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A friend recently shared that he upgraded his regular $50 Costco membership to the $100 Executive plan, which immediately made me wonder how much money he will have to spend to make his yearly fee back. If he spends more, the upgrade was worth it. If he spends less, he should have stuck to the regular plan.
My friend makes 1% back on travel purchases, 3% back on gas, and 2% back on all his other bulk purchases. There are also membership perks for check printing, auto financing, and long-distance phone service. The rebates are valid on future Costco expenses.
Cash outlay
$100 to join at the executive level
Money back
$10 Costco gift card for signing up that my friend earned through his company (it’s not clear if this perk is widely available, but you can ask)
$9.92 Amazon selling price of Home Cooking: The Costco Way, which he received for signing up
$5 in travel rebates if my friend buys one $500 vacation package
So far my friend has – theoretically – earned $48.32 back towards his $100 membership on the 1% and 3% rebates. So how much does he have to spend on groceries and other items, earning him 2% back, to earn another $51.68 so he gets the full $100 back? Dusting off my algebra skills…
$51.68 – .02 cash rebate (Costco purchases needed to break even)
$51.68/.02 = Costco purchases needed to break even
$2,584 = Costco purchases needed to break even
My friend has to spend $2,584 on general Costco merchandise in one year to break even. That breaks down to $215 every month or $99 every two weeks, which is entirely do-able for a lot of people. If my friend bought more Costco gas, he would need to spend less in the warehouse to make his Executive Membership back. Buying glasses at Costco is one way to make your money back in one purchase.
Additionally, my calculations do not take into account any savings my friend earns on Costco’s lower prices. Costco gas, for instance, is about $.05 cheaper per gallon. I decided not to take this price differential into consideration because Costco splurges – virtually impossible for mere mortals to resist – cancel out price savings for many shoppers.
Are you a warehouse member? What makes it worthwhile for you to pay the yearly fee? If you are not a member, there are still ways to get deals at Costco.
