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Wednesday, June 10, 2015

Get Numbers Straight on Textbook Markup

Affording a college education—including course materials—is a hot topic right now and may become a prominent issue in the upcoming presidential race. Sharing accurate information will be critical to the discussion, however, there is misleading data being bandied about on the Internet.

For example, this post on Wise Bread, a blog community about personal budgeting, calls out college textbooks as one of nine consumer products with supposedly huge markups. The post claims that in the 2014-15 academic year students faced “markups hovering around 200% for brand-new textbooks.”

That doesn’t square with the financial data collected from campus bookstores by NACS’ OnCampus Research. For years, according to survey results, the margin on new textbooks has averaged around 22%. Used texts are about 34% and custom materials are 26%.

“Markup” and “margin” aren’t the same, of course. Markup is what the store adds to the wholesale price to come up with the retail price (what the shopper will pay). Margin is the percentage of the retail price that represents the markup.

Here’s the math for nonretailers: A student buys a textbook from the store for $74.98. Based on NACS’ 22% average, the margin is $16.50, which means the store got the book at wholesale for $58.48 and the markup is 28.2%. That’s a far cry from the 200% alleged by the blog post. If the book is rented to the student, which many campus stores do these days, the markup is typically even lower.

It’s also important for those debating the cost of course materials to understand that neither margin nor markup is synonymous with profit. Out of that margin/markup amount comes staff salaries and benefits, mortgage or rent, insurance, utilities, cleaning and repairs, checkout systems, lighting and shelving fixtures, materials (shopping bags, signage, etc.), shipping fees on almost every product sold in the store, and other normal business expenses.

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