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Does Your Costco Card Really Save You Money?

This post was featured at Broke Grad Student, Frugal Law Student, Modern Sage, All For Women, Are You Going To Be This Way The Rest Of The Time I Know You?, WESH2 Orlando, The Money Blogs, and Pinching Copper.

I was at Costco recently and was told it was time to renew my yearly membership. I obliged, having a cart of things I needed to purchase, but that $50 membership fee really shocks a frugal person like me.

The renewal got me thinking: is my Costco membership worth $50 dollars? Are most people's memberships? I decided to do the math.

First, the rules:

  • I only considered the kinds of things I regularly buy from Costco. Although it's probably true that you can get a load of laminate flooring at a better price than a flooring store, this is not something I can count on buying anytime soon. I didn't count the kinds of things I rarely buy there either, like ketchup and toilet paper, since Costco makes you buy enough to last for years.

  • I compared the prices at Costco to the cheapest prices I could find elsewhere. If I can buy something for less outside of Costco, I will.

  • I also did just rough estimates of how often I buy the things I do. For this exercise, I'm too lazy to go back through my purchases from a whole year.

  • Finally, we are a family of 4, including a toddler and a baby.

Regular purchases made at Costco versus somewhere else:

Milk: 2 gallons at $5.16 vs 1 gallon at $2.98 at grocery store. Savings of $.40 per gallon, about $60 per year.

Formula: 2 cans at $17 vs 1 can at $11 at Wal-Mart. Savings of $2.50 per can, about $180 per year.

Diapers: 200 diapers for $35 vs $19 for 92 diapers at Wal-Mart. Savings of $.03 per diaper, about $72 per year.

Gas: $2.88 per gallon vs $2.95 per gallon at Sinclair or Maverik. Savings of $.07 per gallon, about $60 per year. (I want to note here that we can easily get gas from Costco without going out of our way. If that weren't the case, I'm not sure it would make a real difference.)

Baby Wipes: 8 packages(88 count) at $15.49 vs 1 package at $2 at Wal-Mart. Savings of $.07 per package, about $1 per year. (This one sort of made me laugh, but a dollar's a dollar, right?)

Total Annual Savings: $373
Less membership fee: -$50
Net Savings: $323

Wow! What a difference one store can make! I knew there was a reason I loved Costco other than their $1.50 hot dog/soda combo.

Obviously, we get the majority of our savings from the fact that we have a baby. But even if we bought just milk and gas alone, we would still save much more than the cost of the membership. As our family grows, I anticipate buying more of our groceries from there as well, taking advantage of the bulk quantities. And although I didn't count big ticket items, over time, the savings would really add up. I guess we are destined to be long-time (satisfied) Costco customers.

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18 comments:

JHS said...

Very interesting. The savings are quite dramatic for your family! However, I don't buy formula, diapers, etc. and much of the food items they sell there, we don't eat. Since there is no Costco store nearby, I let our membership lapse.

Thanks for contributing this post to this week's Carnival of Family Life, hosted at Modern Sage -- Practical Living Blog. The Carnival will be live tomorrow, so please stop by and peruse all of the wonderful articles submitted this week!

Living Almost Large said...

We have been Costco members for nearly a decade and are DINKS. Living in CA, we used to have amazing savings mostly on gas. It was 10 cents/gallon cheaper. And at that time we were driving about 2000 miles/month.

The savings were $100-200/year easy because I drove so much. On a good week I drove 500 miles/week.

And gas stations were off the freeway close to home, so it was easy. HUGE savings in gas alone. And tires.

Funny about Money said...

Ditto Living Almost Large! First time I bought gas at a Costco, I drove out onto a main drag and saw that the price at the first gas station I came to was 12 cents a gallon more than I'd just paid.

I never buy gas anywhere else, unless forced to it by an extreme low tank; in that case, I buy just enough to get me to the nearest Costco. I'm sure that over a year I save well over $50.

What I do resent, though, is constantly being pestered to upgrade my membership. That has become a nuisance--and the last time I said "no" the person in the checkout lane who was pitching me to upgrade, both she and the cashier turned real cold to me. It was annoying enough that I came very close to deciding to quit Costco and check out Sam's Club.

the simple nickle said...

living almost large, I forgot all about the tires! Even though that falls into the category of being a rare purchase, we did save a lot of money compared to other places.

funny about money, I agree with you on the membership thing! It almost feels 'anti Costco' because the rest of my experience there is so pleasant. Perhaps we need 'don't ask me to upgrade' nametags that we can put on while we shop.

BeThisWay said...

You're very welcome for including this post in my Monday roundup. Costco is one of my life loves, and it's great to see it's worth validated!

As an FYI I did a post today about Costco's American Express Rebate cards - you may want to check it out. I found out by accident about the new one when I was there yesterday!



www.justshootmenow.wordpress.com

andrew said...

I've been printing pictures like crazy at Costco with my membership. 4x6's are .17, but my favorite is the $1.50 8x12's. Ordering bigger prints like that online can really rack up shipping charges. Quality is excellent too.

My wife loves those Skinny Cow ice cream sandwiches, they're $5 for 6 at the supermarket, but you can get a box of about 20 for $9 at Costco. They've also got double packs of lunch meat that are pretty cheap compared to the market.

the simple nickle said...

BeThisWay, I'll definitely be checking out that article...I also saw the new promotion and I'm going to give it a look-see when I get some time. I love the idea of EVEN MORE SAVINGS!

andrew, ditto on the photos! I'm not much of a scrapbooker, thanks to blogs, but when I do need actual photos, Costco is my place.

Lisa said...

This is interesting. I think for families it is good. For 1 or 2 people, these places aren't always worth the extra time, effort and cost.

Lisa

ADA Backlash said...
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