Report to Congressional Requesters

United States Government Accountability Office

GAO

July 2005 COLLEGE 

TEXTBOOKS 

Enhanced Offerings 

Appear to Drive 

Recent Price 

Increases 

GAO-05-806 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-806.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cornelia M. 

Ashby at (202) 512-7215 or 

ashbyc@gao.gov. 

Highlights of GAO-05-806, a report to 

congressional requesters 

July 2005

COLLEGE TEXTBOOKS

Enhanced Offerings Appear to Drive 

Recent Price Increases 

In the last two decades, college textbook prices have increased at twice the 

rate of inflation but have followed close behind tuition increases. Increasing 

at an average of 6 percent per year, textbook prices nearly tripled from 

December 1986 to December 2004, while tuition and fees increased by 240 

percent and overall inflation was 72 percent. The cost of textbooks as well 

as supplies as a percentage of tuition and fees varies for first-time, full-time, 

degree-seeking students by the type of institution attended—72 percent at 

2-year public institutions, 26 percent at 4-year public institutions, and 

8 percent for 4-year private institutions. 

Annual Percentage Increase in College Textbook Prices, College Tuition and Fees, and 

Overall Price Inflation, December 1986 to December 2004 

While many factors affect textbook pricing, the increasing costs associated 

with developing products designed to accompany textbooks, such as CDROMs and other instructional supplements, best explain price increases in 

recent years. Publishers say they have increased investments in developing 

supplements in response to demand from instructors. Wholesalers, retailers, 

and others expressed concern that the proliferation of supplements and 

more frequent revisions might unnecessarily increase costs to students. 

U.S. college textbook prices may exceed prices in other countries because 

prices reflect market conditions found in each country, such as the 

willingness and ability of students to purchase the textbook. While 

geographical barriers have historically limited the reentry of textbooks 

intended for international distribution back into the United States, known as 

reimportation, recent advances in electronic commerce have broken down 

this barrier. In response to concerns that the international availability of less 

expensive textbooks might negatively affect textbook sales, publishers have 

taken steps to limit large-scale textbook reimportation. 

The federal government strives to 

make postsecondary education 

accessible and affordable, primarily 

by providing financial aid to 

students and their families. Given 

that nearly half of undergraduates 

receive federal financial aid, 

Congress is interested in the 

overall cost of attendance, 

including the cost of textbooks. We 

were asked to determine (1) what 

has been the change in textbook 

prices, (2) what factors have 

contributed to changes in textbook 

prices, and (3) what factors explain 

why a given U.S. textbook may 

retail outside the United States for 

a different price. 

We received technical comments 

from the Department of Labor. The 

Department of Education had no 

comments. The National 

Association of College Stores 

generally agreed with the report’s 

findings. The Association of 

American Publishers agreed with 

some findings but expressed 

concern about the data sources we 

used and the characterizations 

made by retailers and wholesalers 

regarding the impact of publisher 

practices on students. We carefully 

reviewed the data sources available 

on college textbook pricing and 

found the data we used to be the 

most complete and reliable data 

available for our purposes. 

Additionally, we sought 

perspectives from publishers, 

retailers, and used book 

wholesalers to ensure our 

characterization of the textbook 

industry was balanced and 

complete. 
Page i GAO-05-806 College Textbooks 

Letter 1

Results in Brief 2 

Background 4 

College Textbook Prices Have Grown at Twice the Rate of 

Inflation, Trailing Annual Tuition Increases 8 

Publisher Investments in New Products Have Contributed to 

Increases in Textbook Prices 11 

The Price of U.S. Textbooks Sold in Other Countries Varies 

according to Local Market Conditions 21 

Concluding Observations 25 

Agency Comments 26 

Appendix I Objectives, Scope, and Methodology 31 

Appendix II Consumer Price Index Average Annual Percentage 

Growth, Academic Years 1987-1988 to 2003-2004 35 

Appendix III Comments from the National Association of College 

Stores 36 

Appendix IV Comments from the Association of American 

Publishers 38 

Appendix V GAO Contact and Staff Acknowledgments 46 

Tables 

Table 1: Illustration of Typical Textbook Pricing Practice for $100 

Publisher-Priced Book 13 

Table 2: Source and Methodology for CPI College Textbook 

Research Series Data 31 

Contents 
Page ii GAO-05-806 College Textbooks 

Figures 

Figure 1: The Typical Life Cycle of a College Textbook 5 

Figure 2: Annual Percentage Increase in College Textbook Prices, 

College Tuition and Fees, and Overall Price Inflation, 

December 1986 to December 2004 9 

Figure 3: Estimated Cost of Textbooks and Supplies as a 

Percentage of Tuition and Fees, Academic Year 2003-2004 11 

Abbreviations 

AAP Association of American Publishers 

BLS Bureau of Labor Statistics 

CPI Consumer Price Index 

IPEDS Integrated Postsecondary Education Data System 

NACS National Association of College Stores 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
Page 1 GAO-05-806 College Textbooks 

July 29, 2005 

Congressional Requesters 

The federal government endeavors to improve access to and affordability 

of postsecondary education, primarily by providing financial aid to 

students and their families. Consequently, the overall cost of 

postsecondary attendance, including components such as tuition and 

textbooks, is of national importance because escalating costs can have 

negative effects on access and affordability. In academic year 2003-2004, 

students and their families spent over $6 billion on new and used 

textbooks.1

 Given that nearly half of undergraduates receive federal 

financial aid and the cost of textbooks is one component considered in 

making these awards, escalating textbook prices can impact federal 

spending. Because of the impact on access, affordability, and federal 

spending, recent reports of escalating textbook prices and instances in 

which publishers sell U.S. textbooks in other countries at lower prices 

have heightened congressional concern and raised questions about 

textbook pricing practices. You asked us to determine (1) what has been 

the increase, if any, in textbook prices? (2) what factors have contributed 

to changes in textbook prices? and (3) what factors explain why a given 

U.S. textbook may retail outside the United States for a different price? 

To quantify the change in college textbook prices, the Department of 

Labor’s Bureau of Labor Statistics (BLS) constructed for GAO’s use a 

Consumer Price Index (CPI) data series that shows how the price of 

textbooks for consumers has changed since December 1986, the earliest 

date for which college textbook prices are available as part of BLS’s 

research index. In drawing samples to compute price indices, BLS defines 

a textbook as any book required for a course, including books intended for 

general readership and packages containing the textbook and related 

supplements when the textbook alone has not been ordered. In order to 

put the price of a textbook into context, we examined the cost of tuition 

and fees to students and their families as tracked by the CPI since 1980. 

We also examined data from the Department of Education’s (Education) 

Integrated Postsecondary Education Data System (IPEDS) to gain an 

 1

National Association of College Stores, 2005 College Store Industry Financial Report 

(Oberlin, Ohio: 2005). 

United States Government Accountability Office

Washington, DC 20548 
Page 2 GAO-05-806 College Textbooks 

understanding of the cost of textbooks and supplies (IPEDS does not 

disaggregate textbooks and supplies) for first-time, full-time, degreeseeking students during the course of an entire academic year, as 

estimated by postsecondary institutions, and the portion of the total 

estimated cost of tuition and fees that books and supplies represent. To 

determine what factors have contributed to the change in college textbook 

prices, we interviewed executives from five textbook publishers that 

account for more than 80 percent of new textbook sales; the three major 

national used textbook wholesalers; three companies that operate over 

1,300 college textbook retail stores, or 29 percent of stores nationwide; the 

National Association of College Stores; the Association of American 

Publishers; the California and state Public Interest Research Groups; and 

various other industry experts. To determine what factors have led to 

differences in the price of some textbooks in U.S. and non-U.S. markets, 

we reviewed relevant economic theory and interviewed major industry 

players. Specifically, we spoke to representatives from textbook 

publishers, operators of textbook retail stores, and used book wholesalers 

to determine the extent to which books may be available in other 

countries at lower prices, and the reasons behind these price differences. 

A more detailed explanation of our methodology, including more 

information about our data sources, is in appendix I. We conducted our 

work between November 2004 and June 2005 in accordance with generally 

accepted government accounting standards. 

College textbook prices have risen at twice the rate of annual inflation 

over the last two decades, following close behind annual increases in 

tuition and fees at postsecondary institutions. Rising at an average of 

6 percent each year since academic year 1987-1988, compared with overall 

average price increases of 3 percent per year, college textbook prices 

trailed tuition and fee increases, which averaged 7 percent per year. Since 

December of 1986, textbook prices have nearly tripled, increasing by 

186 percent, while tuition and fees increased by 240 percent and overall 

prices grew by 72 percent. While increases in textbook prices have 

followed increases in tuition and fees, the cost of textbooks and supplies 

for degree-seeking students as a percentage of tuition and fees varies by 

the type of institution attended. For example, the average estimated cost 

of books and supplies per first-time, full-time student for academic year 

2003-2004 was $898 at 4-year public institutions, or about 26 percent of the 

cost of tuition and fees. At 2-year public institutions, where low-income 

students are more likely to pursue a degree program and tuition and fees 

are lower, the average estimated cost of books and supplies per first-time, 

Results in Brief 
Page 3 GAO-05-806 College Textbooks 

full-time student was $886 in academic year 2003-2004, representing 

almost three-quarters of the cost of tuition and fees. 

