Costco Membership: Which Items Offset the Fee?

Costco is known for low unit prices, but the $65 annual membership fee often raises questions about overall value. To determine if the savings justify the cost, researchers compared prices of essential items at Costco against traditional retailers. The study focused on shelf-stable goods consumed steadily throughout the year, using data from national brands for an accurate comparison.

The analysis calculated a 'payback score' for each item, representing the percentage of the membership fee offset by savings after one year of purchasing that item exclusively at Costco. The results indicate that specific product categories offer substantial returns. Pet food and diapers emerged as top performers, with scores exceeding 300. Other items like baby formula, coffee beans, and cheese also demonstrated strong potential to recover the membership cost. Even items with lower scores, such as vitamins and laundry detergent, contribute to reducing the fee burden.

For families with specific needs, certain items at Costco offer returns that far exceed the $65 membership fee. The highest value is found in pet supplies and baby products.

Pet food ranks as the most cost-effective item. A 38-pound bag of Blue Buffalo dog food costs $65 at Costco, compared to $111 at typical retailers. Assuming 10 purchases a year, the savings yield a payback score of 713. This means the savings cover the membership fee plus six times the cost of the dog food itself. Costco also offers its Kirkland Signature brand for $35 per 40-pound bag.

Diapers and baby wipes follow closely. A jumbo pack of Huggies diapers sells for $50 at Costco, versus $70 elsewhere for the same quantity. With monthly purchases, the payback score is 373. Costco also provides a lower-cost Kirkland Signature alternative.

Baby formula is another major saver. Large containers of Similac sell for $55, approximately $13 less than typical retailers. Five purchases offset the membership fee, resulting in a payback score of 240. Generic options are available at roughly half the unit cost of Similac.

Regular grocery staples also provide significant savings, particularly for households with high consumption rates of coffee, dairy, and meats.

Coffee beans offer solid value. Starbucks Pike Place roast costs $8.40 per pound at Costco, compared to $12 at other retailers. For a household consuming 30 pounds a year, the payback score is 166. Costco frequently features local roasters and specialty beans at lower costs.

Cheese and bacon are also profitable. Tillamook cheddar is priced at $4 per pound, about $2.60 less than competitors, yielding a payback score of 102. Thick-cut bacon costs $4.33 per pound versus $8 elsewhere, resulting in a score of 85.

Chicken stock and Greek yogurt provide moderate returns. Chicken stock packs cost about a third of individual packs elsewhere (score: 83), while Fage yogurt saves about $2.70 per three pounds (score: 71).

While bulk purchasing is Costco's hallmark, the savings on non-perishable household and health items can still chip away at the membership fee, even if the scores are lower.

Paper goods are a Costco staple. A 33-pack of Charmin costs $33 ($1.10/roll), compared to $44 elsewhere. With four purchases a year, the payback score is 67.

Pasta and water filters show moderate savings. A six-pack of Barilla pasta saves $4 (score: 54), while Brita filters are $3 cheaper per unit (score: 45).

Dishwasher pods, HVAC filters, and contact lens solution offer similar value. Cascade pods save $7.30 per pack (score: 45), and 3M Filtrete filters save $28 per four-pack (score: 43). Opti-Free solution is 25% less expensive by volume (score: 42).

Allergy medication, cooking oil, laundry detergent, and vitamins round out the list. Generic cetirizine (Zyrtec) costs $13.50 versus nearly $40 elsewhere (score: 40). Store-brand olive oil is half the price per liter (score: 25). Arm & Hammer detergent costs $0.07 per load versus $0.11 (score: 22). Generic vitamins are about 20% cheaper (score: 18).

Beyond grocery aisles, Costco's food court and rotisserie chicken offer additional, though varied, value.

The famous $1.50 hot dog and soda combo is a loss leader. Buying one a month saves $65 annually compared to similar meals at chains like Portillo's or Nathan's.

Jumbo pizzas offer significant savings. An 18-inch Costco pizza costs less than $10, whereas a 14-inch Domino's pizza costs $15. The equivalent square inches of pizza at Costco saves about $12, offsetting the membership fee after six purchases.

Rotisserie chickens at $5 are less favorable mathematically, as many grocery stores offer similar prices. However, the combination of food court items and bulk groceries contributes to the overall value proposition of the membership.