Wondering How Much Cheaper Costco Groceries Are? I Did the Math

Groceries are the biggest ongoing expense for most families after housing and they’ve seen an annoying tick up since the pandemic and all its supply chain chaos. One way to combat high supermarket prices is buying in bulk and nowhere is that more easily done that at Costco — well, if you have one in your town or city that is. 

At Costco, groceries are packaged in larger quantities and sold at cheaper per-pound prices, meaning you can save major dough as long as you have the space to store a 50-pack of paper towels or a 20-pound bag of rice. Shopping at Costco also typically means fewer trips to the store, which will require less gas.

To see exactly how much money can you save by buying bulk groceries from Costco, I decided to price out a grocery list at the wholesale club and a more typical grocery store. After running the numbers, it’s possible to save over $1,000 in one year by shopping at Costco instead of a supermarket. 

Below is a breakdown of how I reached that figure. (And if you get a Costco Executive membership, you could save even more.) 

How we did the math: Stop & Shop vs. Costco

Using grocery list templates available online, I assembled a list of 25 typical, staple grocery items that are suitable for longer storage, either in the pantry, refrigerator or freezer. This ruled out most fresh produce with some exceptions. If you’re hosting a large gathering, buying produce in bulk may be worthwhile. Bulk shopping doesn’t mean buying a year’s worth of groceries all at once, but I didn’t include anything that wouldn’t hold up well for at least a month, with the notion that bulk grocery shopping can be done less often. Bulk buying also requires spending more upfront, which is why Costco’s per-item total is considerably higher than Stop & Shop’s.

Assuming either bi-weekly or monthly consumption of those staple grocery items for a household of one or two people, I came up with the approximate yearly consumption for each. I chose Stop & Shop to represent a conventional grocery retailer, as it’s largely considered to be a quality store with median prices, and Costco to represent bulk buying, as its Kirkland Signature products have a bit of a following in their own right — Costco is the Trader Joe’s of the bulk set, for sure.

Unless a national brand is otherwise indicated, I used Stop & Shop’s SB brand, or the least expensive name-brand product for a given item, to compare to Costco’s Kirkland Signature brand. For the Stop & Shop items, coming up with the yearly price for each item was a simple matter of multiplying by 26 for bi-weekly consumption, or 12 for monthly consumption. For Costco’s items, I scaled the prices accordingly based on whatever package size Costco offers to indicate a yearly cost for the same amount of a given item.

Since I was primarily interested in food cost savings, I didn’t factor in cleaning supplies, paper products or other items, but you can safely assume these also amount to big saving potential over the year when bought in bulk. Also, since my calculations were based on a small household, the bigger your household, the bigger the savings. 

Costco membership fee

Costco requires a membership to take advantage of its bulk savings and low-cost signature brands. A basic membership costs $65 a year and is valid at all locations. Read more about the different Costco membership options.

Why buying in bulk is cheaper

The economics of buying in bulk is simple: The more you buy of something at one time, the less it costs per count or unit of weight. Producers, distributors and retailers are able to offer lower prices this way not only because bulk items often require less packaging, but also because for them it’s a sure sale over a potential sale — they’d rather have your money now, even at a discount, than parsed out over a period of time.

The verdict: Bulk savings are huge

Given this particular grocery list, buying in bulk would allow you to save over $1,000 during the course of a year, representing a 33% savings overall over conventional groceries. (In today’s economy, it is worth mentioning that you also save gas money with fewer trips to the store.) In a few cases, the Stop & Shop item ended up being the cheaper option: organic milk, carrots, potatoes and frozen salmon filets, for example. In all of these cases, there wasn’t a huge size difference between the conventional and bulk items. Milk is an especially good example, as it’s still offered in a larger quantity at Costco, but there’s only so much of it you can buy at one time without risking it spoiling, and so the bulk offering is comparatively modest. Costco also doesn’t have a Kirkland brand offering of organic milk, whereas Stop & Shop does.

Generally speaking, the larger the scale on the bulk item, the larger the savings. If you buy a 40-ounce quantity of Cheerios, for example, rather than the 12 ounces you get in a typical box, they become nearly 75% cheaper. Buying 25 pounds of white rice all at once instead of 2 pounds at a time saves you 60%.

With at least a grand in savings available yearly for just a portion of your grocery list, even if you need to buy additional home storage to accommodate it, the verdict is clear: Bulk grocery shopping is well worth the effort.

Shelf-stable items bring some of the biggest savings

Some of the biggest savings by percentage come from shelf-stable and pantry items including chips, crackers, jarred sauce, rice and whole-bean coffee. These items are typically easier to store and less likely to spoil or deteriorate in quality. Buying pantry items in bulk from a discount grocer such as Costco represents a clear and risk-free strategy for saving money on your grocery bill bill the course of a year.

If you’re a Costco shopper, make sure you check out how to maximize your Costco savings, and how much you can save with a Costco Executive membership. And for more We Do the Math, check out how much you can save by shopping at Trader Joe’s compared to other grocery stores, and if it’s cheaper to buy meal kits than groceries.