Income Stream
In the volatile world that is the grocery business, Costco has a way to ensure a steady source of income: membership fees. In 2017, the company's 90.3 million members worldwide brought in $2.6 billion in membership fees.
Revenues from membership fees are great. Aside from a few minutes of an employee’s time, plus the cost of the card and subsequent promotional mailings, managing membership isn't too costly. As such,
Costco’s $2.6 billion in membership fee revenue is almost entirely profit.
When you consider that
in 2016, Costco’s operating income was only $3.6 billion, you can see why the company needs membership fees to stay in business. Thankfully, its membership numbers keep growing: they were up 8% in 2014, 6% in 2015 and 9% in 2016. The company is likely to not only maintain, but to increase its revenue and profit in the coming years.