Financial Analysis: Is Costco Worth the Membership?
Over the last three months, I’ve been keeping my grocery receipts to see if renewing the $50 Costco membership is going to be worth it. I’m sure that my household is very much like yours in that we have a number of staples that we go through steadily. The Excel sample below shows the cost comparison breakdown on some of those items.
As a basis for comparison, I used the lowest on-sale price that I received at my local grocery store. They do buy-one-get-one-free sales. Costco doesn’t.
Also, I did my best to equal out the price-to-quantity ratios.
So just looking at the prices, things come out pretty even. Before I began this, I had expected there to be a greater difference—with the benefit going to Costco.
But for me, there are other factors to consider:
- My condo is on the third floor of a building without an elevator. We also only have street parking. It’s nice to not have to limit my shopping trips to only the staples I can carry. If I have extras in the house, I can add a bit of variety to my cart.
- There are items that should be on this list, but they are missing because I haven’t had to buy them in the last three months. (toilet paper, dish washing detergent, frozen chicken breasts, etc.)
- The grocery store prices above are the best on-sale promotions of the last three months. But the sales are not always there. I will never go to the store and get buy-one-get-one-free on all of these categories at the same time.
Conclusion
If I use Costco for just these items alone on a twice-monthly basis (for rounding purposes), I will almost save back the $50 membership fee already. If I calculate in the other items I will purchase and the randomness of grocery store sales, I should come out ahead.
Convenience wise, Costco shopping is definitely a help.
So I guess when the renewal notice comes around, I’m signing back up.
Gosh, who’s eating all that food?
:)
We have similar membership shopping like Costco here in our place ( they sell some of the brands that are available in Costco) and I can say that the membership fee is reasonable if I consider the the benefits of being a member. And the brands that we are buying there are not available in our local super market chain.
Hurricane, good question :)
Ferienhauser, you make a good addition. Even though I don’t mind generics one bit, I must say that the brand names are usually a bit better in terms of taste and quality. On my list, I am mostly comparing grocery store generics against brand names.
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Great analysis!
In my part of the country, you can add the savings on gasoline, which almost always is lower than Costco’s competitors. Also, I just bought checks online from Costco for half of what another online check printer charges!
I find that Costco carries larger sizes at cheaper prices for personal care items like saline solution – which rarely offers a good enough coupon to make it worth buying at CVS or the grocery store. I usually pay around $16 for 32 oz. at Costco, vs, $10 for 12 oz. at the grocery store for the same brand.
Funny, I wish our Costco sold gas. In the city of Chicago, there would be lines wrapped around the block though.
Aryn, I also prefer buying the items that would be in the “drug” section of the grocery store at Costco. I just picked up a 90 count package of Claritin for less per tablet than the generics at the drug stores.
I think your analysis is somewhat superficial. You need to look not only at prices but also at intangibles.
Gasoline is 10-15¢ cheaper at Costco.
How about a 3lb roasted chicken for $4.99? That’s bigger than most other stores and $2-5 cheaper. Or a 2lb block of cheese for $3.99? Big pineapples are always $2.99 where my local stores sell smaller ones for $3.99 typically. Juice is cheaper than in the stores. These are just a few examples off the top of my head.
Vitamins are also cheaper and I trust Costco to monitor than the overseas manufacturers aren’t putting anything in them that they shouldn’t.
Plus there is talk of credit card companies reinstating annual credit card fees with the new credit card law recently passed. I have a free American Express Platinum credit card with cash rebates for spending for the Costco “business” fee I pay.
They also send coupons monthly which offer more savings. And they will also notify you of recalls, which happened to me with the recent pistachio recall.
Finally, if you don’t like something you brought at Costco, for any reason whatsoever, they will take it back and refund you with no questions or hassle.
Jojo, I know my comparisons are limited, but I’m not sure I understand what you mean by superficial. The items listed are only the ones I bought at Costco and at my local grocery store within the stated period of time. As for intangibles, I gave a couple of reasons why shopping at Costco works for my lifestyle.
I know that Costco advertises other services, but I haven’t used any yet. Also, the services are still offered by other retailers and service providers. They are not run by or through the Costco organization.
Thanks to Political Calculations for calling this “The Best Post of the Week, Anywhere!”
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