Costco’s membership price hike is part of a trend in the subscription economy
Costco’s membership price hike is part of a trend in the subscription economy
This week, the price of a Costco membership increased for the first time in seven years from $60 a year to $65. And bad news for freeloaders: the company is also cracking down on membership sharing, a move that follows a a broader trend in the somewhat saturated subscription economy.
In 2017, Netflix famously tweeted: love is sharing a password.
“They needed lots of people on the service and they needed those people talking about the shows that they loved on the service” — even if they weren’t actually paying to watch, said David Offenberg, professor of entertainment finance at Loyola Marymount University.
But around 2022, “once they had more or less everybody in the country watching Netflix one way or the other,” Offenberg said “growth at all costs” wasn’t working anymore.
“As soon as they started cracking down on passwords, we saw their revenue burst again,” he said.
Other streamers and other industries took note, per Amy Konary with the Subscribed Institute, a think tank focused on the subscription economy.
“At some point in time you’re going to tap out of the number of memberships that you can sell,” she said, especially as consumers rein in subscription spending.
Wellness apps, software companies and even bulk grocery warehouses are looking to grow subscriber revenue without necessarily gaining new subscribers, Konary said. But raising fees and cracking down on sharing can be risky.
“There’s always the cancel button,” she said. “There are always alternatives.”
Costco is banking deals like its $5 rotisserie chicken are enough to keep members around and turn the rest of us into paying customers, she added.
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