Costco members should remember (or face the consequences) this cardinal rule

Costco (COST) – Get a free report has a very simple business model. It sells memberships in exchange for providing members with a low-cost, no-frills shopping experience.

People pay to access the chain’s warehouses. Those membership fees make up a significant portion of the chain’s profits, allowing Costco to sell its limited selection of goods at a lower price than its rivals.

Membership, however, is the most important piece of the puzzle. The warehouse club works hard to provide its members with excellent value, ensuring that they remain members year after year. That’s something Costco has been very effective at.

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