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Is Costco membership worth it? A field trip report on buying in bulk

As part of my Save $1000 in 30 days challenge, I was going through all our subscriptions and memberships to see if they still make sense. One of the most expensive memberships we have is our Costco membership. We pay $110 every year for the privilege to shop at Costco (we have the Executive membership). Does buying in bulk actually save any money or just encourage waste? Is Costco membership worth it? Esp. an executive membership?

I have seen posts on other blogs arguing both ways. Some people argue, as a couple with no kids, we are wasting money by buying in bulk and becoming  obese. For others, Costco is the haven of frugalists. Which is it?

This is a data oriented blog, right? So, let us see the data.

Does buying in bulk saving me enough money to make Costco membership worth it?

I wanted to hit a whole spectrum of stores to make a fair comparison. So I spent a good 7 hrs. visiting 5 stores in my area – Sprouts’ (a local farmer’s market chain), Ralphs (a Kroger chain), Trader Joes, Target and Costco. We do not have any discount stores like Aldi nearby.

Buying in Bulk: Is costco membership worth it?

I started off with compiling a list of things that we usually buy in our grocery runs. I listed everything including the stuff we buy once in 6 months to things we buy twice a week (except fresh vegetables). Armed with this list, I started my investigation. I visited each store, walked through the endless aisles and recorded the price/quantity of the brand we usually buy and the cheapest available (I realized, with a few exceptions, most of the time we buy the cheapest brand and are not very loyal to any specific brands).

So, here is the result of our grocery list when shopped at different stores. [Judge away what we eat]. I have converted them all into Costco sizes for easy comparison. We don’t need all of these in Costco sizes so, as you can see we don’t buy everything at Costco even if they are cheaper, like ketchup. The final savings is a tally of only the things we do buy from Costco.

*Costco Savings Calculation (last right column): To make a fair comparison, I have used the frequency at which I buy the products. For example, if I buy that product at the quantity I have mentioned every month, I have calculated the savings as 1x, if I buy the product at that quantity twice a month, I have calculated the savings 2x, if I buy the product once every 2 months, I have calculated the savings as 0.5x).

Product 

Ralphs

 

Sprouts

 

Target

 

Trader Joes

 

Costco

 

Usually buy @ Costco, frequency per month (If it is empty, I buy this at Ralphs or Sprouts)

Costco Savings vs Ralphs/ month (* See above the table for more details on how this is calculated)

Hummus (32 Oz)

12.13

12.77

12.77

9.57

5.95

2

12.36

Espresso Roast Coffee Beans (2 lbs)

47.95

17.98

53.28

17.98

12.59

Multi grain cracks (2.6 lbs, 4 varieties)

18.59

NA

12.07

15.75

7.79

1

10.80

Biscotti (40 oz, 25 counts)

30.36

NA

26.60

39.95

9.99

1.5 (every 3 weeks or so)

30.56

Sparkling Cider (4 pack of 25.4oz)

11.96

13.16

11.96

13.96

7.89

2 times/year

0.68

Marinara Sauce (2 x 40oz)

7.63

8.00

6.63

6.63

8.49

Salsa (76 oz)

9.45

13.25

9.45

10.88

7.49

Ketchup (114 oz)

15.39

24.35

16.20

9.45

5.02

Protein Bar (18 bars)

22.64

35.82

21.56

17.82

18.99

2

7.31

Quinoa (4lb)

23.95

13.96

21.28

19.96

9.69

Every other month

7.13

Orange Juice (1gal)

4.58

5.98

3.98

5.98

5.79

Grapefruit juice (2x96oz)

12.98

11.97

12.87

14.97

4.19

1

8.79

Pomegranate juice (60oz)

21.16

15.96

23.96

NA

8.89

2

24.54

Milk(2gal)

5.98

7.98

5.98

5.98

4.79

1.5 (every 3 weeks or so)

1.79

Vegetarian Broth (32oz)

3.59

3.49

3.49

1.99

NA
Canned Beans (108oz)

6.68

6.68

6.68

6.68

4.33

Trail mix – Mixed nuts (4lbs)

23.95

17.96

26.61

15.96

11.89

once every 3 months

3.98

Honey Bunches of Oats/Equivalent Cereal (48oz)

