Current Textbook Cost Reduction and Delivery Models White Paper

Over the last 15 years, textbook delivery systems have gone through more changes than during the previous 100+ years. Textbook rentals, digital, online accessibility (Amazon and numerous other companies), and Inclusive Access programs have totally disrupted the traditional model of selling all textbooks in the brick-and-mortar campus store. Disruption is not a bad thing.

Some of these new programs have had a negative impact on the revenue of the brick-and-mortar stores, regardless whether they are contracted or self-operated. Textbook revenue traditionally has been 3-4 times more than nonbooks. Now it is not unusual for textbook sales to be less than nonbooks, and nonbooks have been going down as well. This has had a definite negative impact on a store’s profitability.

In the past, colleges and universities bookstores were the only game in town. Not anymore. One of the largest misconceptions of self op stores management was that most store profit was from nonbook merchandise because they had the largest margins (45%-55% on average). Textbooks only had a 25% margin. They did not understand that the large volume of textbook gross profit significantly outpaced gross profit of nonbooks. That mistake in understanding retail finances led to hundreds of self-op stores to go lease as they started to lose money and couldn’t adequately explain why.

Leased stores are going through a similar result although for a different reason. They know the gross margin impact of various sales departments. However, the traditional leased stores (i.e. textbooks are sold in the store), are having great difficulty selling textbooks due to the external competition. As a result, their textbooks sales are being reduced significantly as well. During this period, publishers’ revenue was being negatively impacted by so many competitors selling more used copies and rentals were becoming very popular from third parties. They developed a direct to student digital approach called Inclusive Access (IA). Essentially this program has a contract with the institution to provide digital copies directly to the students. This can be by course, by department or by division. For those courses which are not part of an Inclusive Access program, their books are still ordered and sold by the store. This has been expanding over the last few years but still is very much the minority.

The stores, whether self op or leased, were seeing their revenues decrease because they are receiving only a commission on IA sales and still had to maintain a textbook program for the physical books.

Lease operators certainly did not want that trend to continue. Consequently, they developed a program called, among other things, Access Complete. This is a significant modification to the traditional format for selling textbooks. Rather than selling textbooks by the unit, regardless whether they are new, used, rental, or digital, the textbook cost is charged on a cost/credit hour basis. Whether a student is taking a full 5 course load (15 credit hours per semester) or 1 course (3 credit hours), the cost per credit hour for textbooks is the same. The process and delivery method changes significantly from the traditional. When a student registers for their courses, textbooks are allocated to them (based on faculty requisitions). These books will be charged to the student’s account. One to two weeks prior to the beginning of the semester, the required textbooks are shipped to the student’s preferred destination (home or the campus). The student can opt-out right up to the drop/add date.

What are the Advantages to Access Complete:

1. Textbook Pricing
   1. The cost of textbooks are significantly lower overall for the student. Currently, the cost per credit hour ranges in price (depending on the level of institution’s instruction level-liberal arts to engineering and computer science) from about $20-$25 per credit hour. This means that if a vendor provides a quote of $20 the total cost of a 3-credit hour course is $60 (3X$20). This is significantly less than the average cost of a textbook.
2. Convenience
   1. Faculty continue to request their textbooks online with no interference, only support, from the textbook company.
   2. Students no longer need to search the internet for the least expensive textbooks, they already have it.
   3. Students have all their required textbooks before classes begin. This has a positive impact on student retention, and great relief to the student who no longer has to search for less expensive options.
3. Impact on Physical Bookstore
   1. Faculty continue to request their textbooks online with no interference, only support, from the textbook company.
   2. Students no longer need to search the internet for the least expensive textbooks, they already have it.
   3. Students have all their required textbooks before classes begin. This has a positive impact on student retention, and great relief to the student who no longer has to search for less expensive options.
4. Revenue to Institution
   1. The annualized total revenue of the program is based on a simple formula. Revenue=total credit hours taken in one year X cost per credit hour less the opt out rate. Attaching actual sample numbers to this would look like: $1,689,600= 96,000 ch (24 ch per student X 4000 FTE students) X $22 (cost per credit hour)- 20% (opt out rate). Of this revenue figure, 5% commission goes to the institution which equals $84,480. Keep in mind that the 5% commission rate is what the contractors propose. The commission can definitely be more.
   2. One aspect to always keep in mind with any new program provided by an outside company is to understand the process and revenue streams before entering into an agreement. Access Complete is no different. The process is fairly straight forward, especially after the first year. The first year will take a little longer than the more traditional outsourcing arrangement. The main reason for this is to ensure that communication with all constituents (students, faculty, accounting, IT, etc.) is emphasized.

Hopefully this paper doesn’t sound like a commercial endorsement of Access Complete. For the many years I have been involved in institutional bookstore operations, this is the first time that I have seen a resolution to textbook costs and ease of access provided in a single program. I encourage you to review it for your campus.