How Costco Keeps Gas So Cheap

@cnbcmakeit

353.9K followers · usually 10.1K views a post

Views

32.7K

Likes

2.5K

Comments

52

Shares

280

SoundTikTok sound · original sound - cnbcmakeit

Promoted product

Costcohttps://smartlink.bio/t/cnbcmakeit ↗

Why it worked

The video explains a common consumer pain point (high gas prices) and provides a clear, data-backed explanation for why one popular retailer offers a solution. The use of statistics and comparisons makes the information easily digestible and shareable.

Summary

This video explains how Costco maintains low gas prices by operating on thin margins and leveraging its membership model. The low gas prices, along with other bargain items like the hot dog and soda combo, incentivize customers to maintain their memberships and visit the warehouse stores.

Structure

1Introduction to Costco's cheap gas prices
2Analysis of gas price discounts compared to competitors
3Explanation of Costco's thin margins and membership strategy
4The role of low-profit items in driving membership renewal
5Comparison to other warehouse retailers' strategies
6Costco's expansion into standalone gas stations

Original caption

As #Americans look to save money at the pump, many are turning to Costco. One analysis found Costco sells gasoline at about a 9-cent discount to major local competitors and roughly 24 cents below statewide averages. But cheap #gas is just one part of Costco’s bigger strategy and a key driver of the company’s profitability. More on why #Costco keeps #gasprices so low at the link in bio.

More from @cnbcmakeit

Product placement

Costco: ACTS - Sells gasoline and operates warehouse stores. Removing it would fundamentally change the video's subject. NBC Make It: APPEARS - A channel/studio logo. Removing it would not change what happens in the video. Kirkland Signature: ACTS - Brand of fuel sold at Costco. Removing it would not change what happens in the video, but would remove a specific brand name. BJ's: ACTS - Warehouse retailer that employs a similar strategy. Removing it would not change the video's core message. Sam's Club: ACTS - Warehouse retailer that employs a similar strategy. Removing it would not change the video's core message.

Call to action

More on why #Costco keeps #gasprices so low at the link in bio.

On-screen text

How Costco Keeps Gas So Cheap Mike Winters NBC Make It As Americans look for more ways to save money Costco gas price advantage vs. local competitors -9 cents vs. statewide averages -24 cents Source: Gordon Haskett The company operates on very thin margins, making only a couple of cents per gallon. It's to give members to keep coming back, because what Costco really wants is for you their membership card. In 2025, Costco $5 billion in membership fees for 2025 an amount equivalent 66% of Costco net income came from membership fees in 2025 Source: Costco to nearly 66% of its net income. That means Costco doesn't necessarily profits on gasoline the way its competitors do. It just needs to give members to keep paying the annual fee. It's similar to the strategy behind some of Costco's other famous bargains, like its $1.50 hot dog and soda combo. These products generate little or no profit on their own, but they give customers another reason to visit Costco and to keep renewing their memberships. estimate that 50% 50% of customers who visit Costco for fuel also go inside the warehouse and its members typically spend $2,460 $3,190 typical annual spend by Costco members a year at Costco. Other warehouse retailers, including BJ's and Sam's Club, employ a similar strategy. But in June, Costco took its strategy a step further THE WALL STREET JOURNAL. Costco Gas Pumps Are So Popular the Retailer Is Building Stand-Alone Stations By Sarah Nassauer July 18, 2026 by opening its first standalone member's only gas station. It is also expected to open a second standalone gas station in Hawaii in 2027. For Costco, gasoline isn't just another product to sell. It's another way for the company to earn its members loyalty.

Transcript

As Americans look to save money at the pump, many are turning to Costco. One analysis found Costco sells gasoline at about a 9-cent discount to major local competitors and roughly 24 cents below statewide averages. But cheap gas is just one part of Costco’s bigger strategy and a key driver of the company’s profitability. More on why Costco keeps gas prices so low at the link in bio. Costco typically sells gas at about a nine cent discount compared to its largest local competitors, and a roughly 24 cent discount to its statewide averages. The company operates on very thin margins, making only a couple of cents per gallon. It's to give members to keep coming back, because what Costco really wants is for you their membership card. In 2025, Costco generated more than $5 billion in membership fees for 2025, an amount equivalent to nearly 66% of its net income. That means Costco doesn't necessarily profit on gasoline the way its competitors do. It just needs to give members to keep paying the annual fee. It's similar to the strategy behind some of Costco's other famous bargains, like its $1.50 hot dog and soda combo. These products generate little or no profit on their own, but they give customers another reason to visit Costco and to keep renewing their memberships. Analysts estimate that 50% of customers who visit Costco for fuel also go inside the warehouse and its members typically spend nearly $3,190 a year at Costco. Other warehouse retailers, including BJ's and Sam's Club, employ a similar strategy. But in June, Costco took its strategy a step further by opening its first standalone member's only gas station. It is also expected to open a second standalone gas station in Hawaii in 2027. For Costco, gasoline isn't just another product to sell. It's another way for the company to earn its members loyalty.