Author Topic: Reusability effect on costs  (Read 187851 times)

Offline corneliussulla

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Re: Reusability effect on costs
« Reply #400 on: 05/10/2017 08:32 AM »
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)

All he needs is free cashflow. Profit is accounting event which can be adjusted by assumptions around all sorts of things. If the company was quoted on the stock market it would be more important from an investor point of view as it helps define the value of the stock. But any company can survive if it produces free cash each year, profitably or unprofitably

Offline mme

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Re: Reusability effect on costs
« Reply #401 on: 05/10/2017 01:49 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)

All he needs is free cashflow. Profit is accounting event which can be adjusted by assumptions around all sorts of things. If the company was quoted on the stock market it would be more important from an investor point of view as it helps define the value of the stock. But any company can survive if it produces free cash each year, profitably or unprofitably
They need positive (or at least neutral) cashflow.  They have a large engineering team and ambitions far beyond survival.  I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #402 on: 05/10/2017 03:53 PM »
  I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
Historically LV suppliers have basically said "this is what it costs, pay us."

Musk has pushed prices lower. The question is will he continue to do so once the development costs of partial reuse are recovered?
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Offline speedevil

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Re: Reusability effect on costs
« Reply #403 on: 05/10/2017 06:46 PM »
Musk has pushed prices lower. The question is will he continue to do so once the development costs of partial reuse are recovered?

I don't think this has a meaning.
Development costs were somewhat higher due to reuse. There is no notional lender who lent them this money.
They are not going to transfer into a 'normal' space company.

There will always be a new project to take the money, that you might consider as now going into 'paying back the development cost', whether it's Red Dragon, FH, Dragon 2-moon, Raptor, bbootstrapping CommX, ITS, mars-ISRU, mars-boring, ...

Offline oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #404 on: 05/11/2017 03:49 PM »
Musk has pushed prices lower. The question is will he continue to do so once the development costs of partial reuse are recovered?

I don't think this has a meaning.
Development costs were somewhat higher due to reuse. There is no notional lender who lent them this money.
They are not going to transfer into a 'normal' space company.

There will always be a new project to take the money, that you might consider as now going into 'paying back the development cost', whether it's Red Dragon, FH, Dragon 2-moon, Raptor, bbootstrapping CommX, ITS, mars-ISRU, mars-boring, ...
Yes there are a lot of projects all needing cash.

The estimate of the cash produced through reuse of at 70% reuse flight rate and a 25 flights per year is $.5B cash above costs. For just the years of 2018 through 2020 this will produce $1.5B in funds for these projects. At SpaceX usual more development for less money that kind of funds without any government looking over your shoulder on these projects results in a lot of work completed. If SpaceX had to coordinate all of these projects with the government that adds a 25% overhead due to the time it takes writing reports, going to meetings, presentations, briefing government technical evaluation staff, etc.

I think they still may have almost $.5B saved from that $1B investment still. So for this year there is up to $.5B available making the total of funds through EOY 2020 at $2B.  If they spend the $.5B in manufacturing sats an launchof  7 FH with 50 CommX sats per launch each year starting in 2019 then by sometime 2021 there will be an initially operating constellation. At that point the constellation revenues pay for additional sats deployment and no longer would be using the R&D pool.

But SpaceX's own goals for it's constellation is a driving force for reducing cost of launch, higher flight rate, faster turn around of assets (pads, boosters, and farings), and higher reuse numbers (increasing the reuse of the flight assets reuse beyond 10).

Reuse is an enabler for SpaceX itself to achieve its own goals. It needs the above reduced cost, high flight rate, quick turn around, and high reuse all of which is achieved through reuse such that a possible slow but steady new cost model that reduces flight costs as flight rates increase and systems mature even more.

Online macpacheco

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Re: Reusability effect on costs
« Reply #405 on: 05/11/2017 05:26 PM »
  I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
Historically LV suppliers have basically said "this is what it costs, pay us."

Musk has pushed prices lower. The question is will he continue to do so once the development costs of partial reuse are recovered?
They haven't borrowed money to do reuse.
They don't have a running account that they need to put back on.
Their concern is far more in the lines of replenishing every cent of cash they burned after AMOS-6 until they returned to flight. And put aside the mountain of cash they'll need to manufacture the first batch of CommX satellites, the first large Raptor rockets and the large list of upcoming plans SpaceX has.
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Offline AncientU

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Re: Reusability effect on costs
« Reply #406 on: 05/11/2017 07:45 PM »
  I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
Historically LV suppliers have basically said "this is what it costs, pay us."

Musk has pushed prices lower. The question is will he continue to do so once the development costs of partial reuse are recovered?
They haven't borrowed money to do reuse.
They don't have a running account that they need to put back on.
Their concern is far more in the lines of replenishing every cent of cash they burned after AMOS-6 until they returned to flight. And put aside the mountain of cash they'll need to manufacture the first batch of CommX satellites, the first large Raptor rockets and the large list of upcoming plans SpaceX has.

