Minding the Store

When it comes to textbook costs, publishers are often seen as owning all the levers. But Southern New Hampshire University (SNHU) recently decided to take a novel approach to reducing textbook costs for its students by reworking its contracts not with the companies that sell books, but rather those that control the bookstores.

The crucial step in this effort for SNHU, which operates both a traditional undergraduate campus and a lucrative array of online programs, was forgoing the commission it took in past years from the company that ran its physical and online bookstores, Follett Higher Education.

The university had been earning an 11 percent commission (and 12 percent of every sale once revenues exceeded $4 million), according to an internal analysis provided to Inside Higher Ed. In the 2011-12 academic year, the university made $500,000 from this commission.

As large vendors like Follett have taken over bookstores on many campuses, it has become common for universities to accept such commissions in exchange for giving the vendors the opportunity to cash in on the local demand for textbooks. And while other universities have struck deals with publishers for discounts on behalf of their students, attacking the cost issue by taking a pass on that kickback seems to be a rare move.

“It’s not common to waive it completely, that would be fair to say,” says Charles Schmidt, a spokesman for the National Association of College Stores.

Then again, SNHU is in the rare position of having an ample annual budget surplus that gives the institution room for such goodwill gestures. The financial success of the university’s online arm is well-documented, and it is largely to credit for SNHU’s having pulled in between $12 and $14 million more than it spent in each of the last few years, according to Paul LeBlanc, the president.

“We’re lucky enough to be in a place where our growth allows us to do this,” says LeBlanc.

SNHU recently notified Follett that it would be ending its current bookstore contract and soliciting new suitors. The idea was to forgo the university’s customary percentage on the condition that the bookstore vendor would set  the prices for SNHU students accordingly so that students, not the vendor, would benefit from the university’s largesse, says Amelia Manning, the associate vice president of student advising at SNHU, who led the negotiations.

The request for proposals garnered three viable offers. The university’s analysis, and its decision, can be viewed in the accompanying graphic. (SNHU requested that Inside Higher Ed withhold the names of the suitors because negotiations are not yet finalized.)

One of the driving forces behind the university’s effort to address textbook prices was internal survey data suggesting that 49 percent of SNHU students either buy their textbooks someplace other than the campus bookstore or do not buy them at all. LeBlanc says this might be a barrier to student success. The university does not know exactly how many of its students are simply not buying textbooks, but studies have suggested that many students sometimes skip textbooks because they are expensive, and feel as though their academic work suffers as a result.

In trying to push down the price of textbooks for its students, SNHU is hoping more students will actually buy the textbooks. That also was part of its pitch to vendors when it was negotiating for lower markups: If more students buy books, the vendors could make up the difference on volume.   

Based on the proposals it has received from vendors, along with expected enrollment increases, SNHU projects that it will save students $1.8 million on textbooks in 2012-13. Of course, savings for individual students could vary widely based on which courses a student is taking, which format she chooses for obtaining the textbook (new, used, rental or digital), and whether she buys the book in the physical store on campus or in the virtual store — each of which may be operated by a different vendor under the university’s new contracts.

And then there will be the hypothetical students buying their textbooks for the first time, who will be paying more than in past years when they tried getting by without.

Although this seems to be a rare example of a university using its leverage over commissions to address textbook costs at an institutional level, other universities have tried other tactics. Several institutions have struck deals with publishers in which the university underwrites the cost of textbooks and then charges students a flat fee for course materials. The fee is typically much less than the student would have otherwise paid buying the textbooks on his own; the publisher gives the university a heavily discounted price in exchange for a guarantee that the publisher will sell its content to every student, in every class, every year — as opposed to competing for repeat business with used-book sellers.

The problem with dealing directly with publishers, according to LeBlanc, is that it requires an institution to override the freedom of individual instructors to pick whose textbooks they want to use for their courses. And such deals can also be biased in favor of digital texts, such that students who prefer print may have to pay extra. “What goes out the window is choice,” says LeBlanc.

Manning says the university recognizes that its own levers to affect textbooks prices are not nearly as powerful as those of the publishers. But to the extent that SNHU can use its own privilege as a gatekeeper to address textbook costs at the point of distribution, she says, the university thinks it can at least nudge students toward relatively inexpensive options.