How Does Costco Make Money When the Prices Almost Never Change #costco #usa

How does Costco make money when it keeps just $1.94 of every $100 you spend? Most people say "membership fees." Costco's fiscal 2026 results show that's only half the story: fees were 50.55% of its $11.7 billion operating profit. In this business breakdown you'll see how Costco makes money step by step, how Costco actually makes money from its Executive members, the $1.50 hot dog and the $4.99 chicken, how suppliers end up financing the shelves, and how Costco compares with Sam's Club and BJ's. It's how companies make money, told as a short Costco documentary. If you enjoy it, please like, subscribe and tap the bell so you never miss a video. CHAPTERS How does Costco stay profitable while keeping prices steady? We break down the strategy behind their massive revenue. Costco is famous for maintaining the same low prices on items like hot dogs and soda since 1985. The Costco business model relies on keeping low markups on products to drive customer loyalty, rather than relying on high margins on individual goods. While retail profit on items is kept slim, the company generated $9.2 billion in total profit last year. The real secret lies in their membership fees, which brought in $5.9 billion in fiscal 2026, providing a stable revenue stream that allows them to keep item prices low for shoppers. Subscribe for weekly financial literacy breakdowns and comment on which industry topic you want us to cover next. How does the Costco business model actually work? We break down how they stay profitable while keeping prices razor-thin. Costco is famous for its $1.50 hot dog and soda combo, a price that has not changed since 1985. Relying on low product markups should theoretically make a retailer poor, yet the company generated $9.2 billion in profit last year. We track the money through the warehouse to see how they maintain these retail profit margins while keeping operations efficient. The secret is not just in the aisles; it is in the recurring revenue. While product sales drive foot traffic, membership fees accounted for $5.9 billion in fiscal 2026 alone. We examine how this specific Costco revenue structure creates a stable foundation that allows them to undercut competitors like Sam's Club and BJ's without sacrificing long-term viability. Subscribe to @whyitspossibleofficial for weekly financial literacy breakdowns and comment on which industry topic you want us to cover next. Why does the Costco business model keep prices so low? We track the money to reveal how the warehouse giant stays profitable. Most retailers rely on massive markups, but Costco flips the script. By keeping retail profit margins incredibly lean, they drive massive foot traffic that turns the warehouse into a destination. The real secret to their longevity isn't the items on the shelves, but the reliable recurring revenue generated by millions of shoppers. We analyze fiscal 2026 data to show how membership fees accounted for $5.9 billion of the company's $9.2 billion total profit. This structure allows them to hold prices steady on staples like the $1.50 hot dog and soda combo—a price point that has famously remained unchanged since 1985. We break down the math behind these numbers to reveal how they maintain such a distinct competitive advantage. Subscribe for weekly financial literacy breakdowns and comment on which industry topic you want us to cover next. 0:00 The $1.50 hot dog and $9.2 billion 0:48 How Costco makes money: the door 1:16 Your $100 at the checkout 1:46 Thin margins: 3 cents per dollar 2:21 The membership fee 2:59 The Executive member trick 3:38 Gas and the other hooks 4:08 Running on other people's money 4:40 The twist: fees are only half 5:25 The $4.99 chicken and the markup myth 6:00 Costco documentary: the history 6:41 The $1.50 hot dog story 7:12 The 2026 tariff fight 7:52 Costco vs Sam's Club vs BJ's 8:33 What's next for Costco 9:04 So how does Costco make money? SOURCES Costco FY2026 Form 10-K (filed 7 Oct 2026) and Q4 FY2026 earnings release and call (24 Sep 2026) Costco FY2024 and FY2025 10-K filings · Costco.com Executive Rewards Costco 2026 annual meeting report (hot dogs and chickens, 2025) Walmart FY2026 10-K (Sam's Club) · BJ's Wholesale FY2025 10-K · NBC News, 1 Apr 2026 (Sam's fee) Reuters (tariff lawsuits, Dec 2025 – May 2026) · Fortune, 13 Mar 2026 · Snopes (Jelinek speech, 2018) HistoryLink · Seattle Times via TheStreet (Galanti, 2015) · NPR via Scripps News (inflation estimate) "Calculation" on screen = our own arithmetic on Costco's reported figures. Why It's Possible answers one question in every video: why is it possible? New documentaries every Monday, Wednesday and Friday. This video is for educational purposes only and is not financial advice. Not affiliated with or endorsed by any company named. #Costco #HowCompaniesMakeMoney #businessbreakdown