The Fee Rise Nobody Left OverWide moat

Costco Wholesale (COST) — moat facet

Costco raised its most profitable price 8% after seven years and the renewal rate did not move — which is the definition of pricing power and also evidence of thirty years of restraint.

Pricing power is usually asserted and rarely demonstrated. Costco demonstrated it on 1 September 2024, when it raised the annual fee in the United States and Canada from $60 to $65 for Gold Star and Business members and from $120 to $130 for Executive members1 — the first increase in seven years, and an 8% rise on the single line of revenue that carries half the company's profit.

Membership fee revenue ($M)$4,580MFY2023$4,828MFY2024$5,323MFY2025Fee raised $60 to $65 and $120 to $130 on 1 September 2024. Renewal finished FY2025 at 92.3%.
A 10% rise in fee revenue, about 40% of it from the price increase itself, with the renewal rate essentially unchanged. That is what pricing power looks like when it is actually exercised.

The result: membership fee revenue rose 10% in fiscal 2025, of which roughly 40% came from the increase itself2, and the renewal rate finished the year at 92.3% in the United States and Canada. Whatever number of members walked away over five dollars was too small to appear.

Two features of the increase are worth noting. The first is the interval. Costco has raised the fee roughly every five to six years for three decades, which is slow enough that no member experiences it as a pattern and frequent enough that the real price never erodes badly. The second is that the fee is deferred and recognised rateably, so an increase takes a full year to appear in revenue and then keeps appearing — the fiscal 2026 accounts still credit the September 2024 rise with about 35% of membership income growth across thirty-six weeks and 25% in the third quarter3.

The uncomfortable reading is that a fee raised every six years is not really evidence of pricing power at all; it is evidence of restraint. $65 in 2025 buys less than $60 did in 2017. Costco has let the real price of its most profitable product fall for most of its history, which is a choice, and which leaves a large and deliberately unexercised reserve.

Watch membership fee revenue per paid member: about $65.7 in fiscal 2025 across 81.0 million paid memberships4. It should step up in the year after each increase and drift sideways otherwise. If it drifts down between increases, the mix is moving toward cheaper markets faster than the fee is rising.

Moat trajectory: Holding steady

The 2024 increase is decaying on schedule — 40% of growth, then 35%, then 25% — and the next one is five or six years away. The lever works; it is not being pulled.

The number that tests this moat
Reported
Membership fee revenue growth
+10% in fiscal 2025, about 40% of it from the price rise

The September 2024 increase was the first in seven years and the renewal rate finished at 92.3%. If growth ever falls to the rate of paid-member growth, the pricing lever has been fully used.

Source: Costco Form 10-K, fiscal year ended August 31, 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Increase Is Already Behind It
The 2024 rise gave 40% of membership growth, then 35%, then 25%, and the next lever is five years away.
References
  1. ReportedCostco demonstrated it on 1 September 2024, when it raised the annual fee in the United States and Canada from $60 to $65 for Gold Star and Business members and from $120 to $130 for Executive members — the first increase in seven years,...
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 1 Business (membership counts and renewal rates, warehouse and gas-station counts, under 4,000 SKUs, Executive tier and the 2% reward, human capital and wages, competition, Kirkland Signature) — FY2025 · publ. October 8, 2025 · source ↗
  2. ReportedThe result: membership fee revenue rose 10% in fiscal 2025, of which roughly 40% came from the increase itself, and the renewal rate finished the year at 92.3% in the United States and Canada.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
  3. ReportedThe second is that the fee is deferred and recognised rateably, so an increase takes a full year to appear in revenue and then keeps appearing — the fiscal 2026 accounts still credit the September 2024 rise with about 35% of membership...
    Costco Form 10-Q, quarter ended May 10, 2026 - condensed financial statements and notes (total revenue $70,527M, operating income $2,815M, diluted EPS $4.93, balance sheet, segment table, 928 warehouses) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
  4. ReportedWatch membership fee revenue per paid member: about $65.7 in fiscal 2025 across 81.0 million paid memberships.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 1 Business (membership counts and renewal rates, warehouse and gas-station counts, under 4,000 SKUs, Executive tier and the 2% reward, human capital and wages, competition, Kirkland Signature) — FY2025 · publ. October 8, 2025 · source ↗
Sources
Generated September 23, 2026