focuses on selling products at low prices
, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Furthermore, Costco does not carry multiple brands or varieties where the item is essentially the same except when it has a house brand to sell, typically under the Kirkland Signature label. This results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. If Costco management feels the wholesale price of a product is too high, they will refuse to stock the product. For example, on November 16, 2009, Costco announced that it would stop selling Coca-Cola products due to the soft drink maker refusing to lower its wholesale prices. Costco resumed selling Coca-Cola products on December 14, 2009. Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors.
Lighting costs are reduced on sunny days, as most Costco locations have several skylights. During the day, electronic light meters measure how much light is coming in the skylights and turn off an appropriate percentage of the interior lights. During a typical sunny day, it is very common for the center section of the warehouse to have no interior lights powered on.
Most products are delivered to the warehouse on shipping pallets and these pallets are used to display products for sale on the warehouse floor. This contrasts with retail stores that break down pallets and stock individual products on shelves. Costco limits its price markup on items to 15%.
Costco is only open to members and their guests, except for purchases of liquor and gasoline in some US states due to state laws; and prescription drugs due to federal law. Memberships must be purchased in advance for one year (as of May 5, 2007). Purchases made at Costco's website do not require a membership; however, a 5% surcharge is added to purchases made by non-members. Purchases made with Costco Cash Cards also do not require a membership, and there is no surcharge. Canadian and United States Costco locations only accept American Express, PIN-based debit cards (Interac in Canada), cash, checks, and now EBT cards (food stamps). While Costco welcomes members to bring up to two guests, only the members may pay for items. American Express is the only accepted credit card (in the United States, Canada, and Japan) because they charge Costco very low interchange fees (a percentage of revenue from total sales made); as Costco's margins are low in comparison to other retailers. Costco accepts Flexible Spending Account (FSA) debit cards for qualifying purchases at the pharmacy and optical departments in the US. Costco.com accepts the American Express, Visa, MasterCard, and Discover cards. The website also accepts Bill Me Later accounts for payment.
As of November 2009 membership fees at Costco are $50 per year for a Gold Star (individual) or Business membership, which can be upgraded to Executive membership for an additional $50 per year. Along with the additional benefits the executive membership offers (e.g. car purchasing savings, home loans, car insurance, check printing services) Executive members also receive an annual "2% Rewards Check" of up to $500.00 from Costco on all purchases made, excluding select items such as gasoline, tobacco, and in some states, alcohol.
In Canada, membership is CDN $55.00 a year for a Gold Star membership, or CDN $100.00 a year for an Executive membership.
In the United Kingdom, membership is £20.00 for Trade membership (plus VAT) which includes a card for a spouse. People who work for the National Health Service or any other government employee are entitled to an individual membership, which costs £25.
In Australia, membership is A$55.00 a year for a business membership, or A$60.00 a year for a Gold Star membership.
In Mexico, membership is MXN $400.00 a year for a Gold Star membership, or MXN $1000.00 a year for an Executive membership. Costco is only open to members for all services and purchases. Mexican locations only accept cash and Visa Electron debit cards; purchases with Mastercard or Visa credit cards have a surcharge of approximately 4%. Purchases with the Mexican Costco credit card keep cash prices.