12.77

12.77

11.97

9.58

7.19

1.00

5.58

Mixed Vegetables Frozen (5lbs)

7.48

14.95

9.95

13.45

6.09

once every 3 months

0.46

Mixed Berries Frozen (4lbs)

18.61

15.95

15.95

13.16

10.99

2x a month

15.25

Plain fat free Yogurt (32 oz)

2.99

3.29

2.99

2.99

NA
Extra Virgin Olive Oil

16.88

7.99

13.51

14.90

5.99

Once a year

0.91

Truvia (The stevia Sugar substitute) 1.63lbs

19.42

21.28

21.28

8.70

2 times/year

1.79

Toilet Paper (This is one of those items we are very specific about. We prefer Charmin Ultra Soft) 1025sq ft

31.17

NA

31.17

NA

15.00

once every 3 months

5.34

Kitchen Bags (200 ct)

21.65

54.51

25.98

61.78

9.99

once a year

0.97

Mighty Mango (64oz)

9.99

7.99

5.99

2x a month

8.00

Banana (10ct)

2.30

2.23

1.97

1.90

1.54

2x a month

1.52

Vitamin C (500 ct 1000mg)

59.98

53.98

41.65

27.98

9.99

Once a year

4.17

Flax Seed NA

29.96

NA NA

13.28

Once a year

1.39

Women’s Vitamins (150 ct)

31.24

37.49

12.10

29.75

5.99

2 times/year

4.21

Protein Shake Powder (6 lbs) NA

86.38

59.67

74.97

39.99

2 times/year

3.28

Lentils (10lbs)

79.87

59.90

NA NA

21.99

Once a year

4.82

Total Costco Savings Per month

165.60

 

Wow! I didn’t realize we save $165.60 every single month by buying at Costco. Notice that I didn’t include any produce or stuff that will go waste quickly, so no, we are not wasting. It is pure savings of $2000 a year by just shopping at Costco.

There are other things we occasionally buy in Costco like my husband’s winter jacket, jeans & loads of chocolate during the holiday season for gifts. I have not included those because we don’t buy them every year.

I am attaching the entire spreadsheet results of my investigation of 5 different stores including the size of the product in each of these places, price and unit price, if you want to play with it.

Is Costco executive membership worth it? Can’t I get the same savings for half the price with a regular membership?

Yes, absolutely. Before I justify my executive membership, I want to point out that Costco has an excellent policy of refunding the difference in price of the executive membership ($110) vs. regular membership ($55), if you don’t make up that money over a year. All you have to do is go to customer service; they will refund $55 and downgrade your membership to a regular membership.

I became an executive member in 2010 because we had a few big ticket items to purchase (like a color laser printer/scanner/fax & a laptop). Along with our regular purchases I calculated that in 2010 I would be getting more than $55 in cash back. I decided to keep the Executive membership as long as I get more than $55 back and I will cancel it in the year we actually pay for the executive membership.

Every year since then we have been buying one or two big items, like ink for our printer & tires for one of our cars in 2011 and tires for our second car in 2012.

The executive membership actually helps me get a discount on the actual membership. So I don’t see anything to lose here. Yes, it is worth it for us.

Other things that Costco helps me save money on even if I stop buying in bulk

If $2000 in grocery savings is not enough to justify it for us, I use most of their other services as well to really squeeze every single penny’s worth out of my membership.

Travel: If I do not have time to shop around for the best rental rates or Theme park tickets, I have found Costco to be the best bet. I usually book Hertz with AAA or our Amex card discount, but for that I have to check every few days for discounts/coupons. If it is a last minute trip or a crunched-for-time trip, I always go with Costco.

Total savings: $20-$50/trip for rental cars.

Dental Insurance: My husband’s company doesn’t provide dental insurance. I shopped around a lot and found Costco to be the best value. I could have gone for a “discount plan” (not real insurance, but dentists in the network will charge you a discounted rate) for cheaper, but I wanted real insurance and Costco was $15 cheaper per month.

Total savings: $180/year

Tire and battery services: As I mentioned earlier, we have changed tires twice in the last two years. Each time we saved more than $120 over the next cheapest place. And I have real bad luck when it comes to tires. On Christmas Eve in 2011, I had parked my car in a hospital parking lot while I went in for an appointment and came back to find my tire flat with a long slash across it. It would have cost me $400 (the dealer said they had to change all 4 tires), Costco replaced them for free, because they were under warranty.

