Author Topic: Reusability effect on costs  (Read 183172 times)

Offline macpacheco

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Re: Reusability effect on costs
« Reply #380 on: 05/09/2017 11:41 AM »
But SpaceX needs an explosion in launch volume to truly justify eventually reducing launch contracts by over 60 or 70% (perhaps even more). Its not enough to save a bundle on boosters and upper stages being reused. 6000 employees (and rising) require a lot of revenue just to make payroll and other bills.
True. In fact for that kind of price reduction you need full reusability. But with massive price reduction you have a massive fall in per launch revenue, unless you have an (equally) massive rise in launch numbers.

These facts have been known for decades by LV mfgs and are a key brake on changes to the one mfg/one operator business model.  :(
Actually... A properly sized 9 raptor first stage with a single raptor upper stage can also deliver hugely even if the upper stage is expendable, if each launch could be worth US$ 150-200 million like I suggested. In such a scenario, as long as the upper stage costs up to US$ 30 million, and can be mass produced efficiently, such a scenario could be far more economical than using FH to launch modest mass payloads in order to get the upper stage back. It really depends on how much performance reusing the F9/FH upper stage would take.
You need to keep in mind that if each Raptor 9 launch delivers up to a half a dozen 4-7 ton class satellites to GEO-500 m/s, each expended upper stage and reused booster is doing the job of a bunch of F9 boosters and upper stages. Booster low refurb is perhaps already within reach, but upper stage low refurb cost is still a big if. It might be cheaper to expend one Raptor 9 upper stage than refurb a FH upper stage 6x plus lets assume upper stages can only fly for a dozen times. The fully reusable F9/FH solution might not be better.
The main cost item that goes against my idea is the R&D and tooling cost to design a brand new rocket.

But if it could have a 100% common booster with mini ITS, that would change everything.

Of course, in the long run, we all want fully reusable rockets, but a full raptor rocket with double FH payload but F9 economics could be the more logical next step.
It would replace 100% of FH needs and move F9 launches that can be converted to triple or more manifest missions.
« Last Edit: 05/09/2017 11:52 AM by macpacheco »
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Offline M.E.T.

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Re: Reusability effect on costs
« Reply #381 on: 05/09/2017 11:46 AM »
Well, again, you can reduce prices significantly without reducing profit significantly, as long as you have a monopoly on reusability. Spacex can simply stick to charging say $45m per launch, even if it costs them just $20m. Until someone else also masters reusability. Then they just start undercutting the newcomer as required.

Offline macpacheco

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Re: Reusability effect on costs
« Reply #382 on: 05/09/2017 11:55 AM »
Well, again, you can reduce prices significantly without reducing profit significantly, as long as you have a monopoly on reusability. Spacex can simply stick to charging say $45m per launch, even if it costs them just $20m. Until someone else also masters reusability. Then they just start undercutting the newcomer as required.
Except in my idea GEO customers are getting a much, much, much better bang for their buck, and SpaceX is getting better return per payload delivered to orbit.
And the national security side would absolutely love this. GSO delivery of up to 20 ton satellites becomes... STANDARD !
And such a rocket could throw a super sized Dragon to Mars loaded the extreme...
« Last Edit: 05/09/2017 12:25 PM by macpacheco »
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Online John Alan

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Re: Reusability effect on costs
« Reply #383 on: 05/09/2017 02:52 PM »
SpaceX has absolutely no reason to charge much less then the market will bear... from a business standpoint.

As long as the COST (all in) of a launch is less then the PRICE agreed to in the contract = PROFIT

My opinion... the "market" thinks about $10 million profit is about right per launch...

And SpaceX (rightly so) has clearly put out there...
"Hey, we spent $1 billion R&D on this and we want to recoup that over the next few years"

That statement justifies them charging well above market perceived cost for the next few years...  ;)

Offline macpacheco

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Re: Reusability effect on costs
« Reply #384 on: 05/09/2017 03:09 PM »
SpaceX has absolutely no reason to charge much less then the market will bear... from a business standpoint.

As long as the COST (all in) of a launch is less then the PRICE agreed to in the contract = PROFIT

My opinion... the "market" thinks about $10 million profit is about right per launch...

