Costco membership fees are a separately reported revenue line, not a synonym for retail sales or profit. In the third quarter of fiscal 2026, Costco reported $1.373 billion of membership fees, $70.527 billion of total revenue and $2.815 billion of operating income. The useful takeaway is not that fees alone explain the business. It is that the membership model supplies a recurring revenue stream while high renewal rates, paid-member growth and merchandise sales work together.
For readers asking how Costco makes money, the essential discipline is to keep three things apart: fee revenue is recognised over time, renewal rate looks backward, and operating income includes the cost of running the whole business.
Costco membership fees: the short answer
Costco sells memberships that allow shoppers to use its warehouses and e-commerce sites. In its U.S. business, a Gold Star or Business membership costs $65 a year; eligible paid members can add an Executive membership for an additional $65. Pricing varies outside the U.S. Costco recognises membership-fee revenue, net of refunds, ratably over the one-year membership period rather than recording the full fee when a member joins or renews.
That accounting treatment matters. A quarterly fee-revenue figure combines fees from different membership cohorts and countries over time. It should not be read as a count of that quarter’s sign-ups or as an immediate change in customer demand.
Costco’s Form 10-Q says the membership format is integral to its business and profitability. But the filing also makes clear that a membership fee is only one part of the operating model: comparable sales, member shopping frequency, average ticket, merchandise costs and selling expenses all affect the reported result.
The $1.37B line in Q3 FY2026
For the 12 weeks ended 10 May 2026, Costco reported an 11% year-on-year increase in membership fees. The company cited new member sign-ups, fee increases and upgrades to Executive membership as the drivers. The comparison below puts the fee line beside the larger reported measures instead of treating it as a standalone profit number.
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| Q3 FY2026 measure | Reported amount | Year-on-year change | What it measures |
|---|---|---|---|
| Net sales | $69.154bn | +11.6% | Merchandise and other sales before membership fees |
| Membership fees | $1.373bn | +10.7% | Fee revenue recognised in the quarter, net of refunds |
| Total revenue | $70.527bn | +11.6% | Net sales plus membership fees |
| Operating income | $2.815bn | +11.3% | Profit after merchandise costs and selling, general and administrative expenses |
| Net income | $2.192bn | +15.2% | Income after interest, other items and tax |
The Q3 results release and Form 10-Q are the source for the amounts. The year-on-year percentages above are calculated from those reported figures and rounded to one decimal place.
The fee line represented about 1.95% of reported total revenue in the quarter ($1.373bn divided by $70.527bn). That is a revenue-mix observation, not a margin. Costco’s underlying model intentionally operates at low merchandise gross margins; the 10-Q reports Q3 gross margin of 11.04% of net sales.
Why the renewal rate is slower than the headline
Costco reported a 92.2% renewal rate in the U.S. and Canada and an 89.7% worldwide renewal rate at the end of Q3 FY2026. Those are high rates, but they are not a same-quarter customer pulse. The company defines the measure as a trailing calculation that captures renewals occurring seven to eighteen months before the reporting date. It excludes Business-member affiliates.
That lag changes how to use the metric. A renewal rate can be a valuable loyalty indicator, but it cannot by itself show whether the latest 12 weeks brought strong or weak new-member demand. Costco says its worldwide rate is affected by growth in newer international markets and a greater share of online or digitally promoted memberships, which renew at a somewhat lower rate on average.
The more useful sequence is: look at paid-member growth, then renewal rates and their definition, then membership-fee revenue, and finally sales and operating-income trends. This avoids confusing a retention statistic with a real-time sales result.
A calculation with clear limits
The following checks offer context, not a valuation model or a forecast.
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| Context calculation | Method | Result | What it does not mean |
|---|---|---|---|
| Fees as share of total revenue | $1.373bn ÷ $70.527bn | 1.95% | A profit margin |
| Fees relative to operating income | $1.373bn ÷ $2.815bn | 48.8% | That fee revenue equals operating profit or cash flow |
| Recognised fee revenue per paid member | $1.373bn ÷ 82.9m reported paid members | about $16.56 | The annual membership price or average cash collected from a new member |
The last calculation is deliberately limited. Costco reported 82.9 million paid members and 148.5 million cardholders at the quarter end, but the $16.56 figure blends membership types, countries, fee recognition over time and other accounting details. It is not a price list. Costco’s most recent annual report explains that Executive members can earn a 2% reward on qualifying purchases in most countries; that reward is accounted for as a reduction of sales, not as membership-fee revenue.
What to watch in the next filing
The next useful refresh should keep a compact checklist:
- Membership-fee growth and management’s stated drivers: sign-ups, fee changes and Executive upgrades are not interchangeable.
- Paid members and cardholders: counts show scale, but the reported populations can include recently expired memberships that may still renew.
- U.S./Canada and worldwide renewal rates: read them with the seven-to-eighteen-month trailing definition and the geographic mix.
- Net sales, gross margin and operating income: these show how the fee stream sits inside the wider warehouse and e-commerce operation.
- Deferred membership fees: at 10 May 2026, the balance sheet reported $3.157 billion, a reminder that recognised quarterly revenue and cash timing are not the same thing.
Key takeaways
- Costco reported $1.373 billion of membership-fee revenue in Q3 FY2026, alongside $70.527 billion of total revenue and $2.815 billion of operating income.
- Membership fees are recognised over a year, so the quarterly number is not simply the quarter’s sign-ups or cash collections.
- Renewal rates are trailing measures; Costco’s reported 92.2% U.S./Canada and 89.7% worldwide rates capture a seven-to-eighteen-month window.
- The fee line is a recurring part of Costco’s model, but sales, costs and membership growth still determine the operating result.
Sources
- Costco Wholesale Corporation, Q3 FY2026 operating-results release, published 28 May 2026; quarter ended 10 May 2026; accessed 11 September 2026.
- Costco Wholesale Corporation, Form 10-Q for the 36 weeks ended 10 May 2026, filed 29 May 2026; accessed 11 September 2026.
- Costco Wholesale Corporation, Form 10-K for the fiscal year ended 31 August 2025, filed 8 October 2025; accessed 11 September 2026.
This article is for informational purposes only and does not constitute investment advice.
