Costco

Costco deliberately maintains very low markup on products (its gross margin is only ~11%) and does not aggressively raise prices, opting to turn the benefit of its cost advantage into lower prices for members. Thus its merchandise pricing power is limited: raising prices risks alienating members.

The real pricing leverage comes from membership fees. After 7 years without increases, Costco announced a fee hike in 2024 (Gold/Star business +$5 to $65, Executive +$10 to $130), and still achieved ~93% renewal. This suggests some elasticity of fee pricing.

Overall, Costco’s ability to expand margins by raising sales prices on goods is constrained.