I agree that the latter two items (CommX and 'Raptor rockets') being developed simultaneously are the financial challenge, not paying back the $1B invested in reuse.  Once CommX starts returning revenue -- maybe 2021-2022 -- they should get financially healthy quickly... then on to Mars.  Someone dropping another $Billion investment in their laps in the next year or two should help improve cash flow.  I think GS doesn't want to be dependent* on outside investment or loans.  Smart Lady!

* That said, there will probably be investors camped on their doorstep when the constellation deployment becomes imminent.

Also, pushing prices lower should be a piece of cake when they have an internal 'block buy' of hundreds of launches, and customers' marginal cost becomes insignificant.
« Last Edit: 05/11/2017 07:49 PM by AncientU »
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #407 on: 05/11/2017 09:19 PM »
They haven't borrowed money to do reuse.
They don't have a running account that they need to put back on.
Their concern is far more in the lines of replenishing every cent of cash they burned after AMOS-6 until they returned to flight. And put aside the mountain of cash they'll need to manufacture the first batch of CommX satellites, the first large Raptor rockets and the large list of upcoming plans SpaceX has.
That's not really an argument for SX to continue to lower their prices (prices to customers, not costs to themselves) though, is it? :(
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Offline Joffan

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Re: Reusability effect on costs
« Reply #408 on: 05/12/2017 09:12 PM »
I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
I was thinking about this; if Musk pushes prices too low (too quickly), could it actually deter others from entering the market?
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Offline oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #409 on: 05/12/2017 09:22 PM »
I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
I was thinking about this; if Musk pushes prices too low (too quickly), could it actually deter others from entering the market?
Markets are interesting creatures. If someone can do it cheaper then others will push to undercut fighting for market share.

So going cheaper is actually good for the market.

Online macpacheco

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Re: Reusability effect on costs
« Reply #410 on: 05/12/2017 09:25 PM »
I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
I was thinking about this; if Musk pushes prices too low (too quickly), could it actually deter others from entering the market?
I am neither arguing for just a 5/10% discount neither passing through their entire savings. Probably 1/3 of the savings at first, eventually half.
When second stage reuse is working, assuming SpaceX full costs drop by 80%, give customers up to a 50% discount.
Larger discounts depend on either moving to multi manifest on larger vehicles or large launch contracts.

There's a flaw in those that think that SpaceX must first give customer huge discounts, hoping volumes will go up. NO. Give customers enough discount to prove SpaceX has lower costs, and set a progression of discounts based on volume, with the really juicy discounts only available at something like several times the size of the Orbcomm or Iridium contract.
Then wait for customers to bite the bullet.
The whole launch volume up mostly depends on the known bottleneck of the satellite production industry. If they can't increase their volume at least 5x by streamlining their production lines and reducing costs substantially, then SpaceX might find itself with only CommX and perhaps space tourism as high volume customers.

SpaceX lower prices are likely already in the Blue Origin business plan. SpaceX will never be the sole provider. There are national interests.
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Offline wannamoonbase

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Re: Reusability effect on costs
« Reply #411 on: 05/12/2017 09:51 PM »
I hope once CommX comes on line they will reduce prices more as a continued forcing functioning for the rest of the industry.
I was thinking about this; if Musk pushes prices too low (too quickly), could it actually deter others from entering the market?
Markets are interesting creatures. If someone can do it cheaper then others will push to undercut fighting for market share.

So going cheaper is actually good for the market.

As long as they aren't leaving money on the table.  Even if they can be very cheap, it'd be a shame to go any lower than needed to sweep the market place.

In order to dominate the commercial market, flight rate, allowing customers to get into the queue when desired, maybe equally important as cost.
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Online Dao Angkan

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Re: Reusability effect on costs
« Reply #412 on: 05/12/2017 10:20 PM »
Operators are already putting pressure on satellite manufacturers and launch operators to reduce costs so that they can make the same % from lower priced emerging market transponders. SES said in their earnings call that whilst overall income from emerging markets might be less, they expect the percentage to be the same as they are pressuring launch providers and satellite providers to cut costs .... which leads to why SES was the first to try out a reusable launcher .... they need cheap as possible launches for emerging markets.

Offline oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #413 on: 05/12/2017 10:23 PM »
With reusability SpaceX could create a supply of up to 60 East launches (48 from LC-40/LC-39A and 12 more from BC). Price is a compromise between actual costs/supply and demand in a free market. Unfortunately the market is far from being a free market.

Currently globally there is a total of 80 to 100 launches to orbit of everything per year. SpaceX providing such a supply would make it such that schedule would no longer be a concern since demand would be a long way behind the supply. Making the Prices for the launch the deciding factor for just about any customer commercial  or government, even foreign governments. The following could be a consideration for foreign governments: If the "In-House" provider can't launch when desired they will  contract out to SpaceX.