While there are many factors that affect textbook pricing, the price of 

textbooks has increased in recent years, according to experts we spoke 

with, as a result of the increase in costs associated with new features, such 

as Web sites and other instructional supplements. Other factors that affect 

pricing include production costs, availability of used books, and the 

demand for textbooks. Publishers say they have increased their 

investments in the development of supplements to meet the demands of a 

changing postsecondary market. For example, publishers we spoke with 

cited increases in part-time faculty who need additional teaching support 

as a key factor that has increased demand for instructional supplements. 

Publishers also said instructors are requesting more supplements, such as 

Web-based tutorials and self-assessment tools, to enhance student 

learning. However, wholesalers, retailers, and others suggest that while 

supplements may be of value to students, the increasing practice of 

packaging them with textbooks effectively limits the students’ ability to 

purchase less expensive used books. Industry representatives and public 

interest groups also suggested that publishers are revising textbooks more 

frequently, and some expressed concern about the financial impact on 

students. Their concern is that more frequent revisions limit the 

opportunity students have to reduce their costs by purchasing used 

textbooks and selling their textbooks back to bookstores at the end of the 

term. While publishers generally agreed that the revision cycle for many 

books is 3 to 4 years, compared with 4 to 5 years that were standard 10 to 

20 years ago, they said revisions were necessary to keep the materials 

current for faculty and to recoup their investments. 

The price of a U.S. textbook may differ when the book is sold in other 

countries primarily because publishers price their textbooks in order to 

compete in local markets, and conditions exist that limit the resale of 

books from lower-priced markets back to the United States. Publishers 

told us that they produce textbooks primarily for the U.S. market and once 

they have incurred development costs, they can sell textbooks at a lower 

price in other countries because the cost of printing additional copies to 

sell outside the United States is relatively low. Publishers told us they 

price textbooks in other countries based on local market conditions, such 

as income levels, the extent to which students are required to purchase 

textbooks, and the availability of locally published textbooks. For 

example, publishers told us that some U.S. textbooks are priced lower in 

the United Kingdom because they must compete with locally produced 

textbooks that are less expensive. Price differences between the United 
Page 4 GAO-05-806 College Textbooks 

States and other countries persist because there are barriers that limit the 

reentry of textbooks into the United States. In some cases the cost of 

locating lower-priced textbooks and shipping them to the United States 

would result in a higher cost than purchasing them in the United States. In 

other cases, purchases are restricted by agreements between publishers 

and foreign distributors. For instance, some publishers told us that their 

agreements with one online retailer outside the United States limit the 

number of copies that can be shipped back to the United States. 

We provided copies of a draft of this report to the Department of Labor 

and the Department of Education for review and comment. The 

Department of Labor provided technical comments on the use of its CPI 

data, which we incorporated as appropriate. The Department of Education 

did not have any comments. We received written comments from the 

National Association of College Stores (NACS) and the Association of 

American Publishers (AAP), the trade groups representing the companies 

we interviewed for this study. NACS generally agreed with our findings, 

stating that the report accurately portrayed the textbook industry. AAP 

agreed with some findings in the report, but expressed concern with 

respect to the data sources we used in our analyses and with 

characterizations provided by retailers and wholesalers on the impact of 

publisher practices on students. We carefully reviewed the data sources 

available on college textbook pricing, and found the data we used to be 

the most complete and reliable data available for our purposes. 

Additionally, we sought perspectives from publishers, retailers, and used 

book wholesalers, to ensure our characterization of the textbook industry 

was balanced and complete. Both NACS and AAP also provided technical 

comments, which we incorporated where appropriate. 

The college textbook market is complex, comprised of many publishers, 

retailers, and used book wholesalers. Textbooks include new and used 

books and can be combined with supplemental learning materials. 

Figure 1 illustrates the typical life cycle of a textbook and the roles of 

publishers, instructors, bookstores, wholesalers, and students. 

Background 
Page 5 GAO-05-806 College Textbooks 

Figure 1: The Typical Life Cycle of a College Textbook 

Publishers develop and produce textbooks and accompanying materials 

for instructors and students. While there are hundreds of college textbook 

publishers, there has been substantial industry consolidation in recent 

years, with sales at five of the largest publishers representing over 

80 percent of the market in 2004. Because developing a textbook involves 

a significant investment of time and resources, publishers carefully 

consider the potential risks and rewards before publishing a new 

textbook. Publishers consider market needs, including the size of the 

market and competing products. They also consider how the textbook 

would fit into their existing portfolios because they are more likely to 

publish in subject areas that complement successful existing textbooks. 

For example, a publisher that has successful textbooks for calculus might 

want to develop a textbook in an adjacent area like statistics. Publishers 

Development Distribution Purchase

Publishers produce 

textbooks and market them 

to instructors, who choose 

and assign textbooks

Bookstores stock new and 

used textbooks

Student pays retail 

price for new, or 75% 

of the new retail price 

for used, if available

Bookstore buys used 

book

Student gets 50% of 

new retail price

Instructor reorders 

book

Instructor does not 

reorder book

Wholesaler buys used 

book

Student gets 5 to 35% 

of new retail price

Student keeps book, 

gets no money back

Students purchase and use books,

then decide whether to keep or sell them

Student trades/sells 

book to friend or 

online buyer, may 

get some money 

back

New edition released 

or no buyback 

possible, student 

gets no money back

·

·

·

·

·

Bookstore buys used 

books from 

wholesalers for 50% 

of new retail price

· Instructors

Publishers

Bookstores

Wholesaler Bookstore buyback

Students

Source: GAO analysis (presentation). Art Explosion and Clipart.com (images).
Page 6 GAO-05-806 College Textbooks 

may also consider what value they can add by publishing a given textbook 

to move beyond reproducing what is already available in the market. 

Publishers direct their marketing efforts at instructors, and sometimes 

academic departments that make the decision about the course materials 

they will use and ultimately require their students to purchase. Publishers 

employ sales representatives who often call on instructors in person to 

discuss product options and provide instructors with free sample 

textbooks and instructional materials for consideration. Publishers also 

market their products at professional conferences and meetings, as well as 

through targeted mailings. Sales representatives typically receive a base 

salary and have the opportunity to earn commissions based on the volume 

of new course materials that are sold. They receive no compensation for 

materials that students purchase used. 

College textbook retailers collect information about the materials 

instructors have selected for their courses and stock them for student 

purchases. Located both on and off campus, college textbook retailers are 

made up of a diverse group of businesses including independent 

booksellers, campus cooperatives, and large retail chains. The National 

Association of College Stores reports that about half of college textbook 

stores are owned by the postsecondary institution they serve and one-third 

are operated through lease agreements by outside companies. The 

companies that operate stores on college and university campuses through 

lease agreements typically pay a commission based on the total volume of 

sales to the postsecondary institutions in lieu of rent. It is not uncommon 

for the colleges and universities that contract with them to limit the 

margin on textbooks. 

As bookstores receive information from instructors on the books required 

for the upcoming term, they determine the number of textbooks to order 

based on factors such as estimated enrollment and previous sales. Even 

with information on the number of students enrolled in the class, it can be 

difficult to estimate the number of books students will buy because many 

colleges and universities are served by more than one bookstore and 

students may also obtain textbooks from a variety of other sources. 

According to the National Association of College Stores, over 

900 postsecondary institutions are served by multiple bookstores, with 

over 70 bookstores serving the 10 largest colleges and universities. 

Additionally, because students now have the opportunity to purchase their 

textbooks via the Internet from online retailers, no bookstore is without 

competition. 
Page 7 GAO-05-806 College Textbooks 

Retailers also attempt to make used books available to students, 

recognizing that many students prefer to purchase used books because 

they are generally less expensive. Bookstores generally buy as many used 

textbooks from their students as possible and then turn to used textbook 

wholesalers to obtain additional copies. However, the demand for used 

textbooks is much greater than the available supply, which is estimated to 

be between 25 and 30 percent of all textbooks in the market. The ability of 

bookstores to make used books available depends, in part, on how early 

they are aware an instructor will use a certain title. Receiving an order for 

a textbook by the end of a term increases the ability bookstores have to 

purchase used textbooks, particularly if the book is currently being used 

and they can buy back the book directly from students who have finished 

using it. Once the supply of used books has been exhausted, bookstores 

complete their orders with new textbooks from publishers. When 

instructors require new editions or materials that publishers have 

customized specifically for their course, bookstores must rely exclusively 

on publishers to fulfill their orders. 

Wholesale companies facilitate the circulation of used textbooks by 

purchasing used books from retailers and directly from students to 

distribute to other retailers in need of used textbooks. Three major 

wholesale companies distribute textbooks nationally, and several smaller 

wholesalers distribute textbooks in specific regions of the country. Two of 

the national wholesalers also operate retail bookstores, and the other is 

tied to a retail chain through common ownership. Wholesalers have 

developed a complex model for determining the wholesale value of any 

given textbook based on factors such as demand, the available supply, and 

when a new edition is likely to be released. Because the supply of used 

books is limited and demand is high, wholesalers rank retailers in order to 

determine which will get first priority in receiving the used books they 

desire. Generally, national wholesalers give first priority to retailers that 

supply them with the most used books and do not return many of the 

books they purchase. To encourage bookstores to supply used books, 

wholesalers pay a commission and cover the cost of shipping the books to 

their warehouses. 