Restaurant gift certificates: We buy at least 2 $100 restaurant gift certificates per year, mainly to California Pizza Kitchen.  I buy discounted restaurant gift cards during the holiday season to use throughout the year. Costco’s $100 gift card for $79.99 provides great value.

Total savings: $40/year

Gas station: Costco gas is consistently 10-20c cheaper than regular (credit card price) gas stations. However, because of the long lines, I fill the tank only when I see that there are less than 2 cars in front of me.

Total savings: ~$50/year

Prescription drugs: I wrote about this in January, Costco is a great place to get prescriptions filled. One of my medicines cost $4 for a 90 day supply at Costco while the local CVS charges $15 for a 30 day supply with my insurance.

Total savings: $150-$200/year

Costco Services I have used in the past to save me money

Auto buying service: I bought my car for a great price by making a local dealer price match Costco’s auto buying service price. It was a great experience for me. All I had to do was call the participating dealer and ask for Costco price. That price was the lowest after 3 rounds of bidding from 5 local dealers. Finally, one dealer agreed to price match the Costco price, otherwise I would have gone with the Costco auto buying service all the way through. I also used Costco to get a lower rate for my auto loan (3.99%), which again, I asked the Honda dealer to match (he initially offered 7.99%) and he did. Overall, I estimate Costco saved me over $2000 in that whole process.

Prescription eye glasses: I had LASIK done last year, so I no longer need prescription glasses, but when I did, I used to get them from Costco. They accepted my insurance and it cost me $0 (compared to $40 in Walmart & $200 in LensCrafters).

Check printing: I don’t use a lot of checks these days, but I still need a few every month. I printed them using Costco a couple of years ago, they were 80% cheaper than what the bank wanted me to pay.

But wait, there is more – Costco is more than savings

I like Costco for more than savings. I consider it a service more than just a place to buy stuff in bulk.

  • Excellent customer service: Whenever I call them for anything, they have always been very courteous and help me with my request. This should not be a pro, it should be a given, but compared to Best Buy and Walmart, I have had great service at Costco.
  • Great refund/return/warranty policy: We buy a lot of the big ticket items even if they are a few dollars extra because of the great return policy. It used to be even better, but even with their reduced return benefit it is still the best there is. My American express doubles the warranty so it works great for us.
  • Quality of the products: Costco doesn’t have a lot of selection, but if I don’t have time to comparison shop, I am pretty confident that the Costco product will provide me with the best value. Cheapest? Not always. Great quality? 100% so far.

But Suba, Buying in bulk is a waste of products, storage and money. So Costco membership is totally not worth it.

I know there are several downsides to shopping at Costco or any warehouse store – mostly psychological, some logistical.

  • You use more; you waste more – The psychology of buying in bulk: If you have something in large quantities you do tend to use more, this is a proven scientific fact (Ref: Mindless Eating – Why we eat more than we think). That is why we buy things that are (1) On our list. (2) Has to be cooked to consume more (like Quinoa or lentils) (3) Simply cannot be used more (we avoid buying ketchup, big bag of chips, cake, etc. We know we will finish the big bag around the same time we would finish a much smaller bag). It comes down to understanding our weaknesses and even forgoing some savings to not waste anything.
  • I don’t know how I survived without this so farImpulse buying: We always impulse buy chocolates during the holiday season because they have a lot of good stuff. Since we know we will impulse buy around that time, we budget for it. We would impulse buy anywhere we see delicious holiday treats. We understand that. When we don’t have a budget for it, we stick to our list. If you are prone to impulse buying, just skip everything and stick to the list.
  • Honey, I shrunk the house – Where would you store all the stuff? This is a very real problem. Most of the stuff we buy usually gets over in a couple of months. So far we have been able to store all our staples in the kitchen pantry (we have a very tiny kitchen), the Vitamins are easy to store as they are small anyway. Toilet paper is our main problem; it is on the floor near the toilet with no real home. It doesn’t look pretty, but we have done a good job arranging it well to not make it stand out.
  • I simply hate the place. Who can deal with such a crowd? I agree with this completely. During the weekends, our Costco looks like a chaotic market. We have changed our routine to go a half hr. before they close during the week. It makes the whole experience much better.

