Buy Low - Sell High -- textbook buying and selling

Yes, this is a familiar phase in the investing world. Something easier said than done if you don’t have the proper knowledge and discipline. But today I want to talk about this phrase relative to something that really is a no-brainer – buying and selling textbooks!

If you are in school, I would wager that textbooks are one of your largest expenditures. According to a July 2005 study by the U.S. GAO, “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, full-time student was $886 in academic year 2003-2004, representing almost three-quarters of the cost of tuition and fees.”[1]

These costs are outrageous but you can do something about it. My first rule is – avoid the campus bookstore. Sure the bookstore is convenient but you will be paying out of the nose, even if you buy a used book. You may be able to find a student on campus selling the text book but my advice would be to go online. The explosion in web sites that buy and sell textbooks is a testament to how over priced these books have been at campus bookstores. I would be happy to see a little free market competition challenging this monopoly! Google “textbooks,” “buy” and “sell” and you will get close to 7 million hits! Some of the more well known sites include Amazon, Barnes and Noble, and Half.com.

I just completed a Masters program and bought all of my books on Amazon. More importantly, I sold most of my books there as well. The net outlay for these books ended up being a couple of hundred of dollars – much less than the costs noted above. I am not necessarily endorsing Amazon over any of the other sites, I am just telling you what I used. I used Amazon because I was familiar with it and found it to work for me. You might find another site works better for you.

Buy Low
Buying textbooks online is so much cheaper and easy that I can’t understand why everyone doesn’t do it. I suppose the main drawback is the shipping time. If you wait until the first day of class to find out the required textbooks you may fall behind in the assignments. Please don’t let you grades suffer. The easiest fix to that is to get this information before class starts – either from the instructor or the bookstore website. You might also be able to share a book with a buddy or use the library’s copy while you are waiting for your book. Worse case, you can pay for express shipping – it will probably still be cheaper.

I sense that another reason students don’t comparison shop for books is because they are not paying for them. Your parents or employer might be paying these costs. I think it just makes good sense to spend others money just as prudently as you spend your own but I know that is not the easiest lesson to learn. But you might be able to make this a revenue generating activity. For instance, if you parents are buying the books, you might be able to work out a deal to get a percentage of the saving. This might even give you a jump start to saving (see the November 21, 2006 post “Just Do It!). It might be harder to work out the same kind of deal with your employer but I think they would be impressed knowing that you are spending their money wisely. It could be a career boosting move!

Sell High
Don’t forget the other side. As an undergraduate, I kept most of my textbooks, especially those for my major. I was a nerd – my guess is that most students don’t form such an attachment. For the others nerds out there, I would also tell you that there are probably very few textbooks that you should keep. Especially now as textbooks are changing so frequently, they become out-dated very quickly. Any reference material you need can be readily found on the internet or at local or company libraries. As with selling, avoid the bookstore. I am appalled by how little these bookstores offer While a little more effort is required to sell you books online, you will get far more money for them.

So what effort is required? Not much really. Again, with Amazon, all I needed to do was set up an account and list my book for sale. Amazon only charges a commission if something is sold (usually about 20%). Every two weeks any money due you is credited to your bank account (even if it is a small amount). The shipping is a bit of a pain because it requires a trip to the post office. I usually save the package that the book was mailed in and reuse it when I ship it out. The standard shipping is media mail where the rates are quite low and you do get a shipping credit so I usually find that it doesn’t detract from the amount that I receive. You have two business days to ship but I advertise that I ship within 24 hours of the order (I find that this encourages students to select my book because time is usually a factor. I also frequently offer expedited and international shipping for the same reason.). I suspect that I could have made more by using other sites but I used Amazon because it was pretty painless.

Just a few other points. I find that I need to highlight passages in my textbooks to fully absorb the information. Many students don’t do this because they plan on reselling it afterward. Don’t be penny wise and pound foolish. The emphasis should be on learning the material. If you need to highlight to learn, then that is what you should do. I find that it hasn’t hindered my ability to sell the books. I make sure that I accurately describe how much highlighting there is and price the book accordingly. There is a market for these books. Selling online also helps when you school updates to a new edition. Usually there is still a market for the older editions for a few more semesters for other schools that haven’t already switched to the new edition. Timing is also a factor, you want to make sure that you have your book listed a month or a few weeks before the semester. This will show you the current prices. If it doesn’t sell, try again for the next few semesters. I had a text that came out with a new edition and I thought I would never sell it. I checked a few semesters later and found that I actually got a better price by waiting!

And don’t forget – proceeds from these sales should be found money. Don’t just blow it away. Use it to start that saving account!

[1] http://www.gao.gov/new.items/d05806.pdf