Despite recent inflation, a higher cost of labor, and rising fuel prices, Costco manages to keep prices reasonable. A perfect example is their famous $5 rotisserie chicken, which is only available to its members. People flock to Costco stores for deals like this one and its popularity as a retailer remains strong in 2025. Have you ever wondered how Costco keeps its prices to a minimum? 

Why Are Costco’s Prices So Low?

Costco’s reputation as a popular destination for groceries, electronics, clothing, cars, tires, an optical center, a pharmacy, and more, makes it a one-stop shop for all the essentials. You can save money across all of these categories thanks to Costco’s strategic business model.

First, Costco keeps its marketing and merchandising costs to a minimum with a basic, straight-forward model. Costco stores are not full of intricate displays and don’t have a premium fill compared to some other grocers. Its warehouse-style store is lined with wide aisles containing bulk products for customers to pile into industrial-sized shopping carts and dollies. Bulk products allow consumers to get a better value and a larger quantity of items for their money.

Second, Costco maintains relationships with several vendors that allow the company to buy very large quantities of items at a discount. This results in much lower prices for in-store products as Costco can pass on its bulk savings to its customers. To add, Costco also works with vendors to adjust bulk product packaging, which also keeps prices to a minimum.

Additionally, Costco tends to have a somewhat limited selection of products in comparison to regular grocery stores. However, the trade-off is lower prices on the products Costco has to offer. Other retailers having a hard time matching Costco’s lower prices. Limited product selection plus the fact that Costco’s entire business model operates around the concept of a warehouse makes shopping there a huge cost saver.

Over the last few years, Costco has adapted to consumer demand and offers same-day delivery via delivery services such as Doordash and Instacart.