How Costco Makes Money on the Membership Fee
Business Models Explained with Fexingo: Subscription, Marketplace, SaaS, and Service Companies · 2026-06-06 · 9 min
Episode notes
In this episode, Lucas and Luna break down Costco's counterintuitive business model: the company deliberately limits its merchandise markup to 14 percent on most items, relying on membership fees for the bulk of its profit. They walk through the economics of a $60 Executive Membership, explain how Costco's inventory turns 12 times a year versus the retail average of 4, and compare the model to Amazon Prime. The conversation also touches on why Costco's treasure-hunt shopping experience defies traditional retail wisdom and how the model creates a moat that competitors struggle to replicate. #Costco #BusinessModel #MembershipEconomy #Subscription #Retail #ProfitMargin #InventoryTurn #AmazonPrime #TreasureHunt #KirklandSignature #BusinessStrategy #PricingPower #CustomerLoyalty #Moat #Business #FexingoBusiness #BusinessPodcast #ModelsExplained Keep every episode free: buymeacoffee.com/fexingo