Pricing Power in Volatile Times: Lessons from Costco’s BNPL Play
Why brands are shifting from discounting to psychology-first pricing strategies...and how Costco's move with Affirm signals a bigger market shift.
This article builds on my original piece on BNPL psychology — featuring Coachella as a case study. If you missed that one, you can read it here.
When Costco added Affirm as a Buy Now, Pay Later option online last week, I wasn't surprised. I was intrigued.
Costco isn't in the habit of chasing every trend. Their brand is built on simplicity, loyalty, and pricing discipline. So when they make a move like this, especially with a targeted, online-only rollout, it signals something deeper.
Even the most trusted, value-focused brands are adjusting to the new psychology of buying in uncertain times.
Why Costco's BNPL Move Matters
What caught my attention wasn't just the partnership itself. It was the strategic intention behind it.
Costco's official announcement highlighted "helping members confidently manage their spending on larger purchases." That's not just marketing fluff.
It reflects the pressure even reliable buyers are feeling right now, and shows that Costco is trying to secure revenue without compromising their pricing structure or brand promise.
This isn't about affordability in the traditional sense. It's about maintaining buyer momentum in a financially cautious market.
BNPL lets them do that by reducing friction, not by lowering prices.
From Fringe to Infrastructure
Early BNPL adopters like DTC brands leaned into it as a growth hack…a way to boost conversions or ease sticker shock, often aimed at younger, more cost-sensitive consumers.
By contrast, Costco doesn't need to experiment recklessly. Their brand is built on trust, consistency, and value.
When they adopt BNPL, it signals that this model is no longer fringe. It's infrastructure. It's normalized. And it's not just for the cash-strapped. It's for the value-savvy.
The timing is strategic too. With consumer uncertainty rising, this isn't about chasing new customers. It's about preserving momentum with loyal ones.
Online-Only: Strategic Discipline, Not Hesitation
Costco's selective, online-only rollout makes total strategic sense. It's not hesitation. It's discipline.
Online purchases tend to skew toward higher-ticket items: electronics, furniture, travel packages. These are exactly the kinds of purchases where BNPL removes friction and drives conversion without requiring price cuts.
It's also easier to control and measure the impact online. Costco can test messaging, analyze opt-in rates, and monitor cart behavior without disrupting the consistency of the in-store experience.
There's a margin consideration, too. In-store, they often operate on razor-thin margins and impulse-driven bulk buys. Adding BNPL there could overcomplicate the checkout experience or eat into operational simplicity.
This online-first move is Costco doing what they do best: testing strategically, prioritizing where it makes the most business sense, and only expanding when the data tells them it's worth it.
Impact on Average Order Value
When you reduce the emotional weight of the initial purchase decision, you don't just increase conversions. You expand the mental budget of the buyer.
That's the real power of BNPL.
Once the buyer is thinking in monthly terms instead of total cost, the question shifts from "Can I afford this overall?" to "What's a few extra dollars a month?" That's where AOV tends to rise.
It's the same principle behind bundling or freemium-to-premium upgrades: if the big decision already feels handled, bonus products or add-ons feel like smaller, lower-stakes choices.
Research published in the Harvard Business Review confirms this effect, showing that BNPL drives both increased purchase likelihood and 10 percent larger basket sizes, with these effects especially pronounced for consumers who historically made smaller purchases.
I've seen this play out especially in service-based businesses and digital offers. When BNPL is available, buyers are more likely to say yes to things like bonus modules, strategy calls, or extended access.
It's not about tricking anyone. It's about helping them feel more in control of how they say yes, and that often opens the door for deeper, more valuable engagement.
Why Now? Market Conditions Driving BNPL Adoption
We're in a moment where economic uncertainty is high, but overt discounting can still damage brand equity, especially for retailers like Costco that pride themselves on everyday value.
So BNPL becomes a strategic middle ground: a way to meet consumer hesitation without lowering the price.
Several forces are converging:
Rising Costs of Living with Stagnant Wages
Consumers are feeling squeezed. Essentials like groceries, gas, housing, and insurance have all gone up, but most paychecks haven't kept pace. That creates more scrutiny at checkout, even among loyal buyers.
Increased Financial Anxiety
Between inflation, interest rates, and geopolitical instability, people are more hesitant to part with large sums, even if they can technically afford it. They're looking for ways to maintain their lifestyle without feeling reckless.
Normalization of Installment Behavior
Thanks to streaming services, subscriptions, and tech payment plans, we're all used to thinking in monthly terms. BNPL just extends that logic to everyday purchases and now feels familiar, not risky.
Retailers Protecting Margin Without Losing Momentum
In a volatile economy, companies want to keep revenue flowing without slashing prices or signaling panic. BNPL gives them a conversion lever that doesn't damage pricing integrity.
Research from the Filene Institute indicates that around 55 percent of the U.S. adult population has tried a BNPL service, showing its widespread adoption and growing normalization as a payment method across demographic groups.
So when even brands like Costco make this move, it reflects a broader shift: BNPL isn't about financial need anymore. It's about psychological reassurance in a time of uncertainty.
BNPL as Strategic Infrastructure
As BNPL becomes infrastructure, it's no longer just a feature at checkout. It's a strategic layer embedded across the entire customer journey.
We're already seeing this shift ripple through retail in three major ways:
Marketing and Positioning Strategy
BNPL is influencing how products are priced, framed, and promoted. Instead of leading with discounts, brands are leading with accessibility.
