Costco raised its Gold Star annual membership fee to $65 in 2024. It had been $60 for the past seven years. The membership fee started at $25 in 1983. Back then, blue-collar workers earned around $11.22 an hour in compensation (wages and benefits). This puts the time price at around 2 hours and 14 minutes. Blue-collar workers earn closer to $36.92 today, putting the $65 membership time price at 1 hour and 46 minutes. Memberships are actually 21 percent cheaper today compared to 1983.

Charlie Munger from Berkshire Hathaway is supposed to have said that the membership card is an important filter:

Think about who you’re keeping out [with a membership card]. Think about the cohort that won’t give you their license and their ID and get their picture taken. . . . That cohort will have 100 percent of your shoplifters and 100 percent of your thieves.

Costco introduced its hot dog and soda combination in 1985 for $1.50. The price has not changed in 39 years. Blue-collar hourly compensation was around $12.50 an hour back then. It took 7.2 minutes to earn the money to enjoy this American treat. Today, at $36.92 an hour, it only takes 2.4 minutes. You get three combos today for the time it took to earn one back in 1985.

Costco went public on December 5, 1985. After adjusting for stock splits, the initial price was around $1.67. Today, shares are selling for around $892. That’s a compound annual growth rate of 17.47 percent. If you had invested $1,000 in Costco the same year it introduced its $1.50 deal, you would have $534,131, enough to buy 356,087 hot dog and soda combos.

Long live the entrepreneurs at Costco who make our lives so abundant.

This article was published at Gale Winds on 9/6/2024.