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Coop Markup, Publisher Rules Make Textbooks More Pricey

David Tarin--The Tech
Campe Goodman G buys books at The Kendall Square Coop.

By Douglas E. Heimburger
Associate News Editor

Each semester, most students rush to The Coop to buy their textbooks, often grumbling about the high cost in the process.

In an effort to determine what factors influence the costs of textbooks, The Tech conducted an investigation of prices of common MITtextbooks at various bookstores in the Boston area and on the WorldWide Web.

The investigation showed that The Coop's textbook prices were as much as 13 percent above prices quoted from trade bookstores in the area.

The Coop also quoted a lower price over the phone for several textbooks than the price for which the book was being sold in the textbook department.

Manufacturer partly responsible

The high prices on textbooks at The Coop are in part because of the high costs that the manufacturers charge for books, said Coop General Manager Allan E. Powell. "Our prices are based on what we are charged" for the book, he added.

Book manufacturers charge differently depending on whether the bookstores are trade or textbook retailers, Powell said. Manufacturers often charge more for textbooks than they do for trade books. In addition, the same book is sometimes classified as both a trade book and a textbook and may be sold at different prices depending on its use. Unlike general books, which have printed prices, most textbooks lack published list prices.

Bookstores are then expected to apply a markup representing their costs and profit, Powell said. "It's our disadvantage to be a college textbook store,"Piotti said.

For example, McGraw-Hill Publishing, which publishes "Fundamentals of Applied Probability" for Probabilistic Systems Analysis (6.041), offers trade publishers a 16.7 percent discount off list price for orders of nine or fewer books, said Martha E. Piotti, store manager of TheCoop at KendallSquare.

"Discrete Mathematics," a book by Kenneth Rosen used in Mathematics for Computer Science (6.042J), is sold to The Coop at $51.25, Piotti said. However, trade bookstores are quoted a price of $42.69, she said. The book sells for $71.50 at The Coop.

Book manufacturers charge textbook stores higher prices because they are trying to recoup the costs of their investment in marketing the book to college professors, Powell said. "Their rationale for the markup is that the marketing is done by the manufacturer," and the textbook store is not expected to have additional marketing costs, he added.

Trade bookstores, on the other hand, are expected to have additional manufacturing costs that will be passed on to the consumer, Powell said.

All manufacturers do not follow the process, Piotti said. "There are certain textbook publishers that do not give agency discounts [to trade bookstores]. They have their list price, and their cost comes off of that price."

McGraw-Hill did not return calls seeking comment on their textbook pricing policies.

Textbooks receive preset markup

Once a textbook arrives at TheCoop, it is assigned a price that incorporates a preset markup, Piotti said. "The process is all done by computer," she added.

Books that arrive with a pre-printed price, however, are sold at that price. "The Coop's policy is if it is prepriced from the manufacturer, that's the price we sell it at,"Piotti said.

The selling price is also adjusted for books that are being offered less expensively at other stores in the area, Piotti said. "We won't take much of a markup on MITPress books" since they are located across the street, she said.

The maximum markup on textbooks without a preprinted price is 28 percent, while the markup on books with preprinted prices can be as high as 40 percent due to markups incorporated into the printed price, Piotti said. On the 6.041 textbook, the markup was 25 percent.

The textbook markup, compared to markups for other items, "is the lowest in the store,"Piotti said.

The costs of running a textbook operation contribute to the high costs of textbooks, Powell said.

"It's an expensive process to order books, receive them, price them, and shelve them,"Powell said. "It's a business that doesn't produce any profit,"he added.

If the text fails to sell, The Coop must return the text, often incurring a restocking fee, Piotti said. In addition, The Coop is required to pay shipping costs in all instances, she added.

"If textbooks were a good business, competitors would be knocking down the doors,"Powell said. The Coop, however, considers it to be "our mission,"he said.

Professors contribute to high costs

One of the major difficulties of running a textbook store is consulting with professors to determine what books are required and recommended for subjects, Powell said.

Most professors fail to return the textbook forms to the Coop by its preferred date of Nov. 15 for the spring semester, Piotti said. "Our busiest day to receive forms is the first day of classes,"she said.

As a result, many textbooks that could have been kept by The Coop because they were being sold in the previous semester have already been returned to the manufacturer, Piotti said. They must then be repurchased, often at a higher price, and shipping is again required, she said.

In addition, receiving the purchase forms by the Nov. 15 deadline allows The Coop to purchase more used books. "Our first attempt is to purchase used books" through various means, Powell said.

"The money we make on used books is more than on new books,"since the manufacturer's markup is not charged, Piotti said.

Receiving the forms early also allows students to learn what books are required for each course, Piotti said. Copies of the forms are sent to the MITLibraries and are available for review in the store.

Coop concerned about system

Several books, including "General Chemistry" by Peter Rock and Donald A. McMurry, used in Principles of Chemical Science (5.11), were quoted by The Coop's trade book division at $74.95, while it sells in the textbook division for $90.50.

"It's possible now to have books at different prices within the same stores" as a result of a changeover to new computer systems a few years ago when Barnes and Noble took over day-to-day management of The Coop, Piotti said.

"We should be competitive with ourselves,"Powell said. The Coop is working to remedy this problem, he added.

"Prior to the reorganization, we had a book system that ensured there was a one price to book ratio,"Piotti said.

"We just got a new device that will help us cross-reference the two databases,"which use incompatible formats, Piotti said. The system will be used for the first time with textbooks in the fall, she added.

Coop will try to compete

"We will meet any competition's price that is viable competition if you could go next door and buy it the same day at a lower price, we would price match,"Piotti said.

One area of concern for students is the lack of a rebate on all purchases for Coop members over the last few years. "The rebate was not supposed to be an offset to higher pricing,"Powell said.

The Coop's membership agreement provides that profits will be returned to members in the form of a rebate. The last rebate was 1.1 percent in 1992. During the 1980s, it was as high as 10 percent. A 10 percent refund on textbooks was offered in place of a rebate in fall of 1994.

"It'd be really dumb if we thought that we could gouge consumers"by offering the bait of a rebate, Powell said. Textbooks are "a business that doesn't produce any profit," he added.

Unlike many universities, MIThas no licensing agreement for a company to operate an official bookstore, Powell said. Instead, "it is a relationship that has developed over many years," and that remains informal, he said.