While students have little choice over which textbooks they must 

purchase, they have some choice in where they buy their textbooks. Many 

campuses are served by multiple bookstores, and students may also be 

able to obtain their books through book exchanges on their campus. 

Advances in technology have allowed students to bypass traditional 

textbook outlets with expanded purchasing options online. A local 

bookstore may provide convenience, speed, and return options, while 
Page 8 GAO-05-806 College Textbooks 

online retailers and student-to-student exchanges may offer lower prices. 

In some cases, textbooks meant to be sold in international markets at 

lower prices are also available to U.S. students through online retailers. 

In addition, students can sometimes offset their costs by selling back their 

books at the end of the term. Generally, if a book is in good condition and 

will be used on the campus again, bookstores will pay students 50 percent 

of the original price paid. If the bookstore has not received a faculty order 

for the book at the end of the term and the edition is still current, 

bookstores may offer students the wholesale price of the book, which 

could range from 5 to 35 percent of the new retail price. This practice 

allows bookstores to provide an added service to students while 

supporting the national availability of used books. Students can also sell 

their books online to a wholesaler or to an individual. However, if a new 

edition of the book is forthcoming, students would not generally be able to 

sell back the book. 

College textbook prices have risen at double the rate of inflation for the 

last two decades but have followed the trend of tuition increases at 

postsecondary institutions. The average growth in college textbook prices 

has been 6 percent per year since academic year 1987-1988, ranging from 

4 percent in 1993-1994 to 9 percent in 1989-1990.2

 Meanwhile, tuition and 

fees have increased at an average of 7 percent per academic year during 

the same period, while overall price increases averaged 3 percent per 

academic year. Not only have textbook prices steadily increased each 

year, but the overall change in textbook prices has been substantial. 

According to a BLS research series on the CPI for college textbooks 

shown in figure 2, prices in December of 2004 were 186 percent higher 

than they were in December of 1986, the first month in which data were 

available, compared with a 240 percent increase in the cost of tuition and 

fees at colleges, universities, and professional schools.3

 Overall price 

inflation was 72 percent during the same time period. 

 2

An academic year is defined as September through August for this analysis. 

3

The CPI measures the average change over time in the prices paid by urban consumers for 

consumer goods and services, and the CPI for college textbooks measures the average 

change over time of the price that students and their families pay for college textbooks. 

College Textbook 

Prices Have Grown at 

Twice the Rate of 

Inflation, Trailing 

Annual Tuition 

Increases 
Page 9 GAO-05-806 College Textbooks 

Figure 2: Annual Percentage Increase in College Textbook Prices, College Tuition 

and Fees, and Overall Price Inflation, December 1986 to December 2004 

Note: Data have not been seasonally adjusted. 

With certain publisher packaging practices, supplementary products may 

sometimes be included in the price of the textbook for this index, but it is 

not possible with available data to determine the extent to which these 

practices may have contributed to price increases. The prices collected for 

BLS’s textbook index represent new college textbook prices at colleges, 

universities, and professional schools at which textbooks are required.4

Because only the price of the textbook is collected, the prices of any 

supplementary materials that may be available are typically not reflected 

 4

Although only new textbook prices are collected, standard industry pricing practices 

generally result in used book prices tracking the movement of new book prices. 

Wholesalers and retailers agree that the standard pricing practice for used books is to 

assign a price that is equal to 75 percent of the new price of the same book, so that if the 

new book price increases by 3 percent, the used book also increases by 3 percent. 
Page 10 GAO-05-806 College Textbooks 

in the index. However, if the textbook is only available at the bookstore in 

combination with some other course material—a practice commonly 

referred to as bundling—then the price of the entire bundle is collected. 

Officials at the Bureau of Labor Statistics told us that the practice of 

bundling has become increasingly prevalent in recent years. However, they 

told us it is not possible to determine with the information available the 

extent to which bundling may have contributed to increases in college 

textbook prices. For more information about the methodology used for 

constructing this index, please refer to appendix I. 

Increases in college textbook prices were particularly high for the 

academic years 1989-1990 and 2001-2002, at 9 percent and 8 percent 

respectively. Since 2001-2002, the growth in textbook prices has been 

slowed, increasing by 5 percent in 2003-2004. Appendix II contains more 

details on average annual changes in textbook prices. 

While increases in textbook prices have not followed far behind hikes in 

college tuition and fees, the cost of textbooks and supplies as a percentage 

of tuition and fees varies for degree-seeking students attending different 

types of institutions. According to data from Education’s Integrated 

Postsecondary Education Data System, first-time, full-time students 

attending 4-year private, nonprofit colleges were estimated to spend $850 

for books and supplies in their first year, or 8 percent of the cost of tuition 

and fees during academic year 2003-2004, as shown in figure 3.5

 In 

contrast, first-time, full-time students paying in-state tuition at 4-year 

public colleges or universities were estimated to spend 26 percent of the 

cost of tuition and fees on books and supplies, or $898, during the same 

period. At 2-year public colleges, where low-income students are more 

likely to begin their studies and tuition and fees are lower, first-time, fulltime students are estimated to spend 72 percent of the cost of tuition and 

fees on books and supplies.6

 Specifically, 2-year public colleges estimated 

that their first-time, full-time students would spend about $886 in 2003-

2004 on books and supplies. In 2002-2003, the last year for which 

 5

We did not validate the methodology the institutions used to derive these estimates. These 

estimates are gross, that is, they do not estimate what students might receive if they resell 

their books. Because retailers may pay up to 50 percent of the retail price for used 

textbooks, students’ net costs may be reduced substantially. Also, while these figures 

include the cost of supplies, we cannot disaggregate those cost from the totals. More detail 

on Education’s definition of supplies is in appendix I. 

6

Estimates for 2-year students are for students who are legal residents of the locality in 

which they attend school and thus receive any reduced tuition charges that may be offered 

by the institution. 
Page 11 GAO-05-806 College Textbooks 

enrollment data are available, students attending 2-year public colleges 

represented 42 percent of all postsecondary students. 

Figure 3: Estimated Cost of Textbooks and Supplies as a Percentage of Tuition and 

Fees, Academic Year 2003-2004 

While publishers, retailers, and wholesalers all play a role in textbook 

pricing, the primary factor contributing to increases in the price of 

textbooks has been the increased investment publishers have made in new 

products to enhance instruction and learning according to industry 

executives we interviewed. In particular, publishers point to the high cost 

associated with the development of technology applications that 

supplement traditional textbooks. Publishers told us they have made these 

investments to meet changing needs of higher education, such as the 

increase in part-time faculty who require greater instructional support and 

supplements that will enhance student learning of the subject matter. 

While wholesalers, retailers, and others do not question the quality of 

these materials, they have expressed concern that the publishers’ practice 

of packaging supplements with a textbook to sell as one unit limits the 

opportunity students have to purchase less expensive used books. 

Additionally, wholesalers, retailers, and others have expressed concern 

Publisher Investments 

in New Products 

Have Contributed to 

Increases in Textbook 

Prices 
Page 12 GAO-05-806 College Textbooks 

about how certain publisher practices, such as revising textbooks more 

frequently and increasing the availability of custom publishing options for 

instructors, have affected their ability to help students save money by 

providing used textbooks and buyback services. 

Publishers set the net price, or the price bookstores pay publishers to 

obtain the textbook, based on development and production costs, 

expected sales, and competition from comparable products available in 

the market. While the amount spent on development and production varies 

across publishers and specific titles, the publishers to whom we spoke 

underscored the substantial investments they make before a single 

textbook is sold. These include the cost of author advances, the 

development of content for the textbook and supplements, copyrights and 

permissions for illustrations and photographs, along with the cost of 

typesetting and printing enough copies to provide sample copies and cover 

expected sales. 

In estimating expected sales of textbooks, publishers must consider the 

size of the overall market for a given textbook, the amount of market share 

they can reasonably capture based on the availability of competing 

products, and the availability of used books in subsequent years. The 

publishers we talked to focus heavily on publishing textbooks for 

introductory-level courses because the market is larger, even though 

competition for market share tends to be greater. Publishing in smaller 

markets can still be attractive, though, according to one publishing 

executive, because publishers may be able to attain greater market share, 

as there are generally fewer competing titles. Regardless of the market for 

a particular textbook, publishers told us that new textbook sales are 

highest in the first year an edition is available, with sales declining each 

year as the supply of used books becomes greater. 

Publishers told us that they must price their textbooks based on what 

similar textbooks in the market are selling for, even if it will not generate 

enough revenue to offset their costs or they could lose sales to more 

competitively priced products. As a result, publishers noted that textbooks 

may not realize a profit in the first year of publication. Publishers told us 

that they are willing to take this financial risk because of the long-term 

rewards they expect for successful textbooks. 

While each college store determines its own pricing model, many utilize a 

similar approach for determining the price of new and used textbooks. 

