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Value-based pricing: right Idea, wrong measure

I was never a fan of comparing the price of academic journals to an index that included breakfast cereal, apartment rent, and women's dresses [1]. I'm even less inclined to believe that the Producer Price Index used by the University of California Libraries is any better a comparative measure.

From the Bureau of Labor Statistics web page, "The category for
consumer goods other than foods and energy includes durables such as passenger cars and household furniture and nondurables such as apparel and prescription drugs." [2]

A journal is highly dependent upon people doing the production work. While a new machine can punch out 5 times as many wiggets per hour than in 1980, the output per knowledge worker is more or less static. This is why cost savings are hard to find in higher education, which by the way, are increasing by about 3-4% per year [3], and evoke much more concern from the public than the price of a scientific journal.

This is not to defend those publishers who charge prices that are not commensurate with the value they provide to libraries and their communities [4]. Analyses like the kind proposed by the University of California Libraries are desperately needed. My chief concern is how one systematically calculates something as aloof as "value" and what index one uses to compare price inflation. The CPI and PPI for consumer goods, I believe, are both inadequate for such comparisons.

--Phil Davis


[1] What goods and services does the CPI cover?

[2] Chapter 14. Producer Prices. http://www.bls.gov/opub/hom/homch14_b.htm

[3] Higher Education Price Index.

[4] Journal Cost-Effectiveness Tables and Graphs