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Economics 14

Lecture 35: Textbook Prices

where does the money go?
why do textbooks cost so much?

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Where Does the Money Go?

Consider a $100 textbook. This would have been sold to the bookstore for $80. The author gets 15% of the $80 and the publisher keeps the rest:

• $20 to bookstore
• $12 to author
• $68 to publisher

Out of the $68 the publisher must pay its fixed costs:

1. test bank
2. instructors manual
3. web site
4. study guide
5. Power Point slides
6. editorial staff
7. marketing staff

1. paper and ink (less than $10 per book)

Why Do Testbooks Cost So Much?

• take an enormous amount of time to write, edit, and publish
• the supplements necessary to generate adoptions are expensive to create
• only first sale generates revenue for the publisher and royalties for the author new editions are regularly produced
• little competition in some areas
• professors choose which textbooks to adopt and do not think about textbook prices

David A. Latzko Business and Economics Division Pennsylvania State University, York Campus office: 13 Main Classroom Building phone: (717) 771-4115 fax: (717) 771-4062 e-mail: web: www.yk.psu.edu/~dxl31