Bookstores set the retail price to ensure a certain percentage of the selling 

How Textbooks Are Priced 
Page 13 GAO-05-806 College Textbooks 

price goes to the bookstore. This percentage, commonly referred to by 

retailers as the margin,7

 covers bookstore costs and may allow the store to 

realize a profit. While the margin may vary at different individual 

bookstores, the average margin on new college textbooks among stores 

reporting to the National Association of College Stores is about 

23 percent.8

 The margin on used textbooks, however, is typically higher. 

Used textbook prices are directly linked to new textbook prices as 

retailers and wholesalers typically follow a traditional pricing practice. 

According to this practice, retailers purchase used books from 

wholesalers at 50 percent of the new retail price and in turn charge 

students 75 percent of the new retail price to purchase the book. This 

pricing practice results in a 33 percent margin on used books for 

bookstores. Table 1 illustrates the typical pricing practice for a new and 

used textbook. College bookstores justify higher margins on used 

textbooks based on increased inventory risks and resources involved in 

preparing the books for resale.9

 

Table 1: Illustration of Typical Textbook Pricing Practice for $100 Publisher-Priced 

Book 

 Net price Retail price Price increase 

Margin (price 

increase ÷ retail 

price)

New textbook $100 $129 $29 23%

Used 

textbook $65 $97 $32 33% 

Source: GAO analysis. 

Note: Prices rounded to the nearest dollar. 

 7

Two terms, markup and margin, are commonly used to describe the difference between 

the net (or publisher) price and the retail price of textbooks. Publishers commonly refer to 

the markup, or the price increase relative to the publisher price, while college bookstores 

typically refer to the margin, the percentage of the retail price that they keep. 

8

National Association of College Stores, 2005 College Store Industry Financial Report 

(Oberlin, Ohio: 2005). 

9

For example, buying back books from students represents an inventory risk because it 

requires a substantial financial investment, which bookstores cannot recoup until they sell 

the books to another student or a wholesaler. 
Page 14 GAO-05-806 College Textbooks 

The factors that publishers consider in determining the price of their 

textbooks has not changed over time, but the nature of offerings from 

higher education publishers has changed in recent years. Publishers say 

they have invested heavily in developing additional textbook supplements 

for instructors and students, particularly resource-intensive technology 

applications, and ensuring that the content they provide is updated with 

the most current pedagogy and examples. Publishers told us they are 

making these investments in response to the changing needs of the higher 

education community and to remain competitive in the marketplace. While 

supplements are not new, publishers told us the number and variety of 

supplements available for a given textbook have increased substantially in 

the last 10 years. 

Even though there has been widespread consolidation among textbook 

publishers over the last 20 years, publishers characterized the textbook 

market as intensely competitive and said this competition drives what 

products they offer and ultimately how they price their textbooks. 

Because the adoption process in which instructors select the textbooks 

and materials they wish to use in their courses is central to ensuring sales, 

publishers told us that they focus their efforts on developing textbooks 

and accompanying materials that will meet the diverse needs of 

instructors and their students. To ensure their products are appealing to 

instructors, publishers say they must offer a wide range of materials that 

accommodate a variety of teaching and learning styles. Publishers fear 

that if they are unable to keep up with offerings of their competitors they 

will lose adoptions and ultimately market share. One industry analyst we 

spoke to speculated that the consolidation of publishers and a lack of new 

entrants are largely factors of the enormous investments required to 

compete in the marketplace. The analyst said that by consolidating, 

publishers may gain economies of scale and spread their overhead and 

other costs across more titles. 

Publishers say the investments they are making in product development 

are largely in response to changes in higher education that have resulted in 

publishers playing a more central role in facilitating instruction and 

learning. For example, publishers have always provided no-cost 

instructional supplements to help faculty teach their courses, but these 

offerings have intensified in recent years. In particular, publishers told us 

that the increased demand for instructional technology applications has 

resulted in high development costs. They say that since the advent of the 

Internet, postsecondary institutions have made substantial investments in 

technology and increased their expectations for instructors to make use of 

technology in the classroom. In response to this demand, publishers have 

Publishers Have 

Developed New Product 

Options to Meet Perceived 

Needs of Instructors and 

Students 
Page 15 GAO-05-806 College Textbooks 

invested millions of dollars in developing content that can be delivered via 

technological applications, such as Web sites and CD-ROMs, to 

accompany their textbooks. Some of these applications are designed to 

help instructors be more effective in the classroom, while others are 

intended for student use to enhance their learning of the material. 

Publishers told us that they have tailored their instructional supplements 

to enhance instructor productivity and teaching, largely to meet the needs 

of instructors in an environment of funding cuts. Publishers say tools 

designed to enhance instructor productivity are in demand because 

reductions in the number of teaching assistants available to help 

instructors have increased the administrative burden for instructors. For 

example, publishers have developed online homework and quizzes that 

allow instructors to track student progress quickly, saving instructors 

time. The homework and quizzes students complete online can be graded 

immediately to provide both the instructor and students with immediate 

feedback on performance. The need for greater teaching support is 

another area in which publishers told us there has been increased demand, 

stemming largely from a reduction in the employment of full-time tenure 

track faculty at institutions across the country. Publishers say they are 

now providing more extensive curricular support including lesson plans, 

homework sets, multimedia lectures, and even workshops on specific 

teaching approaches. While these materials are provided at no cost to 

instructors, the cost of developing them is built into the price of the 

textbook. 

Publishers also described a wide array of supplements that faculty can 

adopt that are intended to enhance student learning and success in the 

course. Publishers say there is a growing demand for these products 

because the number of students who are unprepared for college-level 

work has been increasing. Student supplements are either sold separately 

or bundled with the textbook, but the bulk of the development costs are 

typically built into the price of the textbook, according to publishers. 

While publishers produce print supplements, such as study guides and 

solutions manuals to accompany their textbooks, technology content 

represents the area in which publishers say they are investing more 

substantially. For example, one publisher told us the company had 

invested over $1 million in the development of a CD-ROM that provides 

three-dimensional images to enhance learning in anatomy. In the short 

term, these investments are very costly for publishers, but publishers are 

predicting increased demand for these products over time, with more 

content delivered digitally. Electronic content is appealing to publishers 

because sales of these products would be less affected over time by the 
Page 16 GAO-05-806 College Textbooks 

used textbook market than print products, which can more easily be 

bought and sold in the used textbook market. Specifically, passwords to 

restricted access Web sites cannot be resold, and there is no national used 

market for other types of electronic products, such as CD-ROMS and 

software, because retailers and wholesalers cannot easily verify that the 

products are functional once they have been used. 

Wholesalers, retailers, and some public interest groups acknowledge that 

publishers are making substantial investments to develop textbooks and 

supplementary materials, but they have expressed concern about the 

impact some publisher practices may have on student costs. In particular, 

they think some of the strategies employed by publishers, such as 

bundling textbooks with supplements and revising textbooks more 

frequently, may limit the ability students have to decrease their costs by 

purchasing less expensive used textbooks. 

Wholesalers, retailers, and some public interest groups agree that there 

has been a proliferation of supplements in recent years, and they have 

expressed concern about the increasing practice of selling supplements 

and textbooks bundled together in a package. While wholesalers and 

retailers do not question the quality of these materials, they suggest the 

practice of combining these supplements with textbooks limits students’ 

ability to reduce their costs by purchasing less expensive used books and 

choosing which, if any, supplements they want to purchase. Retailers told 

us that when bundling started becoming more common, it became difficult 

for them to obtain supplements separately from publishers to provide 

students the option of buying a used book and selected supplements. 

Though publishers say that most supplements are now available 

separately, retailers said that because publishers often discount bundles, 

most of the savings students could expect from purchasing a used 

textbook would be negated if they bought the supplements separately. For 

example, a new book may be bundled with an access code to a companion 

Web site at no additional cost to the student. Students who choose to buy 

a less expensive used textbook will have to purchase the access code 

separately, but the combined cost of the used book and the access code 

will be similar to the price of the new course materials sold in a bundle. 

One retailer also noted that publishers assign every product a unique 

identification number, whether sold individually or bundled. Because the 

identification number for a bundle varies based on the specific 

combination of materials included in the package, the retailer told us it 

can be difficult to identify the individual components in the bundle to 

order them separately from publishers or, when available, through the 

Wholesalers, Retailers, and 

Others Express Concern 

That Some Publisher 

Practices May 

Unnecessarily Increase 

Costs to Students 

Concerns about Bundling 
Page 17 GAO-05-806 College Textbooks 

used textbook market. Publishers note, however, that the standard 

industry practice of assigning each bundle a unique identification number 

is intended to make it easy for students, retailers, and wholesalers to 

obtain a complete description of the bundle’s contents by entering the 

identification number online. 

Publishers told us that textbook sales representatives work to identify 

materials that will best meet a given instructor’s needs and generally 

bundle course materials with the textbook when the instructor desires it. 

However, retailers said that instructors are often unaware that the course 

materials they selected will come bundled, based on routine follow-up 

discussions that stores have had with instructors. Retailers told us that 

many instructors want the supplements to be available for their students 

but also want students to have the option of buying a used book. However, 

some publishers say that the discounts available on bundles are a selling 

point with instructors, along with the assurance that students will 

purchase the correct course materials. 

