Who thinks Costco is a ripoff?

Question

If you want to shop at Costco, you need to pay a membership fee. Costco makes lots of profits every year, why do they charge a membership fee to shop there?

Answer 1

There are 3 reasons:

1. The membership fee is the source of most of their profit. It guarantees them a set profit per member.

2. By charging a membership fee they create an effective barrier to people leaving. Psychologically the money you pay upfront will keep you locked in and keep coming back to buy more.

3. And the most important reason, there are no shortage of people who believe the upfront fixed cost of membership is well worth it for the privilege of shopping at the store. In other words, they do it because they can!