#4: profits from the membership fees

Costco makes money by selling memberships, not products. That is why one of the most fundamental parts of the Costco business model is customer loyalty. It is essential for Costco to provide so good value and service for the customers that they renew their membership every year.

For years the company has had 90% renewal rates in the US and few percentage points lower rates in other countries.

For years the Costco membership fee tracked closely the Net income of the company. Thus, Costco made all or almost all of their profit with the memberships. During the last few years net income has outgrown the membership fees.