Editor’s note: This is an editorial. Like a news article, an editorial is based on facts but also contains opinions. The opinions expressed here are solely those of the author and bear no association with our editorial staff.
SALT LAKE CITY — Business is simple. You buy for one, sell for two — and make money. But Sol Price had a different idea.
He was a lawyer and, according to the New York Times, represented grocery stores in the 1950s. Sol Price took over empty warehouses in San Diego and sold many of these and other things at knock-down prices. He called his warehouses FedMart Price Club, later shortened to Costco.
And now comes the part you didn’t know. Sol Price was a socialist and believed that a company shouldn’t make too much money. He paid his employees well and sold everything at rock-bottom prices, but charged a small membership fee. The goal was to get people to renew their contract because the money was included in the membership fee.
Sol Price died in 2009, but 15 years later, the average Costco worker makes $26 an hour. And his formula for selling this and that indoors means people come into the store every day to buy essentials and walk out with 98-inch TVs.
The result: 70 years after this socialist opened his first department store, Costco has 134 million members. Membership fees, which cost the company nothing, bring in $5 billion. Remember the “buy for one, sell for two” principle? Costco buys memberships for nothing and sells them for $120. That’s what makes Costco an amazing company. And all this time, you thought it was about the $1.50 hot dogs.
Jeff Caplan is host of Jeff Caplan’s Afternoon News on KSL NewsRadio. Follow him on on facebook. And X.
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