Costco: Cracking the Price Code

Sol and Robert Price raised $2.5 million from friends and family to open Price Club on July 12th, 1976 in San Diego, California.  It was the first warehouse club only for business shoppers in the United States.  The first Costco was opened in Seattle in 1983.  Price Club and Costco merged in 1993 to become Price/Costco and the name was changed to Costco Companies, Inc. in 1999.

Costco is one of my favorite companies as they are, in my opinion, a model of a customer-centric company that cares about its shoppers.  They also have a unique business model as they need to make a 15% profit minimum on ALL goods and will change vendors if/when net profit falls below that mark.

Costco is a wholesaler that specializes in selling bulk items with competitive pricing.  The reason why their pricing is so competitive is that they go directly to the producers, buy in bulk, and pass on those savings to their loyal members.  Take wine for example.  Costco will go directly to the vineyards and negotiate their agreement, which is why their wine is so well-priced.

\What many people do not know is some of their prices have a special code, based on the last 2 digits of the price.  If you learn to decode the Costco price tag, you can save even more money!

  1. If the Price Ends in .97 Cents: It means the item is on clearance.
  2. If the Price Ends in .88 or 00 Cents: The price was lowered by the store manager.  That means it could be an open box or missing pieces.  Look closely before buying!
  3. If the Price Ends in .49 or .79 Cents: It is a manufacturer’s deal and should be grabbed, as it will not be around for long! 

When I decided to write this article, I had to call my Uncle Walter Meade, who is the family expert on Costco, and he did not disappoint.  Costco is grouped with Sam’s Club and BJ’s in the top tier of member-only wholesale shopping clubs.  Walter went to the first Price Club in New York State, which was in Holbrook, Long Island at the time, and he now lives 5 minutes from a Costco in Tampa, Florida, which he uses as his supermarket.

]Uncle Walters’ Lucky 7 Top Costco Tips:

  1. If You Like Wine, Costco is the Spot: Prices are excellent for bottles, cases, and their wine bottle coolers, which hold 25-30 bottles each.
  2. Beware of Sam’s Club: Sam’s Club is owned by Walmart, and in many cases, Walmart sells the same product for less money.
  3. Consider the Costco Visa Card: Costco has its own money-back Visa Card (formerly with American Express) which pays you back once/year.  Walter typically gets between $1,000-$2,000 back annually. 
  4. Costco Travel and Cruise: Costco has a wide range of travel and cruise deals.  They have deals with car rental companies and offer good pricing and consumer protection. 
  5. Go Kirkland All the Way: Kirkland is a subsidiary of Costco and their house brand.  These off-brand items are not only tasty and delicious, but their quality stands up to their higher-priced competitors.
  6. Costco Tires are Worth the Buy: Walter buys all his tires from Costco, and they include (no extra charge) lifetime tire balancing, rotation and tire pressure service built into the tire price.
  7. What to Avoid at Costco: Anybody who has had to take back items to Costco knows they are outstanding with refunds and exchanges.  Not so much for electronics.  Other items that are not as competitively priced are breakfast cereals, condiments and sauces, flour, milk, eggs, and spices. 

Costco is a forward-thinking company and in 2020 it purchased a logistics company called Innovel.  Innovel helps streamline the “final mile” for bulky items like televisions, appliances, furniture, and fitness equipment to get to your home.  Innovel serves major retailers and the military with more than 1100 trucks on the road daily and more than 4 million deliveries per year!

For questions, comments, or topics you are interested in learning about feel free to ask me at Rob@InsuranceDoctor.us.