Costco Business Model Explained: How a $1.50 Hot Dog Makes Billions

Costco has sold its hot dog and soda for $1.50 since 1985, yet it makes billions every year. So how does Costco actually make money? In this video we break down the Costco business model: the hot dog promise, the tiny markups, the membership fees that bring in most of its profit, and the flywheel that keeps prices low. Which company should we break down next? Tell us in the comments. ⏱️ Chapters 0:00 The $1.50 mystery 0:36 "If you raise the price, I will kill you" 0:51 Why the hot dog is a promise 1:13 Costco barely profits from products 1:46 The real product: the membership card 2:07 $4.8 billion in fees 2:31 The Costco flywheel 3:05 What the hot dog really is 🍔 Watch next: McDonald's isn't a burger company (it's a $10 billion landlord)    • McDonald's Isn't a Burger Company (It's a ...   Figures are approximate and based on Costco's public reports. Stock footage: Pexels 👉 Subscribe to Money Mechanics for a new business breakdown every week, like this video, and comment which company we should explain next! #costco #businessmodel #howcompaniesmakemoney