Author Topic: Reusability effect on costs  (Read 185465 times)

Offline RedLineTrain

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Re: Reusability effect on costs
« Reply #280 on: 04/16/2017 07:42 PM »
I am not sure I buy that 1B number as an actual out of pocket cost... I think it might be padded for customer benefit.

I would describe the $1 billion as a number that doesn't impact the way in which SpaceX will run its business going forward.  They will look more to cash-on-hand and supporting and keeping busy the 6,000 employees on the payroll as they change to being an RLV provider.  And in this sense, they need to be thoughtful and careful.

I was a little shocked at learning the 6,000 number.  They haven't even ramped up for their constellation.
« Last Edit: 04/16/2017 07:46 PM by RedLineTrain »

Offline MikeAtkinson

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Re: Reusability effect on costs
« Reply #281 on: 04/16/2017 08:26 PM »
Thanks for the spreadsheet.

Now for the other item. How long will it take for SpaceX to recover their $1B investment in reuse.

At 25 flights / yr and 70% being used boosters and SpaceX recovering $10M to pay against this charge per reused booster flight it will be 6 years for them to recover this development cost. Number of flight goes up or % of reused to new goes up then the time for this recovery will shorten. At 90% and 35 flights per year it would take only 4 years. So with SpaceX's flight projections the recovery period will be closer to 4 than it will be to 6. Putting recovery period ending in 2021. So in 2022 the prices could drop an additional $10M for an F9 and as much as $30M for an FH. The key here is that SpaceX is still making the same amount of profit per flight as they are now but at prices are a lot lower.

This is a very stiff competition price point profile. Other LV's would be hard pressed to keep up unless they were fully reusable. These price drops would occur only 2 years after the NG and Vulcan are operating.

One way of looking at things, allocates only the extra profit margin from launches that SpaceX would have done anyway but the full profit margin from launches that SpaceX pick up because reusability brings down the cost.

So if without reusability a launch costs $60M with a profit of $15M and after cost reductions due to reusability the profit margin goes up to $20M, those flights have $5M to pay off the development cost of reusability. But if the number of launches goes up from 20/year to 30/year then the entire profit from those extra 10 launches can be allocated to pay off the reusability cost. So the first 20 launches in a year that they would have got gives $100M and the 10 extra launches give $200M. [all figures completely made up for illustration purposes only]

A second advantage of reusability is that it avoids SpaceX hitting the limits of Hawthorne factory (about 40 cores per year). Using expendable launches CommX plus their normal commercial customers would exceed that limit, so they would have considerable capital cost and time bringing a new factory on-line and expanding their Texas testing facilities.

Offline MikeAtkinson

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Re: Reusability effect on costs
« Reply #282 on: 04/16/2017 08:44 PM »
I was a little shocked at learning the 6,000 number.  They haven't even ramped up for their constellation.
Considering they have 6 major development projects (block 5, resuable US, CommX, Raptor, ITS and Dragon 2), numerous smaller development projects, 2 operation pads and 2 being built, attempting a launch cadence of 2 per month, etc. and that they are vertically integrated so that most of the costs fall on them, it is amazing the headcount is so low.

Offline Eric Hedman

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Re: Reusability effect on costs
« Reply #283 on: 04/16/2017 08:54 PM »
A second advantage of reusability is that it avoids SpaceX hitting the limits of Hawthorne factory (about 40 cores per year). Using expendable launches CommX plus their normal commercial customers would exceed that limit, so they would have considerable capital cost and time bringing a new factory on-line and expanding their Texas testing facilities.
Great point!  If launch demand grows significantly that will be a big advantage for both SpaceX and Blue Origin.  Anyone without a reusable first stage will have a much higher overhead to maintain.  The reusable in space ACES stage might be the sweet spot for ULA in the long haul for the same reason.  It brings us back to the fuel depot argument.  Cheap fuel to a depot and a reusable in space tug instead of an expendable second or third stage to get out of LEO.  Add in SEP tugs and you have a pretty good cost effective solution for all sorts of destinations.  Everything reusable.
« Last Edit: 04/16/2017 08:55 PM by Eric Hedman »

Offline Eric Hedman

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Re: Reusability effect on costs
« Reply #284 on: 04/16/2017 09:06 PM »
I would like the terminology to change.  Call rockets from SpaceX and Blue origin just rockets.  Call everything else from other companies throwaway, disposable or single use rockets and put the negative connotation on them.  You don't ever hear anybody call a 787 a reusable airplane.  It's just assumed.
« Last Edit: 04/16/2017 09:20 PM by Eric Hedman »

