alt Hacker NewsAlways found Costco's largest source of profits interesting:
> Revenue from membership fees accounts for the majority of the company's profits, accounting for over 72% of the company's net operating income in fiscal years 2022 and 2023, and 65.5% in fiscal year 2024.[115][a]
Replies
e40 • yesterday at 6:35 PM
It's a great model. We get the benefit of low prices, they get sustaining revenue that allows us to get those low prices.
hn_acc1 • yesterday at 6:38 PM
I always found that weird because we get like 5x our membership dues back in rewards every year, so I guess we're the exception, rather than the rule?
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jackweirdy • yesterday at 8:53 PM
The membership has another impact on the balance sheet. It not only adds revenue, it also cuts loss from shoplifting
The sentence you quoted from Wikipedia is nonsensical.
Comparing one revenue line to total net profit is a category error: the numerator and denominator measure different things.
In FY2024, Costco did $249.6B in net sales and collected $4.8B in membership fees. Gross margin on product sales was about $25B. That $25B is 5x the membership fee revenue. So, even if you consider membership fees as being free money, membership fees are only 16% of gross margin.
Moreover, without those product sales, the membership would be worth zero and no one would buy it.