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

[DigitalMan]

Even though Jeff has been selling $1B of Amazon a year to fund Blue, his worth has been going up too fast for him to keep up.  I think it is around $137B, not $100B.  Enough of a difference to fund Moon/Mars/Asteroid Belt/Jupiter.

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.

[Lars-J]

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.

I get the feeling that a lot of the contracts for NG may be more MOUs (a sign of intent or "hold this spot") rather than firm contracts.

[Coastal Ron]

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.

No. Blue Origin is not a "hobby", it is a company. The do work for money, and are selling services, so in NO WAY are they a "hobby".

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.

If Jeff Bezos was just spending money on a hobby there would need to be a concern about how much he would put into his "hobby", but since Blue Origin is a company and plans to charge money for their services Jeff Bezos does not have to 100% fund them - they will be also funded by revenue.

Even if he does have the money, does Blue have the ability to launch all payloads needing launch?

Weird question. What is the requirement they have for launching that you are concerned about?

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.

I think you are trying too hard to make a direct competition between SpaceX and Blue Origin. SpaceX is obviously further ahead of where Blue Origin is at, but Blue Origin is obviously further ahead of where ULA is at for their next launcher.

Also, there's the point that SpaceX has been diversifying, so launch isn't their only revenue stream.

Again, you are trying to make a 1:1 comparison between two completely different companies. While they have some of the same market goals, otherwise they have different end-games that they are pursuing.

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.

Which is why any direct comparisons is like comparing apples to oranges - some similarities, but enough differences to make they incomparable for now...

[Coastal Ron]

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.

All of the customers Blue Origin are pursuing understand how prices can be used to affect competition, and all of the customers Blue Origin are pursuing want robust competition and redundancy, both for the commercial and government markets.

And yes, Blue Origin can not artificially reduce their prices and win government contracts because of government procurement laws that were put in place to protect from things like "dumping".

Blue Origin can use things like discounts and "introductory pricing", but eventually they will need to be transparent about their pricing structure. And because of SpaceX, everyone will have a baseline for what reusable launch services should actually cost, and they will be rightly suspect if the pricing comes in too low - or too high.

Jeff Bezos is not the only smart person in the world...

[mme]

I am amazed when people:

1. don't understand how mind boggling rich Bezos is and how easy it is for him personally to spend billions, plural, annually for the rest of his life and still be mind boggling rich when he has his head cryogenically frozen and is uploaded into the matrix (OK, last bit is a joke but the first part is real);
2. don't understand Bezos is willing to run at a loss for decades (see Amazon);
3. is the king of the slim margin (see Amazon);
4. is very serious, if not in a rush, about getting humanity into space;
6. that this is a SpaceX thread (though it's sort of refreshing for a SpaceX thread to get hijacked rather than vice versa.)

P.S. I am not saying SpaceX can not compete just that ignoring Blue Origin as a threat to SpaceX's market share today is more foolhardy than when "old space" ignored and ridiculed SpaceX as a threat 5 years ago.

[DistantTemple]

Bezos has stated his aim of having "a million people living and working in space". He has not said he will contest Mars, or race EM there.

He did try to nobble SX by attempting to patient droneship landings though!

So BO will be after SX's satellite launch clients. It is therefore more important for SX to make sure it is well ahead in other space industries, as BO could very likely do the tortoise trick and make a very successful launch system, and as people say, run it at a loss to capture the market.

But the tortoise won't have  a Starlink constellation, a ship that can easily land on the moon or Mars, or an established service to Mars. Its second stage might not be initially reusable adding delay as well as cost! And it isn't even hinting at point to point. If SX makes good on a couple of these before BO breaks out of its chrysalis, it will be able to stay ahead. And on Mars, SX will have a base, ISRU habitats and infrastructure, by the time BO considers Mars, ... which it may not.

A million people living and working in space implies large (rotating) space stations. Maybe in 10 years they will be selling on-orbit fuel or tankage space to musk, or providing short term hotel space prior to Mars transit, whilst BFS is tanked and cleaned on-orbit.

Bezos might be more selfish and devious than EM but SX is so much more agile, and will be established on Mars... The tortoise can not rush this way and that. It can only win one race at  a time.... But the Falcon, can get an enormous overview, focus on many details with its sharp eyes, soar from mountain, to forest, to prairie, and plummet for the kill. A tortoise can not reach the Falcon's nest!

[tplank]

As a non-industry space fanboi, it seems to me that the strongest odds are that SpaceX and BO will end up providing complimentary services. Like economics generally, this is not necessarily a zero-sum game. I am thrilled that Bezos' billions are in the mix. We need more visionary leadership both on this planet and off.

