SpaceX to increase price of cargo delivery to space station by 50%

[deruch]

Guesses: If the thrusters in the trunk still function once it is detached from Dragon, then it could be detached earlier before the deorbit burn, and it would be able to deorbit itself, and so place this important separation as a seperate item before the rest of the deorbit process. This may be deemed safer for crew.
Guess2: Creating more room in Dragon2

This is not a guess, it's how they planned to do it, already discussed in https://forum.nasaspaceflight.com/index.php?topic=41016.msg1809459#msg1809459 and posts before it, source is the new draft environmental assessment for Dragon re-entry.

The image seems to come from James Vaughan, so I wouldn't take the thruster location and size too seriously, it's possible the artist added them exactly because he read about the new truck separation ability in the draft environmental assessment.

The more likely case is that the draft EA writers were just mistaken/misunderstood what they were told and that the document therefore contains a small error on this topic.  Which, by the way, is not the only such minor technical error on the hardware/aerospace elements of the document.  This isn't so surprising when one considers the qualifications/experience of those responsible for preparing the EA and that those topics aren't the primary focus of the process.  The preparers all have solid backgrounds in biological sciences and/or environmental management/science and are generally very experienced in the EA process but none of them are trained in engineering/aerospace/etc.:

6.0 LIST OF PREPARERS AND CONTRIBUTORS

Government Preparers
Daniel Czelusniak
Affiliation: FAA Office of Commercial Transportation
Education: BS Environmental Management, Juris Doctorate
Experience: 16 years of environmental impact assessment experience

SpaceX
Matthew Thompson, EA Preparation
Education: B.S. in Environmental Science and Archaeology, Honors Degree in Environmental Management and M.S. in Applied Geography
Experience: 13 years

Shelby McCay, EA Preparation
Education: B.S. in Wildlife and Fisheries Sciences
Experience: 2 years

Cardno
Kathleen Riek, EA Preparation Assistance
Education: B.S. Biology
Experience: 27 years of environmental impact assessment experience

Erika Fuery, EA Preparation Assistance
Education: B.A. Field Biology/Environmental Science, M.S. Environmental Science
Experience: 15 years of environmental impact assessment experience

Cristina Ailes, EA Preparation Assistance
Education: B.S. Biology, Ecology, and Environmental Science
Experience: 10 years of environmental impact assessment experience

Kathy Hall, EA Preparation Assistance
Education: B.S. Earth and Environmental Science
Experience: 19 years of environmental impact assessment experience

Rick Spaulding, EA Preparation Assistance
Education: M.S. Wildlife and Fisheries Science
Experience: 30 years of environmental impact assessment experience

Margaret Parker, EA Preparation Assistance
Education: B.A. History
Experience: 25 years of environmental impact assessment experience

The above comment isn't meant to denigrate the quality of the work they did, but just to point out that when it comes to the nitty-gritty specifics of the aerospace side one shouldn't treat the EA as the Gospel Truth. 

[envy887]

SpaceX will price their services to maximize their profit and/or revenue. Novel, I know.

Not in the slightest.

SOP for aerospace.

The surprise (for some) is that SX is not behaving in any way that's actually different from other large aerospace primes, other than the sticker pricing.

Are you referring only to CRS-2? Because there are many, many other ways they are different.

[bilboleo1]

Guesses: If the thrusters in the trunk still function once it is detached from Dragon, then it could be detached earlier before the deorbit burn, and it would be able to deorbit itself, and so place this important separation as a seperate item before the rest of the deorbit process. This may be deemed safer for crew.
Guess2: Creating more room in Dragon2

This is not a guess, it's how they planned to do it, already discussed in https://forum.nasaspaceflight.com/index.php?topic=41016.msg1809459#msg1809459 and posts before it, source is the new draft environmental assessment for Dragon re-entry.

The image seems to come from James Vaughan, so I wouldn't take the thruster location and size too seriously, it's possible the artist added them exactly because he read about the new truck separation ability in the draft environmental assessment.

The more likely case is that the draft EA writers were just mistaken/misunderstood what they were told and that the document therefore contains a small error on this topic.  Which, by the way, is not the only such minor technical error on the hardware/aerospace elements of the document.  This isn't so surprising when one considers the qualifications/experience of those responsible for preparing the EA and that those topics aren't the primary focus of the process.  The preparers all have solid backgrounds in biological sciences and/or environmental management/science and are generally very experienced in the EA process but none of them are trained in engineering/aerospace/etc.:

The above comment isn't meant to denigrate the quality of the work they did, but just to point out that when it comes to the nitty-gritty specifics of the aerospace side one shouldn't treat the EA as the Gospel Truth.

edited for brevity

Correct! I do EA's for transportation (highways) and energy (solar farms, electrical transmission) projects as a consultant (Cardno is a not-direct competitor company), but I'm not an engineer (mechanical, civil, electrical, etc.). I need to know how to complete an EA properly for the lead agency, and I need to know which questions to ask the client (county engineer office, state DOT, energy company, etc.) to get the information I need to put into the EA, but I don't know anything about the details or accuracy of that information. When it comes down to it, an EA (or DEIS, see Boca Chica discussion) is interested in the potential impacts of an action, not necessarily what is making/causing those impacts exactly, and how to reduce, minimize or mitigate those expected impacts.

