The best part about school letting out is that we don't have to pay for textbooks, and the worst part about school starting up is paying for textbooks. Why are textbooks so expensive? On my campus, we have two book stores: The university book store, and an independent, "off-campus" bookstore. I had a conversation with the manager of the independent book store, which happens to be right next to the business school.
He told me that even though we pay an arm and a leg for textbooks, if his establishment wasn't present on our campus we would pay even more. It's simple economics: if the official bookstore of the university was the only bookstore on campus, they can set their own price. The presence of competition (Campus Book & Supply) forces prices to drop for everybody. Thanks, CBS!
Their profit margins are within a few percentage points of each other.
Speaking of margins though (margin being Selling price minus costs), the bookstore I go to have profit margins per book of 50-60%!! Most any bookstore does. What this means is that if they buy a book for $50, they'll sell it for $100-125.
Due to the nature of the industry, bookstores wouldn't survive if they didn't price similarly.
Paying so much for books stinks, I know. That's why you have to budget and plan for these expenses.
But why do textbooks cost so much? Well,
$0.32 of every dollar goes to the publisher's paper, printing and editorial costs. This amount includes all manufacturing costs from editing to paper costs to distribution, as well as storage, record-keeping, billing, publisher's office, and employee's salaries and benefits.
$.07 (after-tax) is publisher's income. This is after-tax income from which the publisher pays for new product development, author advances, market research and dividends to stockholders.
$.11 goes to college store personnel. Store employees need paid too! This amount pays for employee's salaries and benefits to handle ordering, receiving, pricing, shelving, cashiers, customer service, the refund desk and sending extra textbooks back to the publisher. This is all part of their budget.
$.12 goes to author income. The author's royalty payment covers the author's expenses for research and any writing expenses incurred. Believe it or not, you're teachers don't make much money off of the books they write.
$.10 goes to the publishers general and administrative expenses, including federal, state and local taxes, excluding sales tax paid by publishers.
About $.15 goes the publisher's marketing costs. Such costs include marketing, advertising, promotion, publisher's field staff and the free copies for professors.
Like these companies need to "market" their textbooks. Our syllabi do a plenty good job of marketing what books to buy...
A little more than $.04 (pre-tax) is each college store's income. The amount of federal, state and/or local tax, and therefore the amount and use of any after-tax profit, is determined by the store's ownership, and usually depends on whether the college store is owned by an institution of higher education, a contract management company, a cooperative, a foundation, or by private individuals.
$.07 (approximately) per dollar goes to college store operations. This includes insurance, utilities, building and equipment rent and maintenance, accounting and data processing charges and other overhead paid by college stores.
Almost $.02 goes to freight expense. The cost of getting books from the publisher's warehouse or bindery to the college store is the main part of this cost. Part of cost of goods sold is paid to the freight company, obviously.
With gas on the rise... well... you get the drift.
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