Pricing Strategy
Costco can sell gas at between 6 cents and 12 cents below the market price. It discounts gas in the hopes that people will fill up and then head over to its stores. According to Costco, their gas comes from “major refineries.” The fuel comes from the same refineries that supply oil to Exxon, Mobil, and other major gas companies in the country.
Membership Requirement
In order to buy gas from Costco, you’ll need a Costco membership. The starting cost for a membership is $60 per year.
Competition Analysis
In 2018, Costco dropped to second place, but only below Food 4 Less. Business Insider reported in 2019 that when it came to chains offering the cheapest gas in every state, Costco came out on top about 50 percent of the time.
Volume and Quality
With Costco selling gasoline at an average of 20 cents a gallon below the regional average, it’s a business model based on high volume sales and leading customers to purchase more inside the store.
Is Costco Gas Worth the Membership?
Membership Costs and Savings
A Costco membership might be worth it for gas if the annual savings on fuel exceed the cost of the membership. Assuming 20 cents per gallon savings and average annual use of 562 gallons, you could save over $112 a year. However, Costco’s $60 basic membership would require filling up at least 34 times to cover membership costs.
Quality and Supply
Top Tier Gas
Kirkland Signature gasoline at Costco meets Top Tier standards like Shell, Mobil and Chevron. All grades sold at Costco, including regular, mid-grade, and premium Kirkland Signature gas along with brands like BP and ExxonMobil, meet these standards.
Comparing Quality and Convenience
The decision depends on personal factors. Drivers must weigh the overall savings from Costco against the convenience of nearer stations. For those who value high-quality fuel, Costco gas can yield substantial long-term savings.
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