And SpaceX (rightly so) has clearly put out there...
"Hey, we spent $1 billion R&D on this and we want to recoup that over the next few years"

That statement justifies them charging well above market perceived cost for the next few years...  ;)
Except Elon Musk has a solid track record of caring more about growth than profit.
The valuations SpaceX has already achieved in successive investments (Google, Fidelity, ...) is huge.
Investors care far, far, far more about 20+% yearly sales growth than profits. Specially if growth is accompanied by cost reductions.
In essence you're thinking like ULA/Ariane, not like Elon Musk.
SpaceX certainly will seek profitability, but absolutely not "sell at the highest prices the market will bear" profitability.
Perhaps you haven't heard about the US$ 1 billion/yr losses Tesla is incurring. At the same time they're growing at over 50% per year. An excellent investment of those US$ 1 billion/yr if you ask me. This year they might have a US$ 2+billion loss, as they spend a lot of money to tool for half a million cars/yr production.
Please, lets not start a Tesla discussion here.
Like I said before, if you don't understand how EM thinks, your predictions will be wrong. Mine could be wrong too, but I'm trying hard to think like he does. In fact I think my predictions will be wrong, because I'm thinking too small, rather than too big.

Your focus on short term profits is even smaller thinking !
« Last Edit: 05/09/2017 03:10 PM by macpacheco »
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Offline VIY

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Re: Reusability effect on costs
« Reply #385 on: 05/09/2017 03:13 PM »
An actual customer recently said:
Quote
Maxim Zayakov, chief executive of BulgariaSat, said the use of a reused first stage lowers the launch price and “makes it possible for smaller countries and companies to launch their own satellites.” [...]The satellite is a major undertaking for BulgariaSat, which has been working on the project for nearly 12 years. “Elon Musk and his SpaceX team have convinced me that people like them bring us closer to a new quality of life through providing access to cutting-edge technology,” Zayakov said in a statement. “This is a chance for Bulgaria to join the efforts to develop these new aspects of [the] space industry.”

Link: http://spacenews.com/bulgarian-satellite-to-launch-on-reused-falcon-9-in-june
Surrey Satellite Technology have been helping "small countries" put significant missions together and fly them as secondaries for decades. this sounds like a payload that's been a long time in building and had borderline funding to begin with.

I don't see one flight, that would have flown on the lowest cost launch opportunity they could get (probably F9 anyway) being statistically significant.

True, but the expected market elasticity will be to a large extend due to those kind of "borderline funded" customers. So they will not be statistically insignificant.

Offline gospacex

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Re: Reusability effect on costs
« Reply #386 on: 05/09/2017 03:14 PM »
SpaceX has absolutely no reason to charge much less then the market will bear... from a business standpoint....

Except Elon Musk has a solid track record of caring more about growth than profit.

Right now, Elon can't get more market share by lowering prices - his manifest is already full for the next few years. In this situation, lowering costs even more would be ridiculous.
Elon needs to launch faster (of course, he knows that), and _then_, when he has free slots in the manifest, he can lower prices to attract more customers.
« Last Edit: 05/09/2017 03:15 PM by gospacex »

Offline macpacheco

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Re: Reusability effect on costs
« Reply #387 on: 05/09/2017 03:23 PM »
Right now, Elon can't get more market share by lowering prices - his manifest is already full for the next few years. In this situation, lowering costs even more would be ridiculous.
Elon needs to launch faster (of course, he knows that), and _then_, when he has free slots in the manifest, he can lower prices to attract more customers.
Full manifest vs what launch capacity ?
Are you saying LC40 isn't coming up this year ?
Are you saying more customers aren't going to sign up for re used boosters (dramatically reducing Hawthorne and McGregor bottlenecks) ?
Or are you pretending orders are signed for launch next month ?
SpaceX is aiming for a launch per week perhaps still this year once LC40 is up.
And don't forget Boca Chica.
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Offline gospacex

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Re: Reusability effect on costs
« Reply #388 on: 05/09/2017 03:39 PM »
Right now, Elon can't get more market share by lowering prices - his manifest is already full for the next few years. In this situation, lowering costs even more would be ridiculous.
Elon needs to launch faster (of course, he knows that), and _then_, when he has free slots in the manifest, he can lower prices to attract more customers.
Full manifest vs what launch capacity ?
Are you saying LC40 isn't coming up this year ?
Are you saying more customers aren't going to sign up for re used boosters (dramatically reducing Hawthorne and McGregor bottlenecks)?

More customers can't sign up for a launch in 2017 or 2018 - SpaceX is fully booked. The best you can get is a launch somewhere in 2019. It's as simple as that.

Quote
SpaceX is aiming for a launch per week perhaps still this year once LC40 is up.
And don't forget Boca Chica.