[Robotbeat]

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. ...

...the context was Bezos/Blue underselling competitors for a decade, not SpaceX.

[Lar]

mme has it exactly right. Bezos is playing the longest of long games and has practically infinite resources unless something really surprising happens. But SpaceX can still succeed because a) there is plenty of room for many competitors, many pathways, especially after things really get rolling and b) SpaceX is nimble.

So this cargo price increase (remember the topic?) is a minor blip and not really all that important in the grand scheme of things. But it is a good message to send... NASA's price goes up while commercial comes down. Because reasons.

[AncientU]

I am amazed when people:

1. don't understand how mind boggling rich Bezos is and how easy it is for him personally to spend billions, plural, annually for the rest of his life and still be mind boggling rich when he has his head cryogenically frozen and is uploaded into the matrix (OK, last bit is a joke but the first part is real);
2. don't understand Bezos is willing to run at a loss for decades (see Amazon);
3. is the king of the slim margin (see Amazon);
4. is very serious, if not in a rush, about getting humanity into space;
6. that this is a SpaceX thread (though it's sort of refreshing for a SpaceX thread to get hijacked rather than vice versa.)

P.S. I am not saying SpaceX can not compete just that ignoring Blue Origin as a threat to SpaceX's market share today is more foolhardy than when "old space" ignored and ridiculed SpaceX as a threat 5 years ago.

I think most here are strongly pro-Blue Origin and its contribution to the competition.  The real threat is to those who believe reusability is a one and done phenomenon that they can survive with expendable rockets.  A tough, head-to-head struggle between Blue and SpaceX will be terrific!  If Blue exceeds SpaceX capabilities and dominates, just imagine where we'll be...

Of course, such a struggle will involve collateral damage among the less aggressive/staid launch providers.

[Semmel]

Its very interesting how the discussion here processed. However, there is one point to make that stuck out to me after I munched over this topic for a while and its not discussed here at all. SpaceX claims that access to space is what needs to get cheaper in order to grow the market and make humanity multi-planetary. And this is quite obviously true. But its only half the game.
SpaceX has the cheapest launch service on the planet and its getting cheaper with reusibility. If not for the customer but for sure for SpaceX as the launch service provider. Still, their price on providing a service to ISS increased compared to the past. Now, that directly proves that its not enough to have a low cost launch service, also the spacecraft and in-space service must become cheap. Otherwise the low-cost launch service is not enough to provide the kind of future SpaceX and Blue Origin is envisioning.
Its very telling that SpaceX of all companies is not able to provide low-cost on-orbit service using the NASA approach on the F9 architecture. So there is much, much more to the game than the launch service it self.
The NASA rulebook of providing in-orbit service is quite obviously not the path to that future. May it be a Mars colony or a million people in cis-lunar space. It will be very interesting to see how BFS will fare in terms of on-orbit service cost. Or how Blue Origin will approach their vision.

[AncientU]

NASA obviously isn't interested in cost reduction --similarly with advancing the technology. If they were, they'd be ordering reused rockets, land-landing and maximally reusing Dragon 2s.  Using Dream Chaser is the exception here, though they decided to pass on DC for crew and go for most expensive and oldest tech. (They kinda owed SNC one since they had 'won' a second position in the Crew competition.)

It does prove that there is no ceiling to how expensive one can make spaceflight.

[envy887]

Its very interesting how the discussion here processed. However, there is one point to make that stuck out to me after I munched over this topic for a while and its not discussed here at all. SpaceX claims that access to space is what needs to get cheaper in order to grow the market and make humanity multi-planetary. And this is quite obviously true. But its only half the game.
SpaceX has the cheapest launch service on the planet and its getting cheaper with reusibility. If not for the customer but for sure for SpaceX as the launch service provider. Still, their price on providing a service to ISS increased compared to the past. Now, that directly proves that its not enough to have a low cost launch service, also the spacecraft and in-space service must become cheap. Otherwise the low-cost launch service is not enough to provide the kind of future SpaceX and Blue Origin is envisioning.
Its very telling that SpaceX of all companies is not able to provide low-cost on-orbit service using the NASA approach on the F9 architecture. So there is much, much more to the game than the launch service it self.
The NASA rulebook of providing in-orbit service is quite obviously not the path to that future. May it be a Mars colony or a million people in cis-lunar space. It will be very interesting to see how BFS will fare in terms of on-orbit service cost. Or how Blue Origin will approach their vision.