Product and Offer Structuring
Brands are rethinking how they package value. They're bundling more, upselling differently, and using BNPL to stretch what a customer is willing to consider, all without touching base prices.
Customer Experience and Trust Building
As BNPL normalizes, the expectation is no longer just "Can I split this up?" It becomes "Will this brand help me buy in a way that aligns with how I manage money?" That’s a trust signal.
So this isn't just about how people check out. It's about how they commit, how they upgrade, and how they feel about a brand after the purchase.
BNPL vs. Discounting: Preserving Brand Integrity
The biggest difference between BNPL and discounting is who's absorbing the cost and what message it sends.
With traditional discounting, the brand takes the hit, not just on margin, but often on perception. You're signaling, "This isn't worth full price." That undermines your positioning.
BNPL, on the other hand, doesn't require lowering the price. Instead, it reframes the buyer's experience of that price by breaking it into psychologically manageable pieces without diminishing perceived value.
It's the difference between asking someone to pay less versus making it easier to say yes.
In short:
Discounts trade long-term positioning for short-term volume.
BNPL trades short-term friction for long-term growth while keeping your brand intact.
I’ve personally implemented BNPL for my own AI-Powered Marketing Department training—not because we lowered our prices, but because we understand how decision-making works under financial pressure. The price stayed the same. The path to yes got easier.
Which Businesses Benefit Most from Soft-Pricing?
The sweet spot for BNPL—or what I call "soft-pricing"—is anywhere there's a meaningful purchase that requires emotional or financial readiness.
That includes:
High-consideration Products
Furniture, tech, fitness equipment, wellness devices, premium apparel.
Transformation-driven Services
Coaching, education, therapy, career development.
Boutique Travel and Experiences
Experiences that create meaningful memories and require upfront commitment.
Digital Programs
Courses, certifications, or training programs where upfront price creates hesitation.
Home Services
From remodeling to repairs, more homeowners are staying put and investing in their spaces. BNPL makes those high-ticket jobs feel more accessible.
In all of these categories, the customer isn't saying "This isn't worth it." They're saying, "I need a better way to say yes."
Beyond Transactions: BNPL's Impact on Loyalty
When a customer feels like they made a decision on their own terms, they're far more likely to feel good about it.
BNPL reduces post-purchase regret. It builds trust. It creates a more empowered buyer who is often more loyal and more likely to return.
Instead of feeling financially stretched, the customer feels respected. That emotional imprint leads to better experiences, fewer refund requests, and stronger lifetime value.
BNPL doesn't just change how people buy. It changes how they feel about the brand that helped them say yes.
Applying Soft-Pricing to Service and B2B
The psychology behind soft-pricing is just as powerful in service-based and B2B contexts, but the execution looks a little different.
Here's how it applies:
Strategic Framing Before Checkout You need to introduce pricing flexibility early in the sales conversation.
Support for Cash-flow-conscious Buyers B2B buyers often can afford it, but need payment options that align with their budgeting cycles.
Perception of Flexibility Equals Trust Offering payment flexibility shows awareness of your client’s context. It makes you easier to work with.
More Momentum, Less Negotiation Soft-pricing reduces the need to discount or create one-off payment plans, preserving offer integrity.
So yes, soft-pricing works in service and B2B. It just shows up earlier and more conversationally than it does in ecommerce.
Strategic Implementation: Learning from Costco
BNPL is a powerful tool, but like any tool, it has to be used with intention.
That's where Costco's approach is so smart. They started online, where purchases tend to be higher-ticket and where they could test adoption, monitor performance, and minimize disruption.
According to retail tech sources, Costco's implementation is online-only and applies specifically to larger purchases, with approved members able to choose from Affirm's personalized monthly payment plans for purchases ranging from $500 to $17,500.
That kind of discipline is a great model for other businesses. Here are a few key implementation principles:
Know Your Audience BNPL isn’t right for every customer segment. Be thoughtful about rollout.
Clear Messaging Explain it upfront. Show the monthly option. Reiterate it during the journey.
Address Real Friction Use BNPL to reduce hesitation, not to mask a weak offer or confused positioning.
When used selectively and strategically, BNPL can drive more conversions and strengthen brand trust.
The Future of Pricing Psychology
What Costco's move into BNPL reveals is a broader evolution in how brands think about pricing strategy.
The old model was binary: either you maintained your price or you discounted it. Today, brands are finding a third way. Psychological pricing tools like BNPL allow you to preserve margin and value while increasing access.
BNPL is one such lever. But it's not the last. As consumer behavior continues to evolve, expect more innovations that separate the experience of cost from the sticker price.
The brands that thrive will be the ones that understand this distinction.
They'll maintain their pricing power while still making it easier for customers to say yes.
And that's a win for everyone: customers get more flexibility, and brands protect their margins and their message.
Key Takeaways for Strategic Marketers
Reduce friction without reducing price.
Reframe large purchases into small mental commitments.
Test BNPL where it makes the biggest impact.
Make it part of the sales journey, not just checkout.
Use soft-pricing to grow AOV and expand access.
Remember: customer satisfaction starts at the decision point.
The most important question to ask yourself: Are you offering optionality without eroding your brand?
In a market where buyers are increasingly cautious but still want to move forward, that balance might be the key to sustainable growth.
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