"Aiming", yes. That's the word. It's quite different from actually managing to do it.
I very much want SpaceX to launch once a week, or even more often.
But it will take time to be a reality. I estimate no less than one year. So far they are launching four times slower, about once per month.

Offline M.E.T.

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Re: Reusability effect on costs
« Reply #389 on: 05/09/2017 03:42 PM »
The constraint to the development of Spacex's next generation of vehicles is not volume related. It is cash related. If Musk had Bezos's financial resources he would have a full team working on ITS already. Instead he has to pace his progress against the need to have the company not go bankrupt.

SpaceX needs quick cash more than it needs to grow its manifest right now. Extra billions earned in the short term will speed up a lot of development.

Musk is not following the loss making Tesla route with SpaceX, because too much is at stake.  The Tesla approach is a gamble that may well implode. The SpaceX approach is a far more incremental one, based on step by step progress while maintaining healthy cash reserves.
« Last Edit: 05/09/2017 03:43 PM by M.E.T. »

Offline JamesH65

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Re: Reusability effect on costs
« Reply #390 on: 05/09/2017 04:20 PM »
An actual customer recently said:
Quote
Maxim Zayakov, chief executive of BulgariaSat, said the use of a reused first stage lowers the launch price and “makes it possible for smaller countries and companies to launch their own satellites.” [...]The satellite is a major undertaking for BulgariaSat, which has been working on the project for nearly 12 years. “Elon Musk and his SpaceX team have convinced me that people like them bring us closer to a new quality of life through providing access to cutting-edge technology,” Zayakov said in a statement. “This is a chance for Bulgaria to join the efforts to develop these new aspects of [the] space industry.”

Link: http://spacenews.com/bulgarian-satellite-to-launch-on-reused-falcon-9-in-june
Surrey Satellite Technology have been helping "small countries" put significant missions together and fly them as secondaries for decades. this sounds like a payload that's been a long time in building and had borderline funding to begin with.

I don't see one flight, that would have flown on the lowest cost launch opportunity they could get (probably F9 anyway) being statistically significant.

It may not be statistically significant in many ways, but one way it is significant is in that it shows there are customers out there who are waiting for cheap launch, because current prices are too high for them. That is a relatively untapped/unserviced market. How many? Who knows, but I expect you could find a lot of scientists out there with ideas for craft that are desparately waiting for prices to drop to they can build and launch.

Offline JamesH65

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Re: Reusability effect on costs
« Reply #391 on: 05/09/2017 04:22 PM »
Except Elon Musk has a solid track record of caring more about growth than profit.

If he had unlimited funds he could do this, but he doesn't. he needs to strike a happy balance between growth and profit to ensure the companies survival, but also to ensure he stays in charge (i.e. he cannot risk a float to gain funding)

Offline AncientU

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Re: Reusability effect on costs
« Reply #392 on: 05/09/2017 05:36 PM »
Right now, Elon can't get more market share by lowering prices - his manifest is already full for the next few years. In this situation, lowering costs even more would be ridiculous.
Elon needs to launch faster (of course, he knows that), and _then_, when he has free slots in the manifest, he can lower prices to attract more customers.
Full manifest vs what launch capacity ?
Are you saying LC40 isn't coming up this year ?
Are you saying more customers aren't going to sign up for re used boosters (dramatically reducing Hawthorne and McGregor bottlenecks)?

More customers can't sign up for a launch in 2017 or 2018 - SpaceX is fully booked. The best you can get is a launch somewhere in 2019. It's as simple as that.

...

If you are buying a comm sat today, is there a vendor on the planet that can deliver it before 2019 (19 months)?
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #393 on: 05/09/2017 09:03 PM »
True, but the expected market elasticity will be to a large extend due to those kind of "borderline funded" customers. So they will not be statistically insignificant.
The difference between $55m and $62m is simply not big enough to get a lot of new developers thinking "Yes now I can close a business case for this."

AFAIK this project would have happened anyway, it's brought their timetable forward a bit.

For serious market growth you have to get to a price point where people who've had ideas sitting in the bottom of desk drawers for decades (because you can't sell the product they make no matter how good it it at a price that can make a profit and cover all the launch, and re-launch costs) start pulling them out and talking to VC's.

