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Why Are Textbooks So Expensive?

July 27th, 2009 | Posted in College Savings

The Textbook Market

expensive books We all groan over the financial burden of purchasing a semester’s worth of books. But, why are college textbooks so expensive? How is it that one can purchase a book from a bookstore of comparable size and weight for 20 to 30 dollars, yet a college textbook sells for 100 to 150 dollars? Well, the answer has to do with the basic principle of consumer choice, which affects the demand for a product. In a typically efficient consumer market the buyer has a choice about purchasing the product. If the price of the product is too high then nobody buys it. So, the producer of the product lowers the price until people start buying, therefore triggering demand and voila, the market price has just been found. This is called price discovery.

Now, consider the college textbook market, which can be termed a “broken market”. It is broken because one of the parties (the buyer) doesn’t have a choice in the purchasing decision. The books are required and chosen by someone who doesn’t have to pay for them (college professors). This effectively gives all the pricing power to textbook publishers. Naturally, publishers raise their prices up to a level that is just one notch below “ridiculously priced” (ridiculously priced is the level at which people would flatly refuse to purchase a product). This is obviously not good for college students, but very good for publishers. To further exacerbate the issue, publishers frequently issue newer editions of their textbooks that usually contain very little new material (except in the case of science texts). Then the professors require that students purchase these new editions, which precludes a student from saving money on a used copy of the older editions. I think it’s safe to say that these new editions aren’t really published to update information, but rather to maintain a constant stream of revenue for the publisher. Publishers also frequently include bundled material such as CD’s, workbooks, and other bonus material that cannot be bought separately. However, once the student tries to sell the bundled package after the end of the semester they will find that the resell value has been destroyed by their use of the bonus material.

The Student Can Affect Textbook Prices

Many have suggested that legislators should step in to fix the imbalance by enacting laws. Some are promoting legislation that bundled materials be offered for sale separately. Others wish to see laws that would require publishers to make college faculty members aware of textbook prices. However, some states already have these price disclosure laws in place, but to little effect. I disagree with any legislative methods to address the issue because I believe in a free market. Anything a government body does in an attempt to level the playing field invariably has unintended consequences that must be addressed later. No, I believe the real power to make textbooks less expensive lies in the hands of the consumer. You, as a consumer, have a choice. Don’t purchase new textbooks. Instead seek out used, rental, or e-textbooks. Publishers only make money off of new book sales. So, if the demand dries up they will have no choice but to lower their prices. And the price will stay down as long as publishers know that consumers can buy aftermarket books much cheaper. As I wrote about in another post there are plenty of places to find cheap textbooks – just spend a little time looking around.

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