Episodes / Episode 1 · Oct 9, 2026 · 3:11
How Costco Makes Money Selling a $1.50 Hot Dog
Costco has charged $1.50 for a hot dog and soda since 1985. Adjusted for inflation, it should cost over $4. So how is Costco not losing a fortune? The hot dog isn't the product. You are.
The short version
- Costco sells about 245 million hot dog combos a year, and it's still a rounding error next to its total sales.
- The founder famously refused to raise the price, and Costco started making its own hot dogs to keep it at $1.50.
- The real business is the membership card: fees make up the majority of Costco's profit.
- The cheap hot dog keeps members happy, and happy members renew.
Sources
- Costco fiscal 2025 annual report (net sales, membership fees, net income, gross margin)
- Costco Q4 fiscal 2025 results (renewal rate, paid members)
- U.S. Bureau of Labor Statistics CPI inflation calculator
Independent channel, not affiliated with any company mentioned.