I have generated maps and figures for a client to include in an EA even when I don't have the slightest clue as to how construction actions will be performed. I have had to 'make them up' as well due to lack of information from the client while working on a deadline for EA submission. Artistic liberties included. In the end, all of those reports have been approved, even with multiple subsequent revisions to the project. And I am NOT the gospel truth.

Cheers.

[JamesH65]

SpaceX will price their services to maximize their profit and/or revenue. Novel, I know.

Not in the slightest.

SOP for aerospace.

The surprise (for some) is that SX is not behaving in any way that's actually different from other large aerospace primes, other than the sticker pricing.

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

SpaceX are doing exactly what they need to do to ensure the money flows in. It going to be some years before prices for launches really drop, and until then, they need the cash to build the craft designed to bring about that drop. And what they are doing is pricing below others, but high enough to keep the money flowing in.

Simples.

[john smith 19]

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

Quite true. 

SpaceX are doing exactly what they need to do to ensure the money flows in. It going to be some years before prices for launches really drop, and until then, they need the cash to build the craft designed to bring about that drop. And what they are doing is pricing below others, but high enough to keep the money flowing in.

Simples.

Actually without effective competition there is no reason for them to drop those prices ever.

Since it looks like they are going to be their own biggest customer they can have price transparency (ULA -X% for example) and still make out hugely better.

WRT to this thread if NASA are happy to pick up the tab for the redesign of dragon then they are happy to do it.

This also is SOP for a large aerospace contractor. 

I'll believe SX will charge an outside customer a price equal to an F1 flight for a BFR when I see it happen.

[envy887]

I'll believe SX will charge an outside customer a price equal to an F1 flight for a BFR when I see it happen.

It will happen when Bezos tries to steal market share by pricing under cost.

[Prettz]

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

Most people have forgotten, but the reason is that only a few years ago SpaceX said their intention was to drastically lower launch prices with reusable F9/FH, in order to create new markets and new demand for space launch. Most on NSF forgot about that, but that is why many are/were expecting different. Feels like the hoped-for new demand still hasn't materialized.

[envy887]

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

Most people have forgotten, but the reason is that only a few years ago SpaceX said their intention was to drastically lower launch prices with reusable F9/FH, in order to create new markets and new demand for space launch. Most on NSF forgot about that, but that is why many are/were expecting different. Feels like the hoped-for new demand still hasn't materialized.

Nobody has forgotten that. Space did lower prices. And new demand certainly has materialized.

Also, that's off-topic. CRS-2 is not a new market or "created" demand. SpaceX isn't raising prices for CRS because they don't have enough demand elsewhere, or anything like that. They are raising prices because NASA wants more services and is willing to pay for them.

[DigitalMan]

Here's the thing. Starlink has no service to deliver right now and won't have for several years (in fact I don't think they have a date for that).
Meanwhile SX is a)Building the factory for BFS b) Developing BFS now.

That's a shed load of money that's going out right now.

Do you still not see how your funding does not seem to match reality?

OTOH the $14Bn COTS II contract has been awarded and I'm confident early payments of that are already flowing into the SX account.

On the Tesla call this earlier this evening someone asked a question about connecting Starlink to Tesla vehicles, Elon indicated Starlink was likely 3 years out.  There will probably be a transcript posted at some point soon.

[Lar]

Let's not drift too much. SpaceX general pricing strategy might be a bit off (or more than a bit) topic.

[JamesH65]

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

Most people have forgotten, but the reason is that only a few years ago SpaceX said their intention was to drastically lower launch prices with reusable F9/FH, in order to create new markets and new demand for space launch. Most on NSF forgot about that, but that is why many are/were expecting different. Feels like the hoped-for new demand still hasn't materialized.

Not forgotten but times change. When they first started, there was no BFS to pay for. But as others have said, they have reduced the cost to launch, the market has increased in size. I suspect that the market simply hasn't increased enough to get real economies of scale. Might do with block 5. But it seems obvious to me that the space station delivery cost is now more realistic than it was before. Musk likely underbid, because he is a massive optimist, now they have real figures, the prices now more accurately reflect what they need to do.

[su27k]

I think you means SOP for almost every single company ever. So expecting SpaceX to act differently to A.N.Other company when they need as much income as possible seems odd to me.

Most people have forgotten, but the reason is that only a few years ago SpaceX said their intention was to drastically lower launch prices with reusable F9/FH, in order to create new markets and new demand for space launch. Most on NSF forgot about that, but that is why many are/were expecting different. Feels like the hoped-for new demand still hasn't materialized.

Drastically lower launch price with reusable F9/FH and maximizing revenue/profit doesn't contradict each other, they could happen at the same time, in fact they have to happen at the same in order for the former to be long lasting.

And to return to the topic: Just because SpaceX increased CRS-2 price doesn't mean they have abandoned the goal of drastically lower launch price with reusable F9/FH, I think there's a good chance it would still happen once they mastered fairing reuse and Block 5. Remember everything before Block 5 is more or less development phase, the big savings wouldn't appear until Block 5 proven itself.