Online joek

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Re: Reusability effect on costs
« Reply #285 on: 04/16/2017 09:13 PM »
I am not sure I buy that 1B number as an actual out of pocket cost... I think it might be padded for customer benefit.  Remember that a lot of the experiments are done on hardware that otherwise is going into the ocean and is otherwise paid for. 1B buys a LOT of barge time/ tug time/fins and legs, etc

Given that F9v1.0 (block 1) reportedly cost $400M... If SpaceX is counting from zero, fairly easy to believe, possibly minus some outliers such as CCtCap- or DOD-specific spend?  That would put post-v1.0- R&D at ~$600M.  If counting from F9v1.0, that would put total R&D at ~$1.4B (including FH?); does not seem too far out of line in comparison to other efforts.

Then again, I'd agree as you suggest that the way SpaceX has conducted their R&D makes it difficult to quantify... did the cost of every flight also count against reuse R&D?  Maybe for accounting purposes, but not necessarily from a cash perspective.

Online joek

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Re: Reusability effect on costs
« Reply #286 on: 04/16/2017 09:33 PM »
I believe that the pricing structure is headed towards the following:

1) If the contract specify use of new booster customer will be charged an additional fee.

2) Based on the landing mission mode (RTLS, ASDS, EXPD) this will control the basic price. There will be probably a stiff penalty for use of EXPD mode. These prices would assume no specificity by the contract on vehicle usage status.

This type of pricing structure will probably take over once the usage rate of used boosters get to the 70% level. But until then the pricing structure is a price and then discounts.

Generally agree, but I think you can simplify...
Customer: I want payload [mass] P delivered to location/trajectory Q at time R.
SpaceX: Price is $X.  We'll figure out the rest.
Customer: And I want a new/unused/non-flight-proven vehicle.
SpaceX: Price is $X+/-$Z.[1]  Time R depends on inventory/availability.[2]

[1] May be a premium in the near term; may be a discount in the future.
[2] You want new and you want it soon... gonna cost.  Take first available from inventory (new or used) and you get it sooner.
« Last Edit: 04/16/2017 09:34 PM by joek »

Offline LouScheffer

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Re: Reusability effect on costs
« Reply #287 on: 04/17/2017 11:19 AM »
I am not sure I buy that 1B number as an actual out of pocket cost... I think it might be padded for customer benefit.  Remember that a lot of the experiments are done on hardware that otherwise is going into the ocean and is otherwise paid for. 1B buys a LOT of barge time/ tug time/fins and legs, etc

I would be interested in any rough budgets that people might have. We know tug rates and barge rates and stuff....

ok now i'm convincing myself that maybe it is 1B... but it's a self funded 1B ...
I think this type of calculation is much more interesting for ULA (or other new vendors) than SpaceX.  Let's assume it costs about $1B more to develop an re-usable rocket than an expendable, as Musk has stated.

SpaceX has already spent the money - it's a sunk cost.  Whether or not this was a good investment is irrelevant going forward.  Provided it saves them anything at all, even only $1M per launch, it's still worth it for them to go reusable.

But for someone who has not spent the $1B for re-usability yet, these are very interesting numbers.  How much can I save per launch?  How many do I need to sell to recover my development cost?  What kind of market share changes will I see with re-use?  This type of calculation appears all the time in the airline industry (see discussion of how long it will take the 787 and A380 to pay back their development cost).  Surely Boeing and LM, already experienced in this type of analysis, are applying this to Vulcan development and whether or not it should include re-usability.


Online oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #288 on: 04/17/2017 05:40 PM »
A thought about where that recovered $1B would go during the 4 years it would take to recover the funds. At $250M a year that is quite a large fund for SpaceX to fund additional rocket developments. Now add another $250M from other profits you get a yearly R&D budget of $500M. Over 5 years that is $2.5B. This should be sufficient for the beginnings of ITS development.

Offline Lar

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Re: Reusability effect on costs
« Reply #289 on: 04/17/2017 05:57 PM »
I am not sure I buy that 1B number as an actual out of pocket cost... I think it might be padded for customer benefit.  Remember that a lot of the experiments are done on hardware that otherwise is going into the ocean and is otherwise paid for. 1B buys a LOT of barge time/ tug time/fins and legs, etc

I would be interested in any rough budgets that people might have. We know tug rates and barge rates and stuff....

ok now i'm convincing myself that maybe it is 1B... but it's a self funded 1B ...
I think this type of calculation is much more interesting for ULA (or other new vendors) than SpaceX.  Let's assume it costs about $1B more to develop an re-usable rocket than an expendable, as Musk has stated.