While publishers typically allow retailers to return new textbooks that are 

not sold without penalty if the textbooks are in new condition, when 

course materials are bundled together they can be returned only if the seal 

is unbroken. Retailers explained that their stores offer generous return 

policies to accommodate students who, for example, buy the wrong 

course materials or drop a course. If a student has broken the seal of the 

bundle, retailers say they will not be able to return the materials to the 

publisher for a refund. One retailer told us that its stores will generally 

accept returns of unsealed bundles to minimize ill will with students but 

that they would have to absorb the return as a loss. 

Some publishers acknowledged that there has been resistance to the 

practice of bundling, and some told us they are now more carefully 

considering when bundling may be appropriate. While the practice is 

designed to provide students with greater value, publishers understand 

that students must perceive that value for a bundle to sell. Publishers say 

they are also beginning to understand that as students may be sensitive to 

high prices, they must strike a balance between quality and price. For 

example, one publisher provided an example of a bundle that did not sell 

well because the number of components increased the price beyond what 

students were willing to pay. While the publisher knew that the textbook 

and the individual components would retail separately for much more, 

students perceived the price as too high. Publishers also told us that 

bundling is most effective when instructors make use of all the materials 

included in the bundle and stress their importance to students. Publishers 
Page 18 GAO-05-806 College Textbooks 

understand that when students spend money for course materials that are 

never used they may perceive the purchase as unnecessary. 

Industry representatives and some public interest groups also suggested 

that publishers are revising textbooks more frequently, and some 

expressed concern about the financial impact revisions have on students. 

Retailers and wholesalers told us that because instructors typically use the 

most current edition of textbooks in their courses, the previous edition 

becomes obsolete once a new edition is released. Once retailers and 

wholesalers learn of a pending new edition, typically several months in 

advance of the release date, they said the buyback value drops rapidly to 

zero. Once a new edition is released, retailers say they generally cannot 

buy back an old edition from students, a practice that helps students 

reduce their costs. 

Publishers agreed that the revision cycle for many books has accelerated 

over time, but most said that it has been stable in recent years. While 

textbook revision cycles can vary based on several factors, such as the 

level of the course and the discipline, publishers told us that textbooks are 

generally revised every 3 to 4 years, compared with cycles of 4 to 5 years 

that were standard 10 to 20 years ago. Publishers say that the revision 

cycle is driven by instructors who want the most current material and may 

seek products from competitors if they are unable to meet the demand. 

Publishers cited a recent poll of 1,029 college professors commissioned by 

the Association of American Publishers that found that 80 percent of those 

polled think it is important that the material in the textbook be as current 

as possible.10 However, this may not be universal across disciplines. For 

example, over 700 mathematics and physics instructors from 150 

universities across the country have petitioned one publisher to delay 

revisions until there have been substantial changes in content or teaching 

methods that merit revision.11

Publishers noted that while not every revision results in substantial 

content changes, revisions must also be made for other reasons, such as 

changing teaching methods. For example, one publisher cited a teaching 

 10Zogby International, The Attitudes of College Faculty on the Textbooks Used in Their 

Courses (Utica, New York: December 2004). 

11As part of the state Public Research Interest Group’s efforts to advocate for lower prices 

for students, a number of faculty members signed a letter dated April 2004 calling on one 

publisher to change certain practices. 

Concerns about the Frequency 

of Revisions 
Page 19 GAO-05-806 College Textbooks 

approach from the 1980s that has regained popularity in calculus. 

Revisions may be based on current events, such as including recent 

accounting scandals in textbooks for business law and ethics courses, or 

recent elections in political science textbooks. Publishers told us that 

changes in industry standards that are relevant to a discipline may also 

necessitate out-of-cycle revisions or updates, such as pronouncements 

issued by the Financial Accounting Standards Board for accounting 

textbooks. 

Some wholesalers and retailers think that the revision cycle for some 

textbooks has the effect of limiting the used market. For example, retailers 

and wholesalers have observed that books for introductory-level classes 

are on a shorter revision cycle than other books, possibly because there is 

a greater supply of used books, as students are less likely to keep them. 

One publisher we talked to said that books for introductory classes are 

typically revised more frequently because demand for current content and 

technology applications is greater in these courses. Most publishers 

maintain that their decisions to revise a book are based on factors other 

than sales patterns. However, one publisher we spoke with said that the 

current revision cycle at the company is tied to the pattern of sales 

revenues, which all publishers agreed decline the longer the textbook is on 

the market and more used copies become available. Publishers estimated 

that in the second year of an edition they might sell 25 percent to 70 

percent of the textbooks that were sold in the first year, depending on 

level and discipline. Moreover, publishers say that they count on textbook 

revisions to recoup the initial investment costs of developing the textbook. 

They told us that first-edition textbooks are highly risky and that only 

about 20 to 30 percent of their first-edition textbooks are ever revised. 

However, they said that they are willing to take on this risk based on the 

long-term rewards they expect to receive from successful textbooks that 

are revised. 

Wholesalers, retailers, and some public interest groups have also raised 

concerns about other publisher practices that may limit students’ ability to 

purchase used textbooks, such as custom publishing, which allows 

instructors to customize their course materials by adding or deleting 

chapters from a single textbook or multiple textbooks. According to 

publishers, technological advances have made the practice more costeffective and the adoption of custom materials has been increasing. 

Publishers say that custom publishing appeals to instructors because it 

allows them to consolidate material from multiple sources into one 

textbook for their students. Publishers also think it provides students with 

good value because instructors are more likely to use all of the material 

Concerns about Other 

Publisher Practices 
Page 20 GAO-05-806 College Textbooks 

they select. Because the price of custom publishing is based on the 

content, the price of custom textbooks may be lower than for a traditional 

textbook, according to publishers. For example, students might pay less 

for one custom textbook than they would for several books the instructor 

might have required if customization was not available. Some publishers 

also observed that sales of custom materials tend to be better because 

instructors are committed to using all of the material, and there is no 

national used textbook market for them. 

Retailers and wholesalers said that because there is no resale market for a 

given custom textbook outside the campus where it was originally used, 

students may lose out on the ability to save money by buying used books 

and selling them back at the end of the term. One retailer expressed 

particular concern about a few specific instances in which textbook 

covers had been customized with the mascot or logo of a specific 

institution, but the content of the textbook was the same. Because these 

textbooks are designed for a specific campus and have a unique 

identification number, there is no national used market for them. In 

addition, retailers say that publishers place strict return limits—typically 

10 percent—on custom textbooks, even though traditional textbooks are 

usually fully returnable to the publisher. As a result, retailers say that they 

have to carefully balance their commitment to carrying an adequate supply 

of custom materials for students against the risk of exceeding the return 

limit if they do not sell enough copies. 

Wholesalers, retailers, and others are also concerned about the long-term 

cost implications for students that may result from publisher practices to 

provide lower-cost alternatives to the traditional textbook. Among these 

alternatives are loose-leaf textbooks that are designed to be placed in a 

binder and electronic textbooks that are available for purchase online. 

While these options may save students money initially, wholesalers and 

retailers are concerned about the long-term cost implications for students. 

For example, students may initially pay less for a loose-leaf textbook than 

they would for a textbook that is bound, but wholesalers and retailers said 

students would be unable to sell a loose-leaf book back because it is not 

possible to determine whether all the pages are intact. With electronic 

textbooks, students may pay about half of the price of a new textbook for 

password-protected access to an online version of the textbook. Until the 

password expires, students can access the textbook as many times as they 

wish, either reviewing the chapters online or printing a hard copy. Some 

public interest groups initially embraced the idea of electronic textbooks 

but now point out that students may run into technical difficulties if they 

have to rely on Internet access. Additionally, because access to the 
Page 21 GAO-05-806 College Textbooks 

textbook may expire, students may not have the option at the end of the 

term to keep the textbook. According to publishers, electronic textbooks 

have not caught on with students, and sales of these products have been 

unsuccessful. 

College textbook prices in the United States may exceed prices in other 

countries because textbook publishers assign prices that reflect the 

market conditions found in each country. The demand for textbooks can 

vary across countries because of, for example, differences in income levels 

or in the classroom role of textbooks. Publishers typically incur 

substantial costs in order to develop textbooks, but once these 

development costs have been undertaken, the additional cost of producing 

more copies is quite low. As a result, a publisher may be able to profitably 

sell textbooks in one country at prices that are closer to actual costs of 

printing and distributing additional copies while charging higher prices in 

the United States that reflect the substantial development costs 

undertaken. Two factors are typically cited as enabling a seller, such as a 

publisher, to profitably charge different prices to different buyers, such as 

textbook buyers in different countries. The seller must be able to 

distinguish among groups with differences in their willingness and ability 

to pay a given price, and the ability for these groups to buy and sell among 

one another must be restricted. Traditionally, the geographical separation 

of markets has made it difficult for U.S. students to acquire lower-priced 

textbooks from other countries. More recent developments in Internet 

commerce have reduced the costs for buyers in the United States to 

acquire textbooks from other countries, causing publishers to reexamine 

their distribution arrangements. 

Textbook publishers told us that college textbooks are developed 

primarily for sale in the United States, based on cost considerations and 

demand forecasts for the North American market, but that they sell 

textbooks in other markets when there is international demand. 

