[dghlsakjg]

This is such a misconception/oversimplification that drives me nuts and it is so common. It isn’t at all supported by their filings.

In past years their profits match the approximate amount of revenue from their memberships (which, I suspect is the origin of this idea), although recently their profit exceeds their membership revenue by a fair margin (total membership revenue was less than half of operating income for 2025). Membership is not what causes them to be profitable since the “cost” of the membership is operating the rest of the business. You can’t separate retail sales from membership sales since they mutually require each other in the business model. If they got rid of their retail sales (which are, in fact, more profitable than membership sales on their own) then the membership would be worthless. The reverse is not true.

[Gareth321]

It's true that in recent years profits have exceeded membership revenue, but that still comprises 67% of total profit. It is still a requirement for their business model to operate, unless you're arguing that they would be comfortable with significant losses in the lean years, which I would contest.

[dghlsakjg]

That’s a deceptive 67%. You divided the pretax membership revenue by their post tax profit. If we use the same math we see that they get almost 70% of their profit from sales at the same time.

It falls to less than 50% when you properly compare it to pretax profits.

It also doesn’t factor in the 2% rebate that a huge number of members receive.

Costco’s total net sales for fiscal 2025 were roughly $268 billion. With executive members driving ~73.6% of that, and a 2% rebate on qualified purchases, a rough back-of-envelope estimate would place total rebates issued in the range of $3–4 billion, but Costco does not publicly break this out as a discrete figure in its financial statements.

In any case, I’m not saying it isn’t a significant source of revenue, I’m saying that “they only make money/they make most of their money from memberships” is a deceptive framing that is oft repeated. It makes it sound like they are selling things at cost when they aren’t. Their margins are in line with the grocery industry as a whole. Their pricing is an effect of low opex and volume. They make most of their profit from selling things. If they didn’t charge for membership they wouldn’t lose money.