The increase relative to CRS-1 doesn't necessarily indicate anything, since there are differences in the services provided.

It's the fact that SpaceX is more expensive (per kg) than SN that is interesting. Although, that's probably explained by SN only building a single Dream Chaser vehicle, and by SN is loading almost twice as much cargo per trip, mostly in the relatively cheap expendable cargo module. Dream Chaser is almost certainly much more expensive per mission, even though it's cheaper per kg because of the large cargo capacity of the expendable module.

If you order a new BFR and customized BFS for every mission, it will probably be rather expensive in total. However, it would be  extraordinarily capable, and very cheap on a per kg basis even without reuse. NASA requires 3.3 m^3 per 1,000 kg of cargo, so BFS could easily deliver 150 tonnes in its 825 m^3 of volume. Even if the cost was $1.5 billion per flight (which is some 3 times greater SpaceX's estimate of $430 million per vehicle stack), that is only $10k per kg of pressurized delivered, compared to the $80k to $90k per pressurized kg delivered by CRS-2 vehicles.

Increasing size makes things far cheaper per kg. This holds true from Electron, to F9/DRagon, to Atlas V/Dream Chaser, to BFR/BFS.

[Semmel]

Its very interesting how the discussion here processed. However, there is one point to make that stuck out to me after I munched over this topic for a while and its not discussed here at all. SpaceX claims that access to space is what needs to get cheaper in order to grow the market and make humanity multi-planetary. And this is quite obviously true. But its only half the game.
SpaceX has the cheapest launch service on the planet and its getting cheaper with reusibility. If not for the customer but for sure for SpaceX as the launch service provider. Still, their price on providing a service to ISS increased compared to the past. Now, that directly proves that its not enough to have a low cost launch service, also the spacecraft and in-space service must become cheap. Otherwise the low-cost launch service is not enough to provide the kind of future SpaceX and Blue Origin is envisioning.
Its very telling that SpaceX of all companies is not able to provide low-cost on-orbit service using the NASA approach on the F9 architecture. So there is much, much more to the game than the launch service it self.
The NASA rulebook of providing in-orbit service is quite obviously not the path to that future. May it be a Mars colony or a million people in cis-lunar space. It will be very interesting to see how BFS will fare in terms of on-orbit service cost. Or how Blue Origin will approach their vision.

The increase relative to CRS-1 doesn't necessarily indicate anything, since there are differences in the services provided.

It's the fact that SpaceX is more expensive (per kg) than SN that is interesting. Although, that's probably explained by SN only building a single Dream Chaser vehicle, and by SN is loading almost twice as much cargo per trip, mostly in the relatively cheap expendable cargo module. Dream Chaser is almost certainly much more expensive per mission, even though it's cheaper per kg because of the large cargo capacity of the expendable module.

If you order a new BFR and customized BFS for every mission, it will probably be rather expensive in total. However, it would be  extraordinarily capable, and very cheap on a per kg basis even without reuse. NASA requires 3.3 m^3 per 1,000 kg of cargo, so BFS could easily deliver 150 tonnes in its 825 m^3 of volume. Even if the cost was $1.5 billion per flight (which is some 3 times greater SpaceX's estimate of $430 million per vehicle stack), that is only $10k per kg of pressurized delivered, compared to the $80k to $90k per pressurized kg delivered by CRS-2 vehicles.

Increasing size makes things far cheaper per kg. This holds true from Electron, to F9/DRagon, to Atlas V/Dream Chaser, to BFR/BFS.

You didnt get my argument. I am not debaing the way they price Dragon 2 in particular. The thing that I bring up is the fantasy (for lack of a better word) of a future where spaceflight is as common as aircraft flight is today. Thats the future SpaceX and Blue Origin and even to an extent ULA is advertising. SpaceX is very popular on record that all you need is an affordable way to get to space. But thats not enough. You also need an affordable way to operate in space. And my argument is, that Dragon 2, as used for ISS, is NOT on a way to achieve that fantasy future. Maybe if Dragon 2 was landing propulsively and could be reused >10 times without major refurbishment. But that option does not exist for the lack of enough balls on NASAs side (they didnt want to 'test' propulsive landings on cargo missions) and the lack of investment on SpaceX side (they didnt want to test propulsive landings as dedicated missions). The fast is, doing stuff in space is expensive, no matter how much the launch cost. And without a solution for THAT problem, none of the above mentioned dreams will come true. NASAs way is not the right one here. An alternative has to be invented. Lets see what SpaceX and Blue Origin can come up with on their own.

[niