Commercial Space: No Bucks, No Buck Rogers!

[Danderman]

Why Space Business Is Hard:

In order to attract or justify investment, its necessary to identify a market that is satisfied by the project in question. For Virgin Galactic, the market is fairly obvious, although no one can say definitely that there is a market at a price point above $100K beyond a few hundred individuals. For satellite companies, the market exists today, no problem.

For Bigelow, its questionable if there is a market today for pressurized volume in LEO, even with a hypothetical visiting vehicle.

For Nanoracks and other companies developing capabilities for biological research in LEO, there may be a market:

http://forum.nasaspaceflight.com/index.php?topic=19519.msg777464#msg777464

[Cherokee43v6]

Why Space Business Is Hard:

In order to attract or justify investment, its necessary to identify a market that is satisfied by the project in question. For Virgin Galactic, the market is fairly obvious, although no one can say definitely that there is a market at a price point above $100K beyond a few hundred individuals. For satellite companies, the market exists today, no problem.

For Bigelow, its questionable if there is a market today for pressurized volume in LEO, even with a hypothetical visiting vehicle.

For Nanoracks and other companies developing capabilities for biological research in LEO, there may be a market:

http://forum.nasaspaceflight.com/index.php?topic=19519.msg777464#msg777464

Thus one of the reasons for the MOUs.  When no market previously exists, you use these to gauge interest, all the while knowing that your actual MOU to Paid customer conversion is likely to be on the order of 5% - 10%.

Assuming he has 30 MOUs (a number I recall hearing in a different discussion) that would be 2 - 3 actual customers at initiation.  This might be just enough for Bigelow to establish the market and thus be in a position to recruit further customers.

[oldAtlas_Eguy]

Assuming he has 30 MOUs (a number I recall hearing in a different discussion) that would be 2 - 3 actual customers at initiation.  This might be just enough for Bigelow to establish the market and thus be in a position to recruit further customers.

The conversion rate is dependent on the total cost per person per year. At a minimum this includes the cost of transporting 2 persons per year to the station. Making the transportation cost the largest variable on total cost.

For Example: At $25M per seat to $65M per seat that is a variation per year on cost of $80M. A MPCV seat could be higher than $100M. If Bigelow lease price is $50M to $100M (this includes Bigelow supplying cargo resupply to support 1 person per year continuous occupancy), making the total price $100M to $230M.

The lower the price the more additional customers Bigelow could attract. 3 customers with 2 person occupancy each that is spending a total of $200M each, is very different than if they were spending $500M each. Over 10 years that’s $2B or $5B. A price of $100M would attract many more customers probably as much as 5 to 10 times more than a price of $250M. 5 to 20 more customers would fill out a full 3 BA330 station in which the customers buy short term as well as long term occupancy. Most of these customers would be short term occupancy 1 to 6 months at from $30M to $50M, as dictated by their budgets or project needs. If the price is high (occupancy 1 to 6 months at from $75M to $125M) causing only acquiring 1 or 2 more customers which will not even fill out another module, Bigelow’s corporate growth would essentially be halted once two modules would be orbited. With a low price, increase in customers will decrease transport costs and cargo resupply costs lowering the price which will attract even more short term customers.

Let’s consider a business model for widget X. A $30M cost would allow the widget price to be $100 of which $30 is used to pay off the $30M space element costs. The product sells at high volume ~ 1 million units because it is under the current market price. A $75M cost would make the widget price to be $370 of which $300 is used to pay off the $75M space element costs. The product sells at low volume ¼ that of a product at $100 ~ 250 thousand units because it is higher than current market price so that the cost of the space element is quadrupled for each unit.

Under the second case the customer would not spend on use of space because it does not make business sense since without space he can beat the price.

[Orbital Debris]

Do you remember that Bigelow already has two demonstration vehicles flying? The biggest technological development was the ECSS, and Paragon is a partner of them.

Bigelow has 2 subscale models flying.

The biggest technological development for Bigelow is the development of something called a "paying customer"

You forget about "Fly Your Stuff".  He has had paying customers, myself among them.  My personal mementos currently are in LEO.  Actually, there were a surprising number of responses to this program.

To answer other comments, the original Sundancer concept was to be initially crewed by Bigelow Aerospace crew for shakedown and proof of concept prior to paying customers.  This means that the first launch would be "on his dime".  I believe this was stated in public.