Learn to read between lines on textbook costs

University Bookstore explains how it determines buy-back value
Tuesday, April 26, 2005 | 12:00 a.m. CDT; updated 11:15 a.m. CDT, Wednesday, July 9, 2008

When MU freshman Joseph Bell shelled out nearly $500 for textbooks this semester, he knew it was a lot of money but figured he didn’t have a choice.

“Regardless of the price, it’s something you’re going to have to do, and there’s nothing anyone can really do about it,” Bell said.

Buying used rather than new textbooks can significantly cut costs, but there’s no dodging the fact that the book has to be bought. To defray textbook costs, University Bookstore offers a textbook buy-back each semester, returning up to 50 percent of the cost of new books to students, regardless of whether a book was bought new or used.

During the buy-back May 2 to 14, Bell could receive up to $250 for his textbooks. The bookstore benefits by collecting used books to sell at a reduced price next semester.

Many students don’t realize that the return value on books could be 50 percent. Emily Jenkerson, a sophomore nursing major, estimated that the most she’s received for a book during buy-back was 40 percent. Senior Jessica Schmutz thought it was much less.

“The perception is that students bought a book for $100, they get $5 back, and we turn around and sell that book for $100, and that does not happen,” said Michelle Froese, public relations manager for Student Auxiliary Services, which includes the bookstore. University Bookstore employs a wholesaler to conduct the buy-back each semester. Based on textbook adoption orders provided by professors, the bookstore compiles a list of books that will be needed the following semester. The wholesaler then collects the required books and pays 50 percent of the book’s new price until it meets the necessary quota, usually based on enrollment. These books are sold at a reduced price to students taking the class the next semester — this semester, 44 percent of books sold by the bookstore were used.

“We work really hard at University Bookstore to make buy-back good for students and good for the bookstore,” Froese said. “And when it’s good for the bookstore, it means there are more used books for students, so it’s very circular in nature.”

Because it’s a third party, the wholesaler is also buying for other universities. Once University Bookstore’s needs are met, the wholesaler will offer up to 30 percent of a book’s new price for books that other schools need.

Outside factors

Although the bookstore offers buyback to help students, there are issues beyond its control that can hamper the process. The bookstore depends on faculty members to order the books they need. When professors miss the textbook-adoption deadline, which is nearly two months before the end of the semester, the wholesaler cannot collect from students the books that will be used in the next semester.

Another issue is the marketing strategies of the publisher. Because the publisher does not make money off the sale of used books, it employs tactics to encourage new book sales.

“Our challenge is to provide content and services that enhance the learning process and offer a wide choice of good value to students and faculty so that they choose new books — with up-to-date content and interactive features — ahead of the used alternative,” said Wendy Spiegel, senior vice president of communications for Pearson Education, which owns publishers Prentice Hall and Allyn & Bacon.

Strategies include frequently publishing new editions, custom packaging a textbook with a professor’s notes and other supplements, and issuing books with an access code students need to get on a course’s Internet site. These strategies mean that a textbook can’t be sold used because it would be missing key components.

Froese said that faculty members often do not realize how important buy-back is to students. They might miss textbook-adoption deadlines or choose a custom-packaged textbook because they do not realize the effects these choices have on a student’s checkbook.

When Billie Cunningham, adjunct associate professor of accountancy, chooses a text for her class, she bases the decision on what she wants students to learn and how she wants to teach it, she said. Cost is not usually a factor.

“The reason is because when I find something that I like, usually there’s not an equivalent, so I don’t even get into cost,” Cunningham said.

Cunningham recognizes the importance of textbook-adoption deadlines, but she doesn’t have much control over how often a new edition of the introduction to accountancy book is ordered. Although she is an author of the book her class uses, she said it’s the publisher that decides to put out a new edition every three to four years.

“Obviously (publishers) need to be fiscally sound, but our primary focus is what students need at the moment, and used books are the better options,” Froese said.

Profit margins

To profit from buy-back, the bookstore sells the used books for 25 percent to 30 percent more than what students were paid for them. In comparison, the profit on a new book is 22 percent. The difference is that more effort is needed to fill shelves with used books — the bookstore has to deal with multiple wholesalers to get enough, making it more labor intensive to sell used books.

“Very rarely do we fulfill an entire class order just from a student buyback, so then we go to other wholesalers,” Froese said.

To students, however, $50 or more for a single textbook seems like a lot.

“It’s pretty outrageous — I know it’s not the professors because they always talk about how outrageous it is, also,” Schmutz, a psychology major, said about pricing decisions.

“In the college store industry, that is standard pricing on textbooks,” Froese said about the profit margin. “A good healthy margin that gives you room to operate in would be in the 40 percent range, so textbooks are not profitable, but you sell a large volume of them.”

Compared with other items, textbooks are sold for a relatively low price, once the production cost is taken into account.

Merchandise at a clothing store will carry a profit margin of 50 percent to 75 percent, depending on the vendor, said Karen Jefferies, the bookstore director.

Although textbooks might not be profitable for the bookstore, they are making money for the publishers.

“Are publishers making a profit? Absolutely,” Jefferies said. “How much of a profit are they making? I don’t know.”

In 2002-03, publishers made an average of 7.2 cents in after-tax income on every dollar spent on a textbook, while only 4.1 cents before taxes was college store income, according to the National Association of College Stores.

The cost of a book is more than just the pages and ink; it’s also the cost of the intellect in the pages.

“It’s similar to the cost of a prescription medication,” Jefferies said. “You know that that pill doesn’t really cost $5, but the research and development that went into that pill so that the company can get their money back out costs them that much.”

Alternative options

For students who wish to avoid the bookstore and its prices, other options are springing up.

In January, announced that students could swap used books for ones in the Web site’s database without the exchange of money.

Open to both students and the general public, someone lists a book they wish to swap on the site. The site immediately calculates the book’s retail value and awards the seller that amount in “trade credits.” The seller then uses the trade credits to buy the books he or she needs. The cost to the buyer is the shipping and handling charge and a $2 service fee to Swap Simple.“When it comes to used textbooks, buying them from the bookstore is an older way of doing things, and it’s just not really an efficient way of doing things,” said Elliot Hirsch, president of Swap Simple, Inc. “I think it’s going to make a tremendous difference. If I had it when I was in school, it would have saved me a lot of grief.”

Although online retailers might be cheaper because of the nature of their businesses and lower overhead costs, Jefferies doubts the ability of online sites to fulfill the needs of all students.

“When you’re dealing with courses where a thousand or more students need the same book, you’re not going to find anywhere online that can provide a thousand of that book to students,” Jefferies said of peer-to-peer transactions.

Additionally, Jefferies cautions students to be sure they know what they’re ordering. Too often, she said, students have ordered online thinking they were getting a deal only to find out it was the wrong book and the site won’t return it. Not only have they wasted their money on the wrong book, they still have to go buy the correct one.

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