Textbooks developed for certain academic disciplines are more likely to 

have broader international appeal than others, according to publishers. 

For example, the content found in many mathematics, science, and 

engineering textbooks is essentially global in its applicability. However, 

the content found in textbooks used in other disciplines, such as political 

science, may pertain much more specifically to U.S. experiences, 

institutions, or culture. If international demand for a textbook exists, 

publishers may sell the same textbook that is sold in the United States, an 

international edition produced with less expensive materials, or an 

The Price of U.S. 

Textbooks Sold in 

Other Countries 

Varies according to 

Local Market 

Conditions 

Varying Local Market 

Conditions and Barriers to 

Importation Help Explain 

Textbook Price 

Differences between the 

United States and Other 

Countries 
Page 22 GAO-05-806 College Textbooks 

adaptation of the textbook that includes locally relevant examples. In 

international markets where the primary language spoken is not English, 

publishers may sell the rights to translate the textbook into the local 

language. 

In assigning prices to the different versions of U.S. textbooks sold in the 

international marketplace, publishers told us that they consider local 

market conditions and the willingness and ability of students to purchase 

the textbook. As there can be significant intercountry differences in the 

demand for textbooks, publishers told us that they make country-bycountry and book-by-book distribution and pricing decisions. Specifically, 

publishers told us that factors they consider in making pricing decisions 

are income levels, the cost of living, the role of the textbook in the 

classroom, intellectual property protections, the strength of the local 

currency, and the prices of competing textbooks sold in that marketplace. 

In some cases, international prices may be substantially lower than prices 

at which the textbook is sold in the United States, while in other cases, 

they may be the same as or higher than U.S. prices. For example, 

publishers told us that in many developing countries, incomes are 

generally too low for students to buy textbooks at U.S. prices. However, in 

areas where the cost of living is generally higher than in the United States, 

such as in Scandinavian countries, textbook prices may be higher. 

Publishers told us that they have to be particularly concerned about 

pricing at a level that is affordable to students in developing countries 

because of the threat of piracy in these countries. Although they already 

grapple with piracy in many of these markets, publishers say that even 

fewer legitimate copies would be sold in these markets if prices were too 

high. According to publishers, some countries do not have a strong 

commitment to intellectual property protections, but governments have 

been more responsive in dealing with piracy cases when textbooks are 

priced at a level that local students can afford. 

In addition to income levels, differences in instructional styles and 

systems of higher education influence publishers’ pricing decisions. For 

example, publishers told us that even though average income levels are 

high in the United Kingdom, textbooks tend to sell for lower prices than in 

the United States because the demand for textbooks is lower. Specifically, 

they said that instructors in the United Kingdom are more likely to 

recommend several textbooks for students to consider, rather than 

requiring a specific textbook. Additionally, publishers told us that there is 

less demand for electronic and print supplements to support teaching and 

learning in non-U.S. markets. Publishers also told us that because higher 
Page 23 GAO-05-806 College Textbooks 

education funding tends to be highly subsidized in the United Kingdom 

and European countries, students may not be willing to pay out-of-pocket 

costs for textbooks at U.S. prices. According to publishers, textbook 

prices in Canada and Australia tend to be similar to those in the United 

States because the instructional styles are similar in that instructors select 

specific textbooks for their classes. However, publishers noted that in 

these markets there is also greater demand for U.S. textbooks that have 

been adapted to the local culture or economy. 

The National Association of College Stores has criticized the practice of 

differential pricing, or the publisher practice of charging lower prices in 

some countries, saying that it is unfair for U.S. students to pay more for 

the same textbooks. However, the practice of differential pricing is not 

exclusive to textbook publishing and occurs both within and outside the 

United States. For example, GAO has reported on differential pricing in 

the airline industry, where business travelers typically pay much higher 

fares than leisure travelers.12 Likewise, we have reported on differential 

pricing of prescription drugs in the pharmaceutical industry.13 Publishers 

can afford to sell textbooks at prices that are sometimes lower outside the 

United States because once development costs have been incurred for the 

U.S. market, the incremental cost of producing additional copies for the 

international market is low. This allows publishers to sell textbooks in 

other countries at prices that are closer to printing and distribution costs 

while charging prices in the United States that better reflect the high costs 

of development. The publishers we talked to estimated that international 

sales make up from 5 to 15 percent of their total revenues. Some 

publishers speculated that without the added revenues from international 

sales, they would feel more cost pressure and would have to either 

increase U.S. prices or invest less in certain products. 

In order for international pricing differences to persist, there must be 

barriers that limit mass importation of less expensive U.S. textbooks from 

other countries. Such barriers ensure that individuals and businesses 

purchase from the intended distribution channels and insulate students 

 12GAO, Aviation Competition: Restricting Airline Ticketing Rules Unlikely to Help 

Consumers, GAO-01-831 (Washington, D.C.: Jul. 31, 2001). 

13GAO, Prescription Drugs: Companies Typically Charge More in the United States than 

in Canada, GAO/HRD-92-110 (Washington, D.C.: Sept. 30, 1992); and GAO, Prescription 

Drugs: Companies Typically Charge More in the United States than in the United 

Kingdom, GAO/HEHS-94-29 (Washington, D.C.: Jan. 12, 1994). 
Page 24 GAO-05-806 College Textbooks 

from awareness of price differences in other countries. Historically, the 

geographic separation of countries served as a natural barrier preventing 

such trade from occurring. Geographic distances and lack of information 

made it difficult for individuals or businesses in the United States to save 

money on textbooks by purchasing lower-priced textbooks in other 

countries and having them shipped to the United States, a practice 

commonly referred to as reimportation. However, recent technological 

developments in electronic commerce have diminished the effects of this 

natural barrier, increasing awareness of prices in other countries and 

making it easier for students and retailers to purchase lower-priced 

textbooks from international markets. 

Retailers and publishers have expressed concern about the reimportation 

of lower-priced textbooks from international locations. Specifically, they 

cited the ability students have to purchase books from online distribution 

channels outside the United States at lower prices, which may result in a 

loss of sales for U.S. retailers. Additionally, the availability of lower-priced 

textbooks through these channels has heightened distrust and frustration 

among students regarding textbook prices, and college stores find it 

difficult to explain why their textbook prices are higher, according to the 

National Association of College Stores. Retailers and publishers have also 

been concerned that some U.S. retailers may have engaged in 

reimportation on a large scale by ordering textbooks for entire courses at 

lower prices from international distribution channels. Concerned about 

the effects of differential pricing on college stores, the National 

Association of College Stores has called on publishers to stop the practice 

of selling textbooks at lower prices outside the United States. 

Publishers told us that they intend for the textbooks they distribute in 

other countries to be sold for use in those countries, not for resale to the 

United States, and so have taken recent actions to limit large-scale 

reimportation. Most of the publishers with whom we spoke say they are 

particularly concerned about the actions of foreign distributors and U.S. 

retailers that may result in large-scale reimportation of textbooks. As a 

result, publishers told us they have taken recent steps to limit the 

reimportation of textbooks in large quantities. Specifically, publishers told 

us that they have strengthened their agreements with foreign wholesalers 

to prevent the large-scale sale of U.S. textbooks back to the United States. 

Some publishers also said they have made an agreement with an online 

retailer outside the United States to limit the number of copies of a given 

textbook that can be delivered to a single U.S. address in one order. 

Because these measures target large-scale reimportation of U.S. textbooks 

Publishers Have Taken 

Recent Steps to Limit the 

Reentry of Their 

Textbooks into the U.S. 

Market 
Page 25 GAO-05-806 College Textbooks 

from international sources at lower prices, they will not prevent U.S. 

students from purchasing single copies of textbooks from international 

sources. 

College textbook prices have risen steadily, along with tuition and fees, 

and appear to have been largely driven by investments in supplements. 

While price increases have resulted in increasing costs for students and 

their families, they reflect a change in the characteristics of postsecondary 

education. Just as teaching and learning have changed with increasing 

reliance on technology, the college textbook has evolved from a standalone text to include a variety of ancillary products designed to enhance 

the educational experience for instructors and students. By increasingly 

becoming involved in the development of instructional aids, publishers are 

assuming roles that have traditionally belonged to postsecondary 

institutions. If publishers continue to increase these investments, 

particularly in technology, the cost to produce a textbook is likely to 

continue to increase in the future. 

Although changes in the nature of college textbooks are evident, it is 

difficult to assess the impact of these changes on students. Instructors can 

now select from a much wider variety of supplements to tailor their 

courses to the needs of their students, but these additional textbook 

offerings may come at an increased cost to students. While textbook 

prices have risen with tuition costs, these costs can vary greatly depending 

on the type of institution a student is attending. Because textbooks may 

represent a substantial portion of the cost of tuition and fees for students 

attending some public institutions, any increase in textbook prices may 

affect affordability and access disproportionately for some students. 

Consequently, while students may benefit from the advances in textbook 

supplements, they may not feel the price increases are justified relative to 

what they spend on tuition. Students may also think the amount they have 

to pay for their textbooks is unfair, especially if some of the same 

textbooks are available at lower prices outside the United States. 

Because the cost to students may not be the primary factor considered 

when publishers are developing textbooks that students are ultimately 

required to buy, the rate of textbook price increases is not likely to slow. 

Students may lower their costs by purchasing used textbooks and may 

search for lower-priced textbooks from online sources, including 

international retailers, and directly from other students. However, these 

options are unlikely to provide a sustainable source of lower prices 

because the supply of these textbooks is limited and international prices 

are subject to change. In addition, because publishers, wholesalers, and 

Concluding 

Observations 
Page 26 GAO-05-806 College Textbooks 

many retailers are profit-seeking firms, any widespread action that would 

lower costs to students at the expense of profits would be met with 

changes in their business practices, such as changing distribution patterns. 

We provided copies of a draft of this report to the Department of Labor 

and the Department of Education for review and comment. The 

Department of Labor provided technical comments on the use of its CPI 

data, which we incorporated as appropriate. The Department of Education 

did not have any comments. We also sought comments on our 

characterization of the textbook industry from the National Association of 

College Stores and the Association of American Publishers, the trade 

groups representing the companies we interviewed for this study. 

NACS generally agreed with our findings, stating that the report accurately 

portrayed the textbook industry. NACS also provided technical comments 

that we incorporated as appropriate. NACS’s comments appear in 

appendix III. 

AAP agreed with some findings in the report but expressed concern with 

respect to the data sources we used in our analyses and the tone and 

objectivity of the report. 

With respect to the data sources we used, AAP expressed concern about 

the limitations of the data we used in determining textbook price increases 

over time, and the proportion of tuition and fees that spending on 

textbooks and supplies represent for students at different types of 

postsecondary institutions. AAP also suggested alternative data sources 

for addressing these issues, but we found that they were not sufficiently 

reliable for our purposes. 

While AAP disagreed with our use of CPI data from BLS, these are the 

most complete and reliable data on textbook prices available. Further, we 

clearly disclose the limitations and definitions of the CPI data in the 

report. AAP’s claim that BLS data do not capture the “penetration of 

lower-cost alternatives” is not accurate. The college textbooks CPI is an 

index designed to capture the prices of assigned textbooks. To the extent 

that lower cost alternatives are assigned, they would be fully reflected in 

BLS’s index. AAP also suggested that the availability of alternative data 

from Student Monitor that differ substantially from the BLS data call into 

question our decision to use BLS data as a sole source. We disagree 

because the two data sources are not comparable. Student Monitor data 

are measuring annual changes in student spending, while BLS data 

measure annual price changes. 

Agency Comments 
Page 27 GAO-05-806 College Textbooks 

AAP also expressed concerns about the use of Education’s IPEDS data, in 

particular that estimates are for textbooks and supplies and that we did 

not validate the estimates postsecondary institutions provided. We use 

IPEDS data because they are the most complete data available on 

estimated student spending. As we state in appendix I, we tested IPEDS 

for reliability and note that other available data sources are not as 

complete or reliable. AAP also questions the appropriateness of 

measuring estimated spending on textbooks and supplies as a percentage 

of tuition. We present these data to provide perspective on college 

affordability—a primary federal policy concern. To address AAP’s 

concerns about what constitutes supplies, we have noted in appendix I 

that supplies are defined as usual costs incurred by a majority of students. 

AAP also expressed concern that in discussing estimates of student 

spending on textbooks, we did not take into account the extent to which 

students lower their costs through buyback. We have added this context 

where we discuss costs to students. 

AAP also provided additional data sources for consideration and 

expressed concern that deadlines prevented us from giving these sources 

appropriate consideration. We considered other sources available that 

provide estimates of student spending. Time was not a factor in our 

decision not to use the data, but rather we found these sources to be not 

as complete or as reliable as the IPEDS data. Student Monitor, one of the 

sources suggested by AAP, provides market research for those targeting 

college students as a consumer group. Student Monitor employs a 

nonprobabilistic sampling methodology using an intercept-based quota 

sample of 1,200 students covering 100 colleges and universities. Because 

of the sample selection process used, it cannot be used to estimate to the 

college student population as a whole for the purpose of addressing a key 

finding. Other industry sources AAP suggested provide estimates on the 

total size of the market, but they cannot be used to provide representative 

estimates on student spending for textbooks. 

AAP expressed concern about the tone and objectivity of the report, 

particularly the characterizations of retailers and wholesalers on the 

impact of publisher practices on students. In most instances we had 

already discussed issues raised by AAP in other sections of our report. 

AAP took issue with comments made by wholesalers and retailers 

regarding the impact of textbook revisions, bundling, and custom 

publishing on students’ ability to pursue lower-cost, used textbooks. We 

specifically provide information on the views of wholesalers and retailers 

to add balance and include more perspectives in our report. We provide 

publisher perspectives on why they revise textbooks and characterize why 

and how the revision cycle has changed over the last two decades. We 
Page 28 GAO-05-806 College Textbooks 

also extensively discuss in our report publisher perspectives on 

supplements, bundling, and other options, such as custom publishing, 

while capturing publisher views regarding their benefits. Wholesalers and 

retailers provided a different perspective on these practices as they relate 

to potential costs to students, which we captured in our report. 

More generally, GAO’s approach to this study was to rely primarily on 

publishers to provide information on how they price textbooks and gain 

their perspectives on the factors that influence price changes. We also 

sought out other experts in the field, including retailers and wholesalers, 

to better understand how students obtain textbooks and what factors 

affect the cost to the student. Retailers and wholesalers did not place 

blame on publishers but pointed out the impact of some publisher 

practices on students. We do not place any blame in our report on the 

publishers and do in fact note that they offer a variety of options for 

students, sometimes at a discount. We also note in our report that faculty 

have primary responsibility for determining what students are required to 

buy. 

AAP stated in its letter that it agreed with the findings related to 

international price differences and the report’s concluding observations. 

AAP also provided technical comments, which we incorporated as 

appropriate. AAP’s comments appear in appendix IV. 

As arranged with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from its 

issue date. At that time, we will send copies of this report to the 

congressional committees and subcommittees responsible for the Higher 

Education Act, the Secretary of Education, the Secretary of Labor, and 

other interested parties. Copies will also be made available to others upon 

request. In addition, this report will be available at no charge on GAO’s 

Web site at http://www.gao.gov. 
Page 29 GAO-05-806 College Textbooks 

If you have any questions about this report, please contact me on (202) 

512-7215. Key contributors to this report are listed in appendix IV. 

Cornelia M. Ashby 

Director, Education, Workforce, 

 and Income Security Issues 
Page 30 GAO-05-806 College Textbooks 

List of Requesters 

The Honorable George Miller 

Ranking Minority Member 

Committee on Education and the Workforce 

House of Representatives 

The Honorable Dale Kildee 

Ranking Minority Member 

Subcommittee on 21st Century Competitiveness 

Committee on Education and the Workforce 

House of Representatives 

The Honorable Major Owens 

Ranking Minority Member 

Subcommittee on Workforce Protections 

Committee on Education and the Workforce 

House of Representatives 

The Honorable Dennis Cardoza 

The Honorable Raul Grijalva 

The Honorable Maurice Hinchey 

The Honorable Dennis Kucinich 

The Honorable Carolyn McCarthy 

The Honorable Betty McCollum 

The Honorable Michael McNulty 

The Honorable Donald Payne 

The Honorable Bobby Rush 

The Honorable Tim Ryan 

The Honorable David Wu 

House of Representatives 
Appendix I: Objectives, Scope, and 

Methodology 

Page 31 GAO-05-806 College Textbooks 

To determine the extent to which textbook prices have changed over time, 

we reviewed college textbook pricing data from the Bureau of Labor 

Statistics’ Consumer Price Index (CPI).1

 The CPI measures the average 

change over time in the prices paid by urban consumers for consumer 

goods and services, and in the case of textbooks represents an index of 

change over time of the retail price of college textbooks, or the price that 

students and their families pay. While college textbooks have been 

included in the CPI since 1964, data on textbooks in the Bureau of Labor 

Statistics’ (BLS) research database only go back to 1986, when BLS 

collected textbook prices as part of an index on the price of books and 

supplies. The agency began publishing a separate CPI series on textbooks 

in 2001. Using these data, BLS constructed an unpublished research series 

on college textbooks for GAO for the period of December 1986 through 

December 2004. The index was compiled from three separate index series, 

as outlined in table 2. The implications on the index of these differences in 

methodology are discussed below. 

Table 2: Source and Methodology for CPI College Textbook Research Series Data 

Time period Source and methodology 

December 1986 to 

December 1998 

BLS produced the index using data collected for the 

Educational Books and Supplies CPI series. 

December 1998 to 

December 2001 

BLS applied a standard BLS calculation procedure to 

college textbook price data in order to generate the index. 

December 2001 to 

December 2004 

BLS used the published index for college textbooks, which 

employs quality adjustment methods.a

Source: BLS. 

a

For a detailed analysis of these quality adjustment methods, see BLS, Hedonic Quality Adjustment 

Methods for College Textbooks in the U.S. CPI (Washington, DC.: October 2001). 

