Costco Raises Membership Fee But It's Still 21 Percent Cheaper Than 1983

The Hot Dog Combo is 70 Percent Cheaper.

Costco raised their Gold Star annual membership fee to $65. It had been $60 for the past seven years. The membership fee started at $25 in 1983. Back then blue-collar workers were earning around $11.22 an hour in compensation (wages and benefits). This would put the time price at around two hours and 14 minutes. Blue-collar workers are earning closer to $36.92 today putting the $65 membership at one hour and 46 minutes. Memberships are actually 21 percent cheaper today compared to 1983.

Charlie Munger from Berkshire Hathaway said the membership card is an important filter:

Think about who you’re keeping out [with a membership card]. Think about the cohort that won’t give you their license and their ID and get their picture taken…that cohort will have 100% of your shoplifters and 100% of your thieves.

Costco introduced their Hot Dog and Soda combination in 1985 for $1.50. The price has not changed in 39 years. Blue-collar hourly compensation was around $12.50 an hour back then. It took 7.2 minutes to earn the money to enjoy this American treat. Today at $36.92 an hour it only takes 2.4 minutes. You get three today for the time it took to earn one back in ‘85.

Costco went public on December 5, 1985. After adjusting for stock splits, the initial price was around $1.67. Today shares are selling for around $892. That’s a compound annual growth rate of 17.47 percent. If you had invested $1,000 in Costco the same year they introduced their $1.50 deal, you would have $534,131, enough to buy 356,087 hot dog and soda combos.

Long live the entrepreneurs at Costco who make our lives so abundant.

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Gale Pooley is a Senior Fellow at the Discovery Institute and a board member at Human Progress.