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Bookstore
cutting costs
By Jeff Dusing and Danielle Grossman
Summer On-line Forty-Niner
Despite what many
students believe, the University Bookstore at Cal State Long
Beach is not solely responsible for the high cost of textbooks.
In fact, it is the high cost from publishers that contributes
to much of the overall textbook cost.
“The bulk of the cost goes to the publisher,” said Roman Gulon,
general manager and chief executive officer for the Bookstore
and 49er Shops Inc. “We have a definitive philosophy on how
we run the bookstore business and that is to give students
the lowest possible prices on what they need to get through
college, primarily textbooks.”
Of every dollar spent on a textbook, 75.4 cents goes to the
publisher, according to a 1999-2000 study done by the National
Association of College Stores, using financial data provided
by the Association of American Publishers. The remaining 24.6
cents of each dollar goes to the bookstore itself and shipping
expenses.
Among all the costs considered in the per dollar breakdown
of textbook pricing, the five largest, according to the study,
are the publisher’s paper, printing and editorial costs at
31.9 cents; the publisher’s marketing costs at 15.2 cents;
the college store personnel at 11.5 cents; royalties to the
author at 11.4 cents; and the publisher’s general and administrative
expenses at 9.9 cents.
Additional costs include college store operations at 5.6 cents
and freight at 1.4 cents per dollar, leaving the publisher’s
income at 7.0 cents after taxes and the bookstore’s income
at 6.1 cents before taxes.
Additional information in a study of 250 stores serving four-year
institutions, provided by the National Association of College
Stores, shows that the average gross margin on textbook sales
is 28.75 percent, compared to a 25.3 percent margin in the
last fiscal year and a 26.9 percent margin for July-December
2001.
“We actually fit into the low to medium average,” said Fred
Neely, director of the University Bookstore.
Stephen Hochheiser, director of academic reseller management
for Thomson Learning said that there are a few different factors
that contribute to high textbook prices, one of which is non-profitable
books.
“The textbooks that sell end up paying for the ones that don’t
sell,” Hochheiser said.
Another reason textbook prices may be high is due to included
costs in textbook prices that allows publishers to give instructional
materials to the professor and teaching assistants for free.
Materials that are paid by the student and given to the professors
include the textbook itself, a teaching manual and other teaching
software and class management materials.
In addition, pedagogy, which is anything other than text,
including photos, graphs, quizzes and chapter reviews, cause
the price of a textbook to go up. For this reason, introductory
courses may have higher textbook prices than upper division
courses because they contain more supplementary material within
the book.
Hochheiser said that used textbook sales cause the price of
the new textbooks to go up. For every used book sold, a new
book is not purchased. In order to compensate for this lost
income, publishers must raise the price of new texts.
Though prices of textbooks are high, Thomson Learning tries
to keep costs down by trying to balance in-house employees
and freelancers and constantly bring in consultants to see
how to keep costs down. The company also uses the buying power
of a corporation to get cheap prices on items such as paper
and ink.
The Bookstore continually compares and examines their textbook
prices against their retail competition in order to ensure
competitive prices. In a January 2002 review done by the Bookstore,
their top 25 best-selling new titles were priced lower than
the same titles at Varsity Books, Barnes and Nobles and Amazon.
Along with comparisons of the top 25 titles, the Bookstore
also does a comparison of 25 random titles and the top 25
used books.
After reviewing the average cost of 25 random new titles,
the bookstore found their prices to be higher than all four
competitors with the exception of Wal-Mart, who is new into
the textbook market and offers a limited list of texts.
The study of used texts, however, revealed the Bookstore was
lower in cost than Barnes and Nobles and higher in cost than
Amazon. Barnes and Nobles and Amazon are the only two other
major competitors in the used book market.
In addition to consistent comparisons to their competitors,
the Bookstore continually reviews internal expenses to keep
costs to a minimum, Neely said. While the largest single cost
to the bookstore is the purchase of textbooks for resale,
the cost of hiring and compensating the staff provides another
significant expense, according to Neely.