SpaceX launch rate of 25 possible just this year represents 25% of the global launches. SpaceX's market share of the global launch could reach 50% by 2020 with even the total global launches increasing to 150/yr.

Prices are going down and will likely continue to decrease year over year. As SpaceX develops additional tech increaseing performance/decreasing costs this yearly decrease is not likely to halt. If each year has a 10% reduction then if there is no big step function this model would have a 20mt payload to orbit price of $15M by 2030. But SpaceX is planning a big step function in the mid 2020s. So in mid 2020s the Price for 20mt would be with this 10% yearly reduction model of $27M.

If something similar happens to CC then by 2025 the price could be $60M for 6 passengers.

Reusability is in the drivers seat. It is now a question of how heavy of a foot SpaceX will have on Pricing.
« Last Edit: 05/12/2017 10:24 PM by oldAtlas_Eguy »

Online Dao Angkan

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Re: Reusability effect on costs
« Reply #414 on: 05/12/2017 10:30 PM »
Arianespace had the whole market .... instead of innovating for cheaper prices for their customers, they relied on government subsidies in order to push out competitors .... will anyone apart from the French really miss Arianespace?

And as an ESA taxpayer, why should we pay ludicrous prices for Arianespace launches just because they're in France?
« Last Edit: 05/12/2017 10:31 PM by Dao Angkan »

Offline oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #415 on: 05/12/2017 10:36 PM »
A BTW looking at 2016 launch statistics by country if SpaceX for 2017 is considered it's own country it would be the #1 launcher compared to any country.

Offline Space Ghost 1962

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Re: Reusability effect on costs
« Reply #416 on: 05/12/2017 11:34 PM »
A BTW looking at 2016 launch statistics by country if SpaceX for 2017 is considered it's own country it would be the #1 launcher compared to any country.

For all intents and purposes of the market - it is its own country. Any surprise it wants ... its own dedicated launch facility?

Offline oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #417 on: 05/13/2017 12:41 AM »
This year if SpaceX actually does 25 could be the highest number of launches in 1 year for quite some time. Since 2000 the highest has been 92. This year the number could be as high as 100 with the US double what it did last year with ~40 vs it's 22 for 2016. 22 tied US with China last year with 22 each for first place.

In 1990 there was 114 launches but the rate was on a steady decline after that until 2004 at only 50 launches before starting to increase again in rate. The highest amount ever was was in 1968 of 120 successes out of 135 attempts.

Although I don't like wiki this graph is instructional. https://en.wikipedia.org/wiki/Timeline_of_spaceflight

Using data and doing some curve fitting to an exponential model by 2025 the launches could be 150. But the real instructional item is that launch rate is going up significantly and has been for the last 13 years. All the industry information says it is about to explode. So an estimate of 150 in 8 years is actual conservative if the proposed constellations get deployed.

Offline Mader Levap

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Re: Reusability effect on costs
« Reply #418 on: 05/13/2017 10:04 AM »
This year if SpaceX actually does 25
SpaceX won't launch 25 times in 2017. Why in every year SpaceX fanboys insist on ridiculous numbers that never happen?

in my opinion, SpaceX won't launch 25 times in 2017. Why do some people continue making projections that I feel are difficult or impossible to achieve even after previous year projections don't come to pass?

Edit/Lar: Soften. Try it yourself.
« Last Edit: 05/13/2017 03:08 PM by Lar »
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #419 on: 05/13/2017 10:41 AM »
Currently globally there is a total of 80 to 100 launches to orbit of everything per year. SpaceX providing such a supply would make it such that schedule would no longer be a concern since demand would be a long way behind the supply.
But the odds of that actually happening are pretty long.  :(
Quote from: oldAtlas_Eguy
Making the Prices for the launch the deciding factor for just about any customer commercial  or government, even foreign governments. The following could be a consideration for foreign governments: If the "In-House" provider can't launch when desired they will  contract out to SpaceX.
There is also the issue that some payloads remain too big to launch on F9 and FH is a long way from first launch.
Quote from: oldAtlas_Eguy
SpaceX launch rate of 25 possible just this year represents 25% of the global launches. SpaceX's market share of the global launch could reach 50% by 2020 with even the total global launches increasing to 150/yr.
It's mid May already and SX have done 5 launches. SX may have a manifest of 25 but I wonder how often they've launched as many as they have manifested?
Quote from: oldAtlas_Eguy
Prices are going down and will likely continue to decrease year over year. As SpaceX develops additional tech increaseing performance/decreasing costs this yearly decrease is not likely to halt. If each year has a 10% reduction then if there is no big step function this model would have a 20mt payload to orbit price of $15M by 2030. But SpaceX is planning a big step function in the mid 2020s. So in mid 2020s the Price for 20mt would be with this 10% yearly reduction model of $27M.
I think we all hope so but while SX has a monopoly on even partial reusability those prices will only fall as far as they want them to.

In the long run monopoly in any market is only really good for the monopolist.  :(
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