increase is likely due to years of inflation and Costco’s desire to maintain a steady revenue stream through fees.
Costco Chief Financial Officer Richard Galanti (pictured) left the company earlier this year.
Costco has recently announced a crackdown on those who attempt to access its stores without a valid membership card.
The retail giant recently announced that shoppers will be required to scan their physical membership card upon entering its stores.
They will also have to visually match the photo that will appear on the scanned card.
The scanners, which have already been spotted in some locations in California, are an attempt to prevent deal hunters from borrowing a friend’s membership card without paying the annual fee themselves.