Secret Behind Textbook Costs

Posted by Professor Cram in Social Learning

The National Association of College Stores has a breakdown of where each dollar goes for a new textbook. A closer look at their logic, though, reveals enough slight-of-hand to make Penn and Teller genuflect in awe.

First, let's take their categories for the non-bookstore portion. (Face it, no matter what the publisher charges the bookstore is going to make their cut – at least they aren't shy about telling you that.)

  • 32.5 (42%) — Paper, Printing, Editorial Costs
  • 15.5 (20%) — Publisher Marketing Costs
  • 11.7 (15%) — Author Income
  • 10.0 (13%) — Publisher General and Admin
  • 1.0 (1%) — Freight Expenses
  • 7.1 (9%) — Publisher Income

After removing the bookstore parts, we find that 77.8 cents per dollar go to the publisher. If we divide each number by 77.8, we get the percentage of textbook dollars for each category that the publisher gets.

OK, let's talk about these categories now:

  • Paper, Printing, Editorial Costs – Paper and printing are such a small part of the cost of a book that it's embarrassing. Called PP&B in the industry (the 'B' is binding), this can run from $2 or less for a typical study guide to $12 or so for a high-quality art or biology text. So, pulling back this particular curtain, we find that the lion's share of this category is not printing but editorial costs. I won't address the relative worth of these editorial costs, but they are incurred whether publishers print a physical book or create an e-book. It's easy to see, then, that the idea of going the e-book route is not going to do much to reduce the real cost of the textbook.
  • Publisher Marketing Costs – Publishers send their sales people to your professor's office to convince her/him to use their textbook. How do they do this? Certainly not by striving to produce the highest quality, most useful book imaginable. No, they give the professor armfuls of "free" stuff to help them teach the class – copies of the student text, instructor manuals, answer books, powerpoints, etc. They also dangle "free" stuff for the student to use, like student websites, bundled CDs, etc. Who do you think pays for all that free stuff? That's right, you do.
  • Author Income – 15% royalties… are these guys on crack? Twenty years ago major authors were getting a 15% royalty, but not anymore. Go ahead and ask any of your professors who have written textbooks, they'll tell you. The trend over recent years is to get royalties down to 10-12%, putting more profits in the publishers' pockets.
  • Publisher General and Admin – All big businesses try their damnedest to avoid paying taxes using whatever legal means are available. (We'll give them the benefit of the doubt on this one.)
  • Freight Expenses – Can't do much with this one, except that at least one major college textbook publisher charges the bookstores a restocking fee for returned books. This will reduce some of the freight expenses, but shouldn't have much impact on the bottom-line cost of the book (although it is pissing off a lot of bookstore managers).
  • Publisher Income – The chart says this is 7.1%, but that's too low. At the very least it's got to be 10% or more, based solely on the reduced royalties being paid nowadays.

By conservative estimates, then, around half the cost of a textbook is attributed to the business practices of the publishing industry (editorial and marketing costs). Publishers will have you believe that E-books is the way to bring down these costs, but the figures above don't lie. Revamping the publishing industry's business practices is the only sure-fire way to bring these prices down. You have several options for helping that along — buying used books (for which publishers get no revenue), buying the international versions of the textbooks from the UK (same book content, cheaper price because the Europeans won't buy otherwise), and simply refusing to buy the book at all. You have the power to force an industry to change!

Power to the people,
Professor Cram

Check out our article on making college less expensive to see what else you can do about the high cost of getting your degree.

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