I'm sure SX can recover their development budget. The question becomes what happens to their prices then?
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #394 on: 05/09/2017 09:19 PM »
It may not be statistically significant in many ways, but one way it is significant is in that it shows there are customers out there who are waiting for cheap launch, because current prices are too high for them.
Current prices are probably too high for 90% of the people who would like to launch a payload into space (including humans).
Quote from: JamesH65
That is a relatively untapped/unserviced market. How many? Who knows, but I expect you could find a lot of scientists out there with ideas for craft that are desparately waiting for prices to drop to they can build and launch.
Historically the funding for the satellite or probe is separate from the that of the LV. The theory behind large probes is economies of scale but personally I think there's a lot to be said for building probes around secondary payload adaptors, with one or two instruments going than a dozen that have taken a decade to get ready.
BFS. The worlds first Methane fueled FFORSC engined CFRP structured A380 sized aerospaceplane tail sitter capable of flying in Earth and Mars atmospheres. BFR. The worlds biggest Methane fueled FFORSC engined CFRP structured booster for BFS. First flight to Mars by end of 2022. Forward looking statements. T&C apply. Believe no one. Run your own numbers. So, you are going to Mars to start a better life? Picture it in your mind. Now say what it is out loud.

Offline macpacheco

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Re: Reusability effect on costs
« Reply #395 on: 05/09/2017 09:56 PM »
If you are buying a comm sat today, is there a vendor on the planet that can deliver it before 2019 (19 months)?
True in general, but a customer might have a satellite that was ordered already and finds out they can save money and launch sooner if they switch to SpaceX.
Perhaps the satellite production schedule didn't match the other launch provider schedule.
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Offline AncientU

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Re: Reusability effect on costs
« Reply #396 on: 05/10/2017 12:18 AM »
True, but the expected market elasticity will be to a large extend due to those kind of "borderline funded" customers. So they will not be statistically insignificant.
The difference between $55m and $62m is simply not big enough to get a lot of new developers thinking "Yes now I can close a business case for this."

AFAIK this project would have happened anyway, it's brought their timetable forward a bit.

For serious market growth you have to get to a price point where people who've had ideas sitting in the bottom of desk drawers for decades (because you can't sell the product they make no matter how good it it at a price that can make a profit and cover all the launch, and re-launch costs) start pulling them out and talking to VC's.

I'm sure SX can recover their development budget. The question becomes what happens to their prices then?

This project certainly did happen without reuse being a factor... it started 11 years ago.  But it does sound like the SpaceX pricing was a factor in the decision to do this first comm sat. 

$55M vs $62M isn't the issue -- it is $62M (instead of $100-150M) is here to stay and maybe get much better.  Planning for edge-case customers involves how far can one stretch, and the worst that can happen is cost escalation after decisions start to be made.  If the long term price ceiling is now $60M, then many more edge-case customers can afford to investigate and eventually buy their first (or second, third, ...) launch.
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Online FutureSpaceTourist

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Re: Reusability effect on costs
« Reply #397 on: 05/10/2017 05:34 AM »
There is also Ariane 6, Vulcan and the yet unknown New Glenn pricing. Highly likely at least one of those will succeed (hopefully all three) so that means launch pricing more generally is decreasing. Should again increase confidence for planning future missions/assessing business cases.

Offline john smith 19

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Re: Reusability effect on costs
« Reply #398 on: 05/10/2017 07:31 AM »
This project certainly did happen without reuse being a factor... it started 11 years ago.  But it does sound like the SpaceX pricing was a factor in the decision to do this first comm sat. 
IOW it's a slight move of the launch timetable to the right, not something that would have never happened if SX was not flying. So not an addition to the launch market.
Quote from: AncientU
$55M vs $62M isn't the issue -- it is $62M (instead of $100-150M) is here to stay and maybe get much better.  Planning for edge-case customers involves how far can one stretch, and the worst that can happen is cost escalation after decisions start to be made. 
Given the large proportion of government payloads (any government) launch price inflation has not historically been that big a concern for a substantial portion of the market in any significant practical way.  :(
Quote from: AncientU
If the long term price ceiling is now $60M, then many more edge-case customers can afford to investigate and eventually buy their first (or second, third, ...) launch.
I'd like to hear from people who've actually had to do it how much easier raising $60m+ is than raising $100m+. I note that is for payloads below 5.5mT to GTO.
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Online FutureSpaceTourist

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Re: Reusability effect on costs
« Reply #399 on: 05/10/2017 08:08 AM »
Given the large proportion of government payloads (any government) launch price inflation has not historically been that big a concern for a substantial portion of the market in any significant practical way.  :(

But isn't that just a consequence that launch prices meant that few business cases, beyond comms sats, national security and govt funded research, could close?

Of course we don't yet know if ~$60M per launch will make much difference to market size, but at least it looks like there's likely to be a sustained trend of reduced pricing.

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