About Me
I am a very frugal business owner who loves easy ways to save money. I have spent a LOT of time and an absurd amount of money in Costco, Sam’s Club, and BJ’s both for myself and for my business, and I think I have enough data to offer a very solid evaluation of membership clubs. They offer SO MUCH benefit yet most people I talk to who aren’t members just have no idea about what they do or the benefits of joining.
For the purposes of this discussion, I will be referring to Costco (spoiler alert: because it’s the best), but most of the points apply to all of them. I do offer specific comparisons of each club at the end, though.
Overview of the Benefits
Basically, Costco is a wholesale club where they sell larger quantities of stuff at a very low (10% average) markup. Instead of a pound, they sell you five. They basically don’t make money on the items themselves; only on the memberships which cost $55 (a deluxe one with cash back is $110). They offer very high quality stuff (everything from groceries to electronics to tools to clothing) at really, really good prices (pretty much unbeatable unless a store is willing to lose money).
One of the biggest benefits of Costco though, is their satisfaction guaranteed return policy. They stand behind everything they sell and if you’re not happy, they will refund you in full, even years down the road. Seriously. It’s awesome.
There are a whole host of reasons to join Costco, any one of which I think is sufficient, but particularly when considered as whole, the benefits make joining a no-brainer unless you just don’t live remotely near one.
Buying in Bulk = $$$
Since they mark things up so little and then also sell more quantity per unit (a box of 50 instead of a package of 10), your per-unit cost is much lower than almost anywhere else. You can stock up very easily at great prices which reduces the number of trips to the store you need to make – less time, gas, and displeasure of being in a store.
Groceries in Bulk Lifestyle
If you do decide to commit to the bulk grocery lifestyle, I would strongly encourage you to get two things. They are definitely not required, but they do make life a lot easier and will help you save money:
1. Deep Freezer. They cost $150-180 new and cost a few dollars a month to operate (used ones on Craigslist can be had for half). SOOO handy to be able to buy in bulk and freeze for future use. Unless you have a family of four +, you will probably not be able to eat everything before it goes bad in your refrigerator. Costco has a TON of really good frozen foods which makes it very easy to run out of freezer space.
2.Vacuum Sealer. Your fresh foods will keep much, much longer if you suck the air out first. In my experience 3-4x+ longer. Highly, highly recommend if you’re going to be buying meat. Costco naturally sells one.
The Insanely Good Return Policy
One of, if not the, biggest benefit for me is their return policy which is basically that they’ll take anything back for any reason at any point in time and give you all of your money back. For real. It’s amazing. I’ve returned things I’ve bought years before because it stopped working. I’ve seen people return furniture and mattresses 10 years after they bought them and get their money back – in cash usually.
Costco stands behind everything they sell and wants you to be happy so they are willing to do what it takes to make that happen. I return stuff all the time even for trivial reasons and they are just as happy as can be.
This might be controversial with some folks, but I don’t see why. You might see it as abusing their return policy, but I don’t think it is, not even a little. They are a corporation grossing over $100 billion per year. If they want to offer a generous return policy, why would you not use it? You don’t owe them anything; you’re simply taking them up on their explicit offer.
They are a very sophisticated corporation who knows exactly what they are doing and has the math and data to back up the policy. Plus, the returns get charged back to the vendor most of the time. It’s a cost of doing business with Costco. To get that volume, you have to accept the returns.
You’re not forcing their hand. They have very clearly stated their policy, and I think you’d be foolish to not use that policy to its fullest extent.
Photographic Evidence
Here is 80 or so pics of some things that Costco offers with pricing. If I could find it on Amazon, I included a screenshot of Amazon's pricing. This is less than 1% of what they carry; I just want to give you an idea.
Other Major Benefits
These are the biggest particular benefits beyond just the good values they offer on items.