[Robotbeat]

I'll believe SX will charge an outside customer a price equal to an F1 flight for a BFR when I see it happen.

It will happen when Bezos tries to steal market share by pricing under cost.

If the revenue is large enough, this wouldn’t be feasible even for Bezos, as Blue Origin isn’t scrappier than SpaceX. Maybe a few token launches could be sold under cost, but Bezos is more concerned with funding R&D for actual ventures than for throwing money at just subsidizing launch cost for dozens of launches.

I do think Blue will lower SpaceX’s profit margin per launch, but they’re not going to straight up subsidize marginal launch costs.

[niwax]

I'll believe SX will charge an outside customer a price equal to an F1 flight for a BFR when I see it happen.

It will happen when Bezos tries to steal market share by pricing under cost.

If the revenue is large enough, this wouldn’t be feasible even for Bezos, as Blue Origin isn’t scrappier than SpaceX. Maybe a few token launches could be sold under cost, but Bezos is more concerned with funding R&D for actual ventures than for throwing money at just subsidizing launch cost for dozens of launches.

I do think Blue will lower SpaceX’s profit margin per launch, but they’re not going to straight up subsidize marginal launch costs.

What exactly would he gain by subsidizing? As soon as the subsidy expires, customers  just go wherever the launch is cheapest again. It won't make them any more money.

[matthewkantar]

What exactly would he gain by subsidizing? As soon as the subsidy expires, customers  just go wherever the launch is cheapest again. It won't make them any more money.

The idea is to undersell the competition until they are gone, then raise prices to maximize profit

[cebri]

What exactly would he gain by subsidizing? As soon as the subsidy expires, customers  just go wherever the launch is cheapest again. It won't make them any more money.

The idea is to undersell the competition until they are gone, then raise prices to maximize profit

You cannot undersell your competitors for over a decade without going bankrupt. Besides, their competitors are space agencies who wont run out of cash. Heavily subsidized rocket manufacturers (ULA) and the richest man in the world. So, yeah, competition isn't going anywhere.

Besides, we know from leaked figures that SpaceX was profitable from 2011 to 2014, incurring in loses in 2015 after CRS-7.

[matthewkantar]

Blue Origin could price a New Glenn launch at some arbitrarily low number and keep it there until all of the competition is gone, Bezos has that kind of money. That sort of behavior violates antitrust laws and the Military's desire for redundant launch capability, so it would have to be done judiciously, but it could be done.

[GreenShrike]

Blue Origin could price a New Glenn launch at some arbitrarily low number and keep it there until all of the competition is gone, Bezos has that kind of money.

This isn't Amazon taking on SpaceX, it's Jeff Bezos' hobby company. And does Bezos really have the money, after all? Bezos' $100B is a lot of dosh, but it's mostly inaccessible to Bezos without collapsing Amazon's share price and eroding his control over it.

Even if he does have the money, does Blue have the ability to launch all payloads needing launch? Pretty certain that they'd need rather more launch pads and recovery ships than announced to support SpaceX's current launch rate, let alone SpaceX plus all the birds SpaceX isn't launching. If Blue tried, you could see it coming from a mile away from their construction plans.

Also, there's the point that SpaceX has been diversifying, so launch isn't their only revenue stream.  There's the topic of this thread -- SpaceX is capable of on-orbit cargo and (soon) personnel delivery, and under contract to NASA for years to provide those services. Don't people often say that most of SpaceX's revenue comes from that, rather than straight launch? And SpaceX's prices (and profits, presumably) from it just got a nice kick in the pants.

Another of those streams, planned to be online before New Glenn will have a chance to make much of a dent in the market, promises to have revenues, if it all works out, that would dwarf the entire launch market.

Finally, there's the point that launch customers have traditionally supported multiple launch providers (e.g. Proton + Ariane 5), even at moderately greater launch expense -- specifically because they don't want to be beholden to a single provider.

Blue and SpaceX will have a nice, clean fight, precisely because *launch* is neither company's actual goal. For both, revolutionizing launch costs is just a necessary step along the way.

[AncientU]

Blue Origin could price a New Glenn launch at some arbitrarily low number and keep it there until all of the competition is gone, Bezos has that kind of money. That sort of behavior violates antitrust laws and the Military's desire for redundant launch capability, so it would have to be done judiciously, but it could be done.

Musk could have that kind of money in five years, too.
Battle of the Titans isn't going to happen.

Space is big enough for the two of them.

[Darkseraph]

Blue Origin must have very attractive pricing for New Glenn to receive as many contracts as it has so far. More than Vulcan (zero so far) and more than Falcon Heavy Actually. They have yet to publicly disclose a price for a New Glenn launch so far, but it has to be competitive with the workhorses of the industry, Falcon 9, Proton and Ariane 5. Probably some price between $30 million and $90 Million. There is also the advantage of the vehicle being able to launch two large comm-sats in one go, something even Ariane 5/6 can't do.

They're likely pricing it somewhat closer to the marginal cost and not immediately transferring development costs to customers as in the case of F9R. Bezos easily has the wealth to back such a strategy.