In one line
“They’re basically a bulk warehouse store that charges members an annual fee.”
Costco is a massive warehouse where you pay a yearly membership fee to buy stuff in bulk at really low prices. They stock way fewer products than normal stores—like 4,000 items instead of 50,000—so they can focus on the bestsellers and keep prices down. Think of it like buying a 24-pack of soda at a better price than buying it 6-packs at the grocery store. They make money from membership fees and by selling gas, pharmacy services, and other stuff on the side.
How they make money
revenue, fiscal year ended Aug 2025Members pay an annual fee to shop at Costco warehouses, then buy groceries, electronics, furniture, and thousands of other products at low markups. Costco also sells gasoline, which made up about 10% of total sales in 2025.
- Pharmacy, optical, and food courtCostco operates pharmacies, eye doctors, and food courts inside warehouses to give members more reasons to visit frequently.
- E-commerce and other servicesMembers can shop online at Costco.com for a wider selection, and Costco offers travel booking, photo services, and hearing aids.
- Credit card rewardsCostco offers a co-branded credit card and Executive member 2% reward certificates that generate additional revenue.
What it looks like
If you signed up for a Costco membership today:
- Pay the annual membership fee
You buy a membership card that lets you shop at any Costco warehouse and online at Costco.com.
- Fill your cart with bulk items
You browse their limited selection of about 4,000 products per warehouse and buy larger quantities at lower prices than you'd find elsewhere.
- Save money and visit frequently
Over the year, the low prices add up and save you money compared to regular stores, plus gas stations, pharmacies, and food courts keep you coming back.
Follow the incentives
Best guessMembers pay an annual membership fee, then buy products at low prices.
Anyone with a Costco membership shops at warehouses or online; they range from families buying groceries to businesses buying supplies.
Costco wants to maximize member visits and bulk purchases, so it keeps prices as low as possible while offering great quality to justify the yearly membership fee.
Say it at dinner
“Costco is the warehouse store where you pay to shop, and they actually make most of their money from membership fees.”
Receipts
Updated- Verified
- From a government filing, like an SEC annual report
- Stated
- The company says it on its own website
- Best guess
- Our reading of the sources when nothing says it outright
- Background
- From Wikipedia, for history only, never numbers
Written by AI from public sources. It can be wrong, and it isn't financial advice. Terms
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