When it comes to shopping, does membership always have its rewards? Depends on where you have membership. For example, for those that believe in buying in bulk, a membership to Costco, Sam’s Club, or BJs is money well spent.
For book buyers paying for a membership in a Barnes & Noble or Borders Rewards program makes sense, if you’re already spending a ton on books and are looking to save without cutting back on purchases.
And for those that do a lot of online shopping, sometimes paying a membership fee to get on the inside track on savings is worth considering. They often provide discounts, offer reduced shipping fees, and give special access to sales.
“When joining a retail membership club is free, the decision is usually a no-brainer — but it’s a different story when you have to pony up money,” said Lisa Lee Freeman, editor-in-chief of ShopSmart Magazine, which created a formula that determines whether or not the rewards of membership are worth the money upfront. “With this formula, consumers can confidently determine if these membership clubs are offering them the best values.”
Considering the following four parts of the shopping club “litmus” test:
- Determine the monetary value of the program’s benefits per order. For example, Shop Smart found that Overstock’s Club O will save consumers $2.95 on standard flat-rate shipping for every order (plus delivery time is faster).
- Estimate the number of times you’ll shop at that website or store each year. Shoppers who buy at least six times a year make their money back. Consumers that shop less often might not find these programs to be as cost-effective or worth the money.
- Multiply the savings per order by the number of times you think you’ll order per year. This number represents the amount of money a consumer can theoretically save when enrolling in the plan.
- Subtract the annual program fee from that amount. If the result is a positive number, then the program is worth the money because a consumer will be saving more than he or she paid for the program. However, if the result is negative, then the program should be skipped.
So, knowing all that, do you think shopping memberships are worth it? All I know is that I must have bought enough shoes via Zappos.com (my favorite shoe site), because they recently welcomed me into their VIP club–which is free to join! Now that’s a membership I can wrap my frugal head around, no math required!
Most mothers teach their kids to cook and clean. Leah Ingram’s mother taught her to compost. These days she’s passing along this green message to her own daughters as they all try to live a green and frugal lifestyle as The Lean Green Family. She’s the author of Suddenly Frugal: How to Live Happier and Healthier for Less“Suddenly Frugal:How to Live Happier and Healthier for Less.” Visit her blog, Suddenly Frugal.