Textbook Pricing

Do think that a company that published texts in smaller units, corresponding to a few weeks of study rather than an entire semester, could offer price/quality combinations that would take market share away from the traditional textooks?

In theory, yes. However, I think it would require a big shift in how curriculum is purchased by the schools. Being bureaucracies, schools won’t quickly change how and what they buy, no matter how good the idea.

As an aside – the unit at a time approach is exactly how many homeschoolers handle curriculum. Although we did buy a comprehensive math curriculum, for just about everything else my wife assembles what she needs one unit at a time from the Internet and public library. The concept is called unit studies. I think there are sites trying to sell them to homeschoolers, but most that I know do all the grunt work of assembling the support material themselves.

Textbooks are like prescription drugs. On a benefit-cost basis, they are cheap. However, comparing price to marginal cost of production, they are expensive, because most of the cost of producing a textbook is up front. The writer needs to obtain the knowledge and develop the examples to convey that knowledge. The publisher must cover the cost of funding projects that fail with profits on those that succeed.

It’s interesting that the For Dummies books are able to tackle things like chemistry, physics, economics and even calculus but still sell at a price comparative to trade paperbacks and not textbooks.

Aquiring knowledge in the information age is cheap, why should producing text books be expensive? Why, for example, don’t we see more professors writing their own texts…having Kinko’s print them for $10 a binder & sell them for $25 a pop? Or better yet, put their writing on the web and let their students download as needed?

I think that nowadays it would be more efficient for professors to produce single chapters than entire textbooks. When you write an entire textbook, you inevitably get into areas that are not your comparative advantage. In fact, you are forced by the market to get into topics that you don’t even think are worth covering.

I think we should have some more information about who decides what texts are to be used for College classes. Like the payola scandals in radio, I suspect there are more than a few conflicts of interest at play here.

Do think that a company that published texts in smaller units, corresponding to a few weeks of study rather than an entire semester, could offer price/quality combinations that would take market share away from the traditional textooks?

I think that this direction changes the nature of the product. Most textbooks seem to by targeted at as wide an audience as possible. They are formatted to be useful in courses which emphasize different topics, present material in different orders, have students at different levels(e.g advanced undergrad vs. graduate level), as well as to individual learners. Selling lots of units rather than a whole textbook would change all of this.

I don’t think that publishers will choose to do this willingly, because it amounts to an “unbundling” of the information provided by the textbook. It would lessen their ability to force consumers to upgrade to newer editions, and also increase the ability for smaller actors to compete. If I am going to teach a course, and I don’t like the way that a specific unit is presented by the publisher, it would not take that much effort for me to write my own unit. I know many professors who do this already, replacing material in a chapter of a textbook with their own presentation. Some professors do this with entire courses, completely eliminating the reliance on textbook publishers.

This pricing discrimination is also happening in many electronic markets.

Specifically I’m thinking about wireless telecom. Lucent and many others are selling equivalent systems overseas at much reduced prices.

Now if network power really does migrate to the edges, ie consumers, then we (ie. good’ole USA) should be extracting the BEST prices from MFG’s while ROW subsidizes us.

Hmmm, something is amiss. But I suspect not for long.

I’m not sure how producing three five-week books would save money relative to one fifteen-week book.

It has always seemed to me that textbook pricing is something of an agency problem. The text is selected by the professor, but paid for by the students, so there is less price pressure than would be ideal.

Note one interesting thing about textbooks. Unlike virtually all other books, they have no cover price. So even a teacher who is concerned about students’ pocketbooks will have to make some effort to find out which of several reasonable choices is the best deal.

I don’t think much of Boonton’s idea. It’s fine to use class notes or other materials written by the profesor in place of a formal text. But the idea of the teacher making a profit by selling the materials to his students just creates too big a conflict of interest.

So how come so many colleges will have a standard Department text for a particular course (like Calculus I) instead of allowing each professor to choose his own text (subject to Dept. approval for content)? How come these texts are always in the range of $75-$150?

Arnold’s assertion that these texts are expensive to produce doesn’t really hold very well when you consider that if you want to self-teach yourself a subject you can go to Borders & Barnes & Noble & pick up a book with equal content for $20-$30.

Even more damming, what’s up with the constant stream of new editions? For some fields that change constantly (like computers and alas, even economics) I can understand that texts have to be current. But can you seriously tell me that someone who was taught Calculus with a used 1973 textbook would be any less proficient than a student taught from the latest text?

No there is a serious incentive problem here. Colleges are not rewarded for selecting inexpensive textbooks. I suspect there are incentives for selecting over priced texts. Now someone just has to explain what they are….

One reason departments have a standard text for a course is for standardization of lectures, homeworks, and exams. This is especially true for lower-level undergraduate courses which are likely to be taught by graduate teaching assistants. The department does not want to give the teaching assistant the option of selecting which text to use for his/her section. Homework grading can then be done by any grader, and that grader can grade homework for more than one teaching assistant.

One very common complaint from students is in fact the cost of college textbooks. But this is somewhat tolerable to them when used textbooks are available at a reduced price. But when a new edition is released, and a department chooses to use the new edition for a course, then any available used texts (of older editions) are no longer of use, and students are forced to pay the price of a new textbook. In some subjects this is justified by the newer information available in the most recent editions. In others, for example Calculus I, students become irritated because they see the new editions as providing no added value and simply as a means to extract more money from them.

“What exactly keeps Departments from choosing low cost texts..”

Nothing. But nothing encourages it either. And since prices are not obvious they don’t affect decision-making very much.

I don’t think requiring departmental approval is going to solve the conflict of interest problem. There will be a real tendency to just go along, not to mention the danger of mutual backscratching. And how many faculty members do you really think are going to examine the home-brew texts critically? And even if they do, how does anyone determine a reasonable price to charge what are pretty much captive buyers?

It is curious to me that no one has directly considered the role of the used textbook market on publishers’ cost recovery strategies. In the old days before the used book market was well organized, publishers priced their texts to generate an acceptable (competitive) rate of return over the useful life of the published text (3 to 5 years in many subjects and even longer in others). Now the strategy is the same, but with the used book market so well organized, the useful life (for cost recovery) is about 1 year. This has caused textbook prices to skyrocket. The problem also affects authors and their royalty demands. Again, in the old days, many more copies of textbooks were sold (lowering the average cost per book) creating a large pool of small royalty payments per book to compensate authors. Now authors demand a much larger royalty per book from a much smaller pool of royalty payments or big up-front payments so that publishers bear the risk of sales volume. If writers had organizations like musicians (ASCAP and BMI) to help collect royalties on a per-use basis rather than on a unit-sold basis, at least this part of the cost escalation might be mitigated. Publishers would still face recovering their costs on limited sales, but costs would be lower.