Gas
Costco sells their gasoline usually $0.10 to $0.30 less than normal rates. I pretty consistently see them average about $0.20 but YMMV. If you drive 15k miles per year in a car with 25mpg average and can change your fill-ups so half of them are at Costco, that’s $60 in savings which pays for your membership. If you have to go out of way to do that, then it’s not as good obviously, but if you fill up your car once per week and go to Costco once per month, then you can basically offset 25% of your fill-ups which saves $30 or half the membership.
Cheap, High Quality Prepared Food = Stop Eating Out So Much
They have lots and lots of very high quality and inexpensive prepared food. Sure, you could do a meal-prep Sunday and make all your lunches, but you know and I know that you’re gonna be too tired or busy to prepare something beforehand. Why not anticipate it happening and just buy and freeze their premade food? It’s all crazy good and super inexpensive. Categorically better for you and your pocketbook than eating out. If you skip one fast food meal a week, you pay for the membership easyplus you’ll be healthier (probably…I’m not a doctor). And if you actually are a meal prepper, buying in bulk is a no-brainer.
Kirkland Private-Label Goods
Costco’s in-house brand is Kirkland. It is universally good stuff. You’d think it would be cheap like Wal-Mart’s Equate or Target’s Up and Up, but Costco only takes really high quality manufacturers to private-label. Seriously, EVERY SINGLE THING Kirkland makes is awesome. The wine is great. The beer is great. The peanut butter is great. The shampoo is great. It’s all great. Plus it’s all inexpensive as can be. Keep an open mind and try it. Worst case, just return it!
Other Specific Benefits
Beer, Wine, Liquor, Soda, and Water
If your state allows Costco to sell these, then you are categorically wasting money by not buying them at Costco. The prices are guaranteed to be superb. Plus you have access to Kirkland beer, wine, and liquor which is very high quality and crazy cheap. The soda is about $0.28 per can and the bottled water is less than $0.10 per 12oz. Their prices are unbeatable unless someone is willing to lose money. Do you know where a TON of vending machine operators get their soda and candy? You guessed it. Glorious Costco.
Car Batteries
If you own a car, you will undoubtedly need to buy a battery or two in your life. You will not find a better value than Costco’s. They cost about $80-90 and each one has a built in 5-year warranty plus Costco’s own return policy backing it if something goes wrong. No brainer if you own a car.
Gift Certificates
They sell gift cards to a variety of restaurants and entertainment venues for 20% off. If you’re ever doing a meal at Ruth’s Chris or other fancy place or even for movies and ice cream, check Costco first to save 20%. Easy money.
Cell Phone Plans
Their terms are the best I’ve found across the board. If you’re looking to get a new phone or a plan with AT&T, Verizon, Sprint, or T-Mobile, you need to do it through Costco. Unless you have an inside hookup, I would be willing to bet you’ll get the best possible deal going through Costco.
Mattresses
Goddamn no-brainer. King-size Sealy or equivalent brand for $699 ($599 on sale), Queen for $100 less. Super thick, crazy high-quality mattress with the normal multi-decade guarantee, but for way less than other mattress retailers. I honestly don’t know how mattress stores survive with Costco around. And, if you don’t like it anymore or if it gets covered in stains etc. just return it!
Office Chairs
Priced $100-$250 which is normal, but all very high quality. When they break or lean or get too worn, simply return it. I’ve done this multiple times. It’s almost like you’re buying it for life.
Small Appliances
What’s the lifespan on a toaster or microwave? I’ve had multiple fail after a year or two. That seems like bullshit to me. Since I bought all of these things at Costco, guess who got all his money back? Plus the original prices were better than anywhere else. If I return it, I just walk back into the store and buy another using the refund money.
Glasses and Jewelry/Watches
Only Costco and Wal-Mart remain independent chains from Luxottica. The price and quality are great. I don't buy jewelry period, but if I did, I would certainly check out Costco first.
Prescription Drugs
Very good prescription prices on par or better with Wal-Mart except you don’t have to go to Wal-Mart.
I'm out of space. See this comment for a FAQ or this comment for a comparison of the three clubs.
Submitted December 08, 2015 at 09:04PM by REInvestor http://ift.tt/1ma0rY2 Frugal
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