SpaceX has already spent the money - it's a sunk cost.  Whether or not this was a good investment is irrelevant going forward.  Provided it saves them anything at all, even only $1M per launch, it's still worth it for them to go reusable.

But for someone who has not spent the $1B for re-usability yet, these are very interesting numbers.  How much can I save per launch?  How many do I need to sell to recover my development cost?  What kind of market share changes will I see with re-use?  This type of calculation appears all the time in the airline industry (see discussion of how long it will take the 787 and A380 to pay back their development cost).  Surely Boeing and LM, already experienced in this type of analysis, are applying this to Vulcan development and whether or not it should include re-usability.



My desire to see the numbers was to see if 1B is reasonable... I was thinking initially it might be a bit fluffy for customer consumption...

Re the A380, I heard (in Aviation Week???)  that the latest projection on paying back dev't cost is "never".
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Offline CuddlyRocket

Re: Reusability effect on costs
« Reply #290 on: 04/17/2017 11:10 PM »
I would like the terminology to change.  Call rockets from SpaceX and Blue origin just rockets.  Call everything else from other companies throwaway, disposable or single use rockets and put the negative connotation on them.  You don't ever hear anybody call a 787 a reusable airplane.  It's just assumed.

That will happen when the numerical balance between expendable and reusable rockets shifts towards the latter. A similar thing happened with the introduction of jet aircraft.

Online oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #291 on: 04/19/2017 05:49 PM »
I would like the terminology to change.  Call rockets from SpaceX and Blue origin just rockets.  Call everything else from other companies throwaway, disposable or single use rockets and put the negative connotation on them.  You don't ever hear anybody call a 787 a reusable airplane.  It's just assumed.

That will happen when the numerical balance between expendable and reusable rockets shifts towards the latter. A similar thing happened with the introduction of jet aircraft.
If by EOY 2018 or 2019 SpaceX is flying 20 reused booster flights and the total number of launches worldwide is 100 then the percentage of reuse to expendable is 20% reused to 80% expendable worldwide. If SpaceX expands their launch rate to 50 from 30 and those additional increase the world total to 120 with the the reuse count being 90% or 45 launches then the reuse to expendable ratio would be 37.5%/62.5%. Now add another expansion of 20 launches with 80% reused (the NGs) with total worldwide of 140 the ratio goes to 44%/56%. So sometime in the 2020's it is possible that the reuse launches will outnumber the expendable launches. As the number of launches on reuse capable vehicles grow and the number of expendable launches shrink.

Online oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #292 on: 04/22/2017 04:39 PM »
An item that just popped up in my thoughts on another thread is the manpower levels needed to support a launch every 2 weeks. At $1-2M for refurbishment and parts between flight that represents 5,000 to 10,000 manhours of refurbishment work on a booster. A crew of 25 would take from 5 to 10 weeks to do the refurbishment. To support an every other week flight the refurbishment crews should number in the 60 to 125 personnel. And they would be constantly busy with no down time unless the pad/vehicle is also in a significant launch downtime for some reason (failure investigation or severe weather event like a huricane).

Offline AncientU

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Re: Reusability effect on costs
« Reply #293 on: 04/22/2017 10:48 PM »
I am not sure I buy that 1B number as an actual out of pocket cost... I think it might be padded for customer benefit.

I would describe the $1 billion as a number that doesn't impact the way in which SpaceX will run its business going forward.  They will look more to cash-on-hand and supporting and keeping busy the 6,000 employees on the payroll as they change to being an RLV provider.  And in this sense, they need to be thoughtful and careful.

I was a little shocked at learning the 6,000 number.  They haven't even ramped up for their constellation.

6,000 also doesn't include running four pads flat out.  With 400+ wanted ads out there as an indicator, and these new personnel demands on the near horizon, growth will continue to be robust for several years.  Breaking 10,000  by 2020 is possible, IMO. (They've doubled in size in the last 3-4 years...)
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Offline RedLineTrain

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Re: Reusability effect on costs
« Reply #294 on: 04/22/2017 11:26 PM »
6,000 also doesn't include running four pads flat out.  With 400+ wanted ads out there as an indicator, and these new personnel demands on the near horizon, growth will continue to be robust for several years.  Breaking 10,000  by 2020 is possible, IMO. (They've doubled in size in the last 3-4 years...)

They definitely need big-time revenue.  Perhaps they will go after the other satellite verticals.  We all need a 10,000 satellite reconnaissance constellation, after all.