Bonus tip: This is not directly relevant to the worthiness of Costco, but I wanted to include this tip for anyone becoming new members or renewing. Costco has a “Gift Membership” promotion during the holiday season. They have $55 gift memberships for $50. You can buy this for yourself and use it when you renew (you can buy two and use it for an executive membership). So never pay the full price.

So is Costco worth it?

For us, yes. For everyone? I have no idea. Then what is the point of this article? I did not set out to justify one way or the other. All I set out to do is to encourage anyone from just taking someone else’s word for it. Do not simply believe bulk stores are a waste for single folks or even a couple with no kids. Do not simply believe bulk stores have the best price.

Make a list of the stuff you consume and actually take an afternoon to look at the prices for these products in different stores. I don’t have time to do this every week, but I can certainly do that once in 6 months or a year.

This exercise might even point you to some creative solutions. Example: You are single but you buy a lot of organic staples like Quinoa or pasta, which have longer shelf lives. You can convince a friend or family to take you along for Costco shopping trips once or twice a year (may be buy them a 6 pack to show gratitude).

For us, Costco membership provides fairly low prices for high quality products- Value. Not everything is a great deal at Costco and not everyone will benefit from a membership. Pick the best couple of stores for your needs based on your priorities, consumption and spending habits, not because this blog or any other blog says they are a good or a bad deal.

{ 8 comments… read them below or add one }

Emily @ evolvingPF

I’ve done some analysis as well (not as extensive as yours) and I think Costco is well worth it for us. Some might argue that if you hit the grocery store sales just right with coupons you would be able to get lower prices, so comparing Costco to any given single week at a grocery store isn’t fair. But I don’t want to mess with that system and prefer the consistently low prices at Costco.

Why don’t you buy produce at Costco? That’s most of what we buy there. Of course, we eat the same fruits and vegetables days on end to avoid waste after buying in bulk!

Reply

Suba

Yeah, some of these items can be bought for cheap with coupons. I don’t spend much time with coupons. I have rarely seen coupons for fresh produce or staples, which is what we buy mostly. Most of the coupons are for processed food. Yes, we could look for coupons for toiletries but as these are infrequent purchases, I always forget about the coupons or lose track of the expiry date. Like you, I prefer consistent low price.

From our experience, produce is something we do waste if we buy in bulk. We still buy mixed veggies and frozen berries at costco. But other than that we stick to buying produce once or twice a week.

Reply

Michelle

I don’t know if it’d be worth it for us. Whenever we buy in bulk, we tend to waste a lot of it.

Reply

Suba

Michelle, You will have to go through your grocery list and buy stuff that only stays for a long time. You can figure out if it is worth it at that point.

Reply

Pauline

we have a shopping membership as well and just with BF’s daily items save more than the membership itself. Impulse shopping is big when we go so I try to limit to 3-4 trips per year, we fill up the car and then go to the normal store for vegetables and perishable items. Anything that can be stored for months is worth buying there.

Reply

krantcents

I make enough off of the gas alone to pay for the membership. I am constantly comparing prices and shop for certain items at Target. Target offers a 5% rebate and makes it a good alternative.

Reply

My Financial Independence Journey

That was a masterful survey of grocery expenses. Just spending 7 hours grocery shopping would have driven me insane.

I have the small apartment problem. I just don’t have room to store bulk items, especially the expensive ones like meat. I would like to try out Costco, if I could borrow someone else’s membership.

I also have the distance problem. Costco is not particularly convenient for me to get to.

I think if I were shopping for more than one person, I would give Costco a lot more consideration.

I have also heard, and maybe you can verify this, that Costco can be a great place to buy more expensive items because the discounts are so good.

Reply

Suba

Yes, Costco is a great place to buy expensive items. But I am not sure if it is solely due to the discounts. They have very few selection but the quality of the products and the return policy makes it worthwhile.

And I think 7 hour grocery shopping would drive anyone insane :) (I am not an extreme couponer who gets high from grocery shopping). I did this as a one time exercise and I also had the incentive to turn this into a post. I spend more than 7 hrs. on most of my posts anyway, so it is all included in the “research” part of the blog post :).

Reply

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