Costco’s membership machine continued to bulk up in fiscal 2025, generating $5.3 billion in fee revenue for the year ended Aug. 31, 2025, even as a small decline in renewal rates has highlighted an overlooked feature: auto‑renewal. Company executives told investors the boost in revenue was driven by both a September 2024 price increase and continued growth and upgrades in the membership base, but the expanding pool of online sign‑ups has meant fewer members are opting into “set it and forget it” automatic renewals.
“We reported membership fee income of $1.355 billion, an increase of $162 million or 13.6% year‑over‑year,” Chief Financial Officer Gary Millerchip said on Costco’s second‑quarter earnings call. He said the Sept. 1, 2024 hike in U.S. and Canada fees — when Gold cards rose from $60 to $65 and Executive cards from $120 to $130 — accounted for about one‑third of the quarter’s membership income growth. Excluding that fee increase and foreign‑exchange effects, membership income still rose 7.5% year‑over‑year, Millerchip added, driven by more members and upgrades to higher‑tier Executive accounts.
Costco’s membership counts underline that momentum. At the end of the quarter the chain reported 40.4 million paid Executive memberships, up 9.5% from a year earlier. Total paid members reached 82.1 million, a 4.8% increase, and total cardholders — which includes family or business associates on a primary account — climbed 4.7% to 147.2 million.
Despite those gains, renewal metrics ticked slightly downward in North America. The U.S. and Canada renewal rate was 92.1% at quarter‑end, down 0.1 percentage point from the previous quarter, while the worldwide renewal rate held at 89.7%. Company executives attributed the modest decline largely to the fact that members who join online renew at a slightly lower rate than those who sign up in warehouses — and are less likely to enroll in automatic renewal.
Costco’s business model depends on those membership fees. “The most important item we sell is the membership card,” CEO Ron Vachris told Fortune earlier this year, and analysts point out membership income is unusually profitable because it carries minimal incremental cost. “Shoppers pay an annual fee to join, and in fiscal 2025 these fees generated $5.3 billion in revenue. Since the costs of running this membership are minimal, nearly all of that goes straight to the bottom line,” The Motley Fool’s Lawrence Nga wrote, summing up the economics that let Costco operate on thin merchandise margins.
The auto‑renewal gap among online joiners is now a focal point because recurring membership revenue not only underpins Costco’s low‑price strategy but also reduces sensitivity to swings in retail margins and traffic. The company’s results show membership fee increases and upgrades to Executive status have fuelled income growth this year, but management will likely be watching whether lower auto‑renewal adoption among digital customers translates into a longer‑term drag on renewal rates as the online cohort becomes a larger share of the base. For now, the overall numbers — higher paid memberships and a growing share of Executive accounts — keep Costco’s membership engine running strongly.