Online oldAtlas_Eguy

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Re: Reusability effect on costs
« Reply #295 on: 04/23/2017 05:23 PM »
6,000 also doesn't include running four pads flat out.  With 400+ wanted ads out there as an indicator, and these new personnel demands on the near horizon, growth will continue to be robust for several years.  Breaking 10,000  by 2020 is possible, IMO. (They've doubled in size in the last 3-4 years...)

They definitely need big-time revenue.  Perhaps they will go after the other satellite verticals.  We all need a 10,000 satellite reconnaissance constellation, after all.
Re-flight rate of only 67% here is the potential revenue/profit estimates (values are in Millions of US dollars):

                                                            Per Flight      At re-flight rate of 20 /yr out of total 30 flights
Normal Price per flight                             $62.00            $620.00
Discounted Flight Price for Reused booster  $50.00          $1,000.00
Normal Profit on Flight                             $10.00             $300.00
Additional Margin assigned for R&D            $10.00            $200.00
Total funds available for reinvestment /yr                          $500.00
Total revenue /yr                                                        $1,620.00

Is this big enough for you?
« Last Edit: 04/23/2017 05:27 PM by oldAtlas_Eguy »

Offline john smith 19

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Re: Reusability effect on costs
« Reply #296 on: 04/24/2017 08:49 PM »
An item that just popped up in my thoughts on another thread is the manpower levels needed to support a launch every 2 weeks. At $1-2M for refurbishment and parts between flight that represents 5,000 to 10,000 manhours of refurbishment work on a booster. A crew of 25 would take from 5 to 10 weeks to do the refurbishment. To support an every other week flight the refurbishment crews should number in the 60 to 125 personnel. And they would be constantly busy with no down time unless the pad/vehicle is also in a significant launch downtime for some reason (failure investigation or severe weather event like a huricane).
Thanks for that. These are the missing numbers for the modelling game.
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Online JamesH65

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Re: Reusability effect on costs
« Reply #297 on: 04/25/2017 11:01 AM »
An item that just popped up in my thoughts on another thread is the manpower levels needed to support a launch every 2 weeks. At $1-2M for refurbishment and parts between flight that represents 5,000 to 10,000 manhours of refurbishment work on a booster. A crew of 25 would take from 5 to 10 weeks to do the refurbishment. To support an every other week flight the refurbishment crews should number in the 60 to 125 personnel. And they would be constantly busy with no down time unless the pad/vehicle is also in a significant launch downtime for some reason (failure investigation or severe weather event like a huricane).
Thanks for that. These are the missing numbers for the modelling game.

Does that make any sense though when combined with the SpaceX desire to have 24hr refurb times? Which in my view is not about 24hr turnaround, but being able to do all the maintenance required to refly in 24hr, which means very cheap to do indeed. They don't need to have a booster ready in 24hrs, but to be able to have it refurbed in those timescales reduces costs hugely.

Offline Lar

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Re: Reusability effect on costs
« Reply #298 on: 04/25/2017 11:44 AM »
I think 2M for refurb costs is high if you're talking 24 hour turnarounds. Airliners are at similar price points (within an order of magnitude) for initial cost of the vehicle and don't spend nearly that much getting ready for their next flight. Maybe when they have scheduled overhauls and have to replace an engine

You may say that SpaceX can't achieve these turnaround times and costs but that's their goal. They may not make it... but I'm thinking a crew of 500 spending 2M in small parts? no.  I could see the average cost being 1M IF you include the once every 10 flights heavy overhaul that might include some engine changeouts if an engine was found to be marginal.... but even that seems high.
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Offline john smith 19

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Re: Reusability effect on costs
« Reply #299 on: 04/25/2017 09:09 PM »
I think 2M for refurb costs is high if you're talking 24 hour turnarounds. Airliners are at similar price points (within an order of magnitude) for initial cost of the vehicle and don't spend nearly that much getting ready for their next flight. Maybe when they have scheduled overhauls and have to replace an engine

You may say that SpaceX can't achieve these turnaround times and costs but that's their goal. They may not make it... but I'm thinking a crew of 500 spending 2M in small parts? no.  I could see the average cost being 1M IF you include the once every 10 flights heavy overhaul that might include some engine changeouts if an engine was found to be marginal.... but even that seems high.
For general aviation passenger services the rule of thumb has been that total costs per flight were 3x the fuel costs. Given Musk has said F9 costs about $200K in propellant that would be about about $600-800K. However since unless the US is fully recoverable that will have to be written off and that's around $17m.
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