If you notice that Costco gas prices are usually lower than nearby stations, there’s a good reason. Costco’s unique business model helps them keep fuel prices low for members.

Membership Benefits

Costco requires a membership to buy gas. This helps them save money on advertising and marketing. They pass these savings on to their members through lower gas prices.

Low Profit Margin

Costco keeps its profit margin on fuel very small. By buying huge amounts of fuel at bulk discounts and negotiating better deals with suppliers, they can sell gas at cheaper prices.

Simple and Quick Stations

Costco gas stations are designed to be straightforward with fewer extra services. This reduces operating costs, so they can focus on offering lower prices. Their stations also turn over fuel quickly, which reduces labor costs.

High Volumes of Sales

Costco sells a lot of fuel each day. Selling in high volume allows them to make a profit even with lower prices per gallon. Their main goal is to attract customers who also shop in their warehouses.

Additional Rewards and Discounts

Many members get extra savings through Costco’s credit card rewards or promotional discounts. These add to the savings on gas.

The Bottom Line

Costco offers cheaper gas because they focus on volume sales, keeping overhead costs low, and passing savings directly to members. This way, customers save money on each fill-up, while Costco builds loyalty and increases overall sales.