Business, Finance & Tech
Why Costco’s $1.50 Hot Dog Combo Still Exists — And Why It’s Brilliant Business
Costco’s $1.50 hot dog and soda combo is more than a fan favorite — it’s a brilliant piece of retail strategy. The price has remained the same since 1985, even though inflation has pushed the real value of the deal closer to $4.50 today. That means Costco is losing money with every sale — and they’re completely fine with it.
This type of pricing is known as a loss leader, a deal so good it draws customers into the store, where they typically end up buying far more than planned. The tactic is clearly working. In 2024, the average Costco shopper spent 37.3 minutes inside the store — significantly longer than shoppers at Walmart (31.8 minutes) or Target (28.7 minutes)...
Costco’s business model relies on volume and membership. While most retailers make profits by marking up items, Costco keeps prices low, averaging only about a 3% profit margin on merchandise. Instead, its revenue comes from memberships. In 2024 alone, Costco brought in nearly $5 billion from membership fees, up significantly from previous years. For comparison, Sam’s Club earned $3.1 billion in fees that same year.
In 2024, Costco raised its membership fees for the first time in seven years — and barely anyone blinked.
But it's not just about low prices and hot dogs. Costco meticulously curates its product lineup, only offering items that pass a high standard. If something doesn’t meet the mark, they make it themselves — as seen with their famously high-quality rotisserie chicken, produced entirely in-house.
Costco’s commitment to value also extends to its employees. The company pays above-industry wages (starting at $20/hour, averaging $31/hour) and has committed to ongoing pay increases. Rather than spending heavily on advertising, Costco lets its loyal customer base spread the word.
Even Wall Street has taken notice. Over the past decade, Costco stock has returned 663%, nearly triple the performance of the S&P 500.
Costco proves that long-term thinking, strong values, and a really good hot dog can build not just a loyal customer base — but a retail empire.
Explore: NBCPalmSprings.com, where we are connecting the Valley.
By: NBC Palm Springs
March 24, 2025
Latest Instagram Posts
Alice B. has announced it’s closing its doors. It’s cozy atmosphere and unique seasonal menu made it a must try and even landed it in the Michelin guide. @susanfeniger and @marysuemilliken left their mark on the desert over at Living Out and it will be missed. Here’s a clip from one of our last interviews with Susan.
Cathedral City City Council votes to rename “LGBT+ Days” to “Cathedral City Pride”. The council approved the change in a 5-0 vote during its latest meeting, updating the official name of the city’s annual celebration. Stay tuned with NBC Palm Springs to see what this means to the Coachella Valley Community #CathedralCity #pride #CityCouncil #CoachellaValley #LocalNews
Discover the Coachella Valley with the Everything Palm Springs app. From iconic attractions and hidden gems to local restaurants, shops, entertainment and even filming locations, the map-based app is designed to help both visitors and locals find more of what the desert has to offer. Creator Lindsay Kinkle is also expanding the app with video tours and narrated guides, giving users another way to explore Palm Springs and the surrounding communities. Local businesses like Buena Matcha are also getting a chance to connect with new customers through the platform. As Lindsay says, there’s so much to do and enjoy here — you just have to know where to look. #PalmSprings #CoachellaValley #EverythingPalmSprings #PalmSpringsApp #VisitPalmSprings DesertLife LocalBusiness CoachellaValleyBusiness NBCPalmSprings
Social Time with Thalia & Jerry
What’s next for Palm Desert? Join community leaders, local businesses and regional stakeholders for the 2026 State of the City Address. Topics: • Economic Development • Infrastructure • Public Safety • Community Programs • Palm Desert’s Future CTA: Friday, September 18 | 11:30 AM JW Marriott Desert Springs Resort
Former Silvercrest CEO, William Rodriguez is expected back in court today in connection with the deadly 2024 Cathedral City hit and run that killed a woman. The murder charge was dismissed, but Rodriguez still faces felony hit and run and suspended license charges.
Social Time with Thalia & Jerry
Murder suspect Vicky Kim has once again not been cleared to appear in court. Kim is accused of killing her husband at their Palm Desert condominium complex. Her arraignment has now been delayed three times. Stay tuned with NBC Palm Springs as we track the latest developments in this case. #VickyKim #PalmDesert #CoachellaValley #BreakingNews #CourtUpdate NBCPalmSprings
Palm Springs is mourning the loss of beloved entertainer James “Gypsy” Haake, who has died at 94. Haake began his entertainment career at just 19 years old as a Broadway chorus dancer. After retiring from the stage, he returned to performing at 82, becoming the host of Carnival Cabaret at Oscars in downtown Palm Springs. A longtime friend of our station, Haake was a familiar and beloved figure in the Palm Springs entertainment community — and his contributions were recognized with a star on the Palm Springs Walk of Stars. His career spanned more than seven decades, proving that the spotlight never truly left him. ❤️ Rest in peace, James “Gypsy” Haake. Your legacy will live on in Palm Springs. #JamesGypsyHaake #PalmSprings #PalmSpringsWalkOfStars #CarnivalCabaret #PalmSpringsEntertainment #OscarsPalmSprings #PalmSpringsHistory
Social Time with Thalia & Jerry