The college textbook CPI is constructed using a probability-based 

selection process that identifies bookstores as well as textbooks that are 

assigned for use in courses of higher education. Prices for specific books 

are taken from a variety of bookstores located on and off campus, as well 

as from Web-based retailers, reflecting prices at public and private 

postsecondary institutions, including 2-year, 4-year, graduate, and 

professional schools. The sample composition changes each year for the 

following reasons: (1) books assigned to classes change over time, 

 1

Data for the college textbooks CPI have not been seasonally adjusted. Seasonal 

adjustment removes the effects of recurring seasonal influences from many economic 

series, including consumer prices. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology 

Page 32 GAO-05-806 College Textbooks 

(2) some books cycle out of circulation, and (3) a quarter of the sample 

rotates out annually. Similarly, the sample size for this research series 

varies over time as sampling procedures are modified and may range from 

200 to 500 price quotes. This variation in sample size does not affect the 

value of the index, though fewer observations may affect the variance of 

the index. Overall, BLS reports that the response rate for college textbook 

CPI data collection is very high, 88 percent. 

Most of the textbooks included in the sample are designated as required 

texts for courses offered by the college or university associated with each 

sampled bookstore. In some cases, the selected textbook may not be 

available for pricing because the course has been terminated, the course 

requires a different textbook, or the course is not offered every term. In 

instances in which the course is no longer offered and the textbook is not 

used in any other course, then the assigned textbook for a similar course 

is selected as a substitute. If the textbook is no longer used for the 

selected course, it is replaced with the textbook that is currently used for 

the selected course. If the book is temporarily out of use (for example, the 

course associated with the book is offered only in the fall semester), then 

the book is listed as temporarily not available and the price change is 

imputed based on the price changes of the other books. 

An important limitation to this research series is that prior to 2001, prices 

for such substitute books were not usually compared and no adjustments 

were made for any qualitative changes between the previous and 

substitute books.2

 With the introduction of quality adjustment in 2001, the 

index is adjusted when certain characteristics of a textbook change, such 

as a move from a major to a smaller publisher or a considerable change in 

the number of pages. If the new version of the textbook contains 

substantially different characteristics and quality adjustment values are 

not available, the price movement is imputed based on the prices of 

comparable textbooks. Because hedonic quality adjustment is 

implemented only for the published portion of the research series, for the 

periods before 2001, the index may have higher variance than the 

published index, which begins in 2001. 

In addition, BLS officials pointed out that textbooks are increasingly 

wrapped in packages along with additional materials, making it difficult to 

 2

Prices were compared only if the same book or a new edition of the same book was 

priced. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 33 GAO-05-806 College Textbooks 

collect all of the qualitative characteristics of the textbook. If the selected 

textbook is sold by itself, then only the textbook is priced. However, if the 

selected textbook is automatically sold with another item, such as a CD or 

workbook, then the agency must price the entire package. As a result of 

these packaging practices, it is sometimes difficult for BLS to obtain the 

information necessary for quality adjustment, and other times the price 

recorded as the textbook price may also include ancillary materials. 

To put changes in textbook prices into the context of other changes in the 

cost of higher education, we also reviewed CPI data on tuition and fees, 

which are constructed using a probability-based selection process and 

reflect the cost of tuition and fees at 2-year and 4-year institutions and 

professional schools.3

We analyzed data from the Department of Education’s (Education) 

Integrated Postsecondary Data System (IPEDS) to determine the 

proportion of tuition and fees that expenditures for textbooks and 

supplies represent.4

 Specifically, postsecondary institutions estimate the 

amount first-time, full-time, degree-seeking students will spend for an 

entire academic year on textbooks and supplies and report on the amount 

of tuition and fees. IPEDS defines books and supplies as the average cost 

of books and supplies for a typical student for an entire academic year (or 

program). Supplies are to include usual costs that are incurred by a 

majority of students. Supplies required of special groups of students, such 

as engineering or art majors, would not be counted unless they constituted 

a majority of students at the institution. The Department of Education has 

not established a comprehensive definition of what supplies are. 

However, an Education official told us that supplies can include such 

things as allowances for personal computers, but such expenses should be 

reported only if they are required for a majority of students at the 

institution. 

 3

Since the CPI for college textbooks is not seasonally adjusted, we relied on nonseasonally 

adjusted data for the overall CPI as well as the CPI for tuition and fees. There are no longterm significant differences between the nonseasonally adjusted and seasonally adjusted 

indexes. 

4

IPEDS is a system of surveys designed to collect data from all primary providers of 

postsecondary education. These surveys collect institution-level data in such areas as 

enrollments, program completions, faculty, staff, and finances. Data are collected annually 

from approximately 9,600 postsecondary institutions, including over 6,000 institutions 

eligible for the federal student aid programs. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 34 GAO-05-806 College Textbooks 

To assess the completeness of the IPEDS data, we reviewed the National 

Center for Education Statistics’ documentation on how the data were 

collected and performed electronic tests to look for missing or out-ofrange values. On the basis of these reviews and tests, we found the data 

sufficiently reliable for our purposes. We did not validate the methodology 

the institutions used to derive their estimates for the cost of books and 

supplies, and there has been no review of how well these institutional 

estimates actually predict student spending on textbooks and supplies. 

There are other sources available that provide estimates of student 

spending on college textbooks that we considered, but we did not find 

these sources to be as complete or reliable as IPEDS. The College Board 

collects estimates from postsecondary institutions on spending for books 

and supplies for full-time undergraduate students as part of its Annual 

Survey of Colleges. While the methodology employed was similar to that 

used for IPEDS, the survey included responses from a smaller population 

of institutions than IPEDS. Another source, Student Monitor, estimates 

spending on college textbooks based on student-reported expenditures. 

Student Monitor provides market research for those targeting college 

students as a consumer group. Student Monitor employs a 

nonprobabilistic sampling methodology using an intercept-based quota 

sample of 1,200 students covering 100 colleges and universities. Because 

of the sample selection process used, it cannot be used to estimate to the 

college student population as a whole for the purpose of addressing a key 

finding. 

To determine what factors have contributed to the change in college 

textbook prices, we interviewed executives from five of the largest 

textbook publishers, representing more than 80 percent of new textbook 

sales; the three national used textbook wholesalers; three companies that 

operate over 1,300 college textbook retail stores, or 29 percent of stores 

nationwide; the National Association of College Stores; the Association of 

American Publishers; and various other industry experts. 

To determine what factors have led to differences in the price of some U.S. 

textbooks in non-U.S. markets, we conducted a review of economic theory 

and relevant GAO work on differential pricing. We interviewed 

representatives from textbook publishers, operators of textbook retail 

stores, and used book wholesalers to determine the extent to which books 

may be available in other countries at lower prices, their analysis of the 

reasons behind these price discrepancies, and their concerns about pricing 

differences. 
Appendix II: Consumer Price Index Average 

Annual Percentage Growth, Academic Years 

1987-1988 to 2003-2004 

Page 35 GAO-05-806 College Textbooks 

CPI average annual percent increasea

Academic year, September-August College textbooks Tuition and fees Overall prices

1987-1988b 7.8 7.3 4.0

1988-1989 6.9 8.0 4.7

1989-1990 9.3 8.0 4.8

1990-1991 5.8 8.8 5.3

1991-1992 6.7 11.6 3.0

1992-1993 4.5 9.8 3.1

1993-1994 4.2 7.6 2.6

1994-1995 4.4 6.3 2.8

1995-1996 5.5 5.8 2.8

1996-1997 5.2 5.3 2.7

1997-1998 5.1 4.5 1.7

1998-1999 6.5 3.9 1.8

1999-2000 5.8 4.0 3.1

2000-2001 6.2 4.6 3.3

2001-2002 8.1 6.5 1.6

2002-2003 6.7 7.5 2.3

2003-2004 5.2 9.8 2.3

Average per year, 1987-2004 6.0 7.0 3.0

Source: BLS published Tuition and Fees CPI and overall CPI, unpublished College Textbook CPI research series. 

a

Data are not seasonally adjusted. 

b

Academic year 1987-1988 shows the growth in prices over the previous academic year, 1986-1987. 

Data for the 1986-1987 estimate lack the months of September through November, as data became 

available in December of 1986. As a result, the average price level in 1986-1987 is based on 

9 months of data rather than 12. 

Appendix II: Consumer Price Index Average 

Annual Percentage Growth, Academic Years 

1987-1988 to 2003-2004 
Appendix III: Comments from the National 

Association of College Stores 

Page 36 GAO-05-806 College Textbooks 

Appendix III: Comments from the National 

Association of College Stores 
Appendix III: Comments from the National 

Association of College Stores 

Page 37 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 38 GAO-05-806 College Textbooks 

Appendix IV: Comments from the Association 

of American Publishers 
Appendix IV: Comments from the Association of American Publishers 

Page 39 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 40 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 41 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 42 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 43 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 44 GAO-05-806 College Textbooks 
Appendix IV: Comments from the Association of American Publishers 

Page 45 GAO-05-806 College Textbooks 
Appendix V: GAO Contact and Staff 

Acknowledgments 

Page 46 GAO-05-806 College Textbooks 

Cornelia M. Ashby, Director, (202) 512-7215, ashbyc@gao.gov 

Bryon Gordon, Assistant Director 

Debra Prescott, Analyst-in-Charge 

Whitney Schott, Analyst 

In addition to those named above, Stephen Brown, Jonathan McMurray, 

and John Mingus made significant contributions to this report. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(130413) 
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