The cost of compensating bookstore employees is a year-round
expense, even though textbook sales are primarily only twice
a year and almost exclusively during the first two weeks of
the semester, Neely added.
Another large expense for the Bookstore is the continual loss
in profit accrued by the various food services owned by the
Forty-Niner Shops Inc., Neely said. Among these services is
the dining plaza, adjacent to the Bookstore.
This deficit for the fiscal year ending in June 2001 was $548,402
according to the Forty-Niner Shops annual financial statement.
The substantial loss is mostly due to the need to retain full-time
employees, as the university requires that food services operate
year round. And while there are students on campus for both
summer and winter sessions, only during the 32 weeks of fall
and spring semesters does the dining plaza consistently see
customers, Neely said.
In an effort to continue the food services, the Shop’s board
of directors voted a couple of years ago to subsidize the
financial loss from the dining plaza with revenues generated
by the bookstore, Neely said.
“That makes no sense,” said English major Kym Bashford in
response to learning that the bookstore subsidizes the dining
services. “Some people never utilize the food court, but virtually
every student buys some books on campus. Those buying books
are subsidizing the meals for others, including instructors,
visitors, etc. Why not either raise food prices or look into
managerial issues?”
As a non-profit organization, the Bookstore is restricted
from making a profit in the same way other businesses do.
In order to continue operation, any profit must be reinvested
into the organization, as opposed to being paid out single
parties, Gulon said.
“The only reason we’re here is to serve our customers,” Gulon
said. “If it wasn’t for the students, we wouldn’t be here.”
In order to improve relations with students and faculty around
campus, the Bookstore makes various donations throughout the
year through monetary donations and supplies. Approximately
$100,000 is given to Associated Students Inc. and $50,000
is given to the athletic department each year, said Gulon.
An additional $50,000 to $100,000 in charitable donations
is reviewed and given on a case by case basis.
Another factor that may drive up book costs, that is out of
the Bookstore’s control, is the creation of packets by publishers.
Packets are the combination of textbooks, study guides and
CD Roms packaged together and sold as one unit. A primary
contributor to the packets are the study guides and CD Roms,
which were previously bought by only 5 percent of students,
but which become required by all students when sold as packets,
according to Neely.
For example, if five students purchase the study guide for
$20, the total sale is $100. But, if 20 students are required
to buy the study guide at $12, the total sale is $240.
Packets can be very labor intensive for the Bookstore, as
professors often must be contacted to verify if students are
required to purchase the complete packet, or if individual
components may be purchased at the student’s discretion, Neely
said.
Another reason the packets drive up cost is because buy backs
are difficult, if not completely impossible. The Bookstore
does not buy back study guides or CD Roms, making the repurchase
of the main text useless, and therefore, not an option. So,
if the next group of students requires those materials, they
have to purchase brand new packets because used packets do
not exist.
So what do professors consider when selecting textbooks?
“I want the book to be well organized,” said Larry Jang, a
chemical engineering professor at CSULB. “The language has
to be clear and get right to the point. I look at the author’s
name, and sometimes the author could be an expert in the field.”
On the other hand, English Professor Elyse Blankley considers
other factors.
“My primary consideration for a text is intellectual, but
when I look at the entire group of texts I order for a course,
then my consideration sometimes turns economic,” Blankley
said. “If, for instance, the whole tab looks too expensive,
I start thinking whether anything might be put on reserve
or could be printed in a course reader.”
Both professor consider price when determining textbooks,
however, it is not their primary consideration.
“I’m never persuaded to buy new books by publishers,” Blankley
said. “I’m also fortunate that in my discipline the texts
may be updated to new, more expensive editions, but I know
that students can still use previous editions without too
much trouble. The poetry of Keats has been pretty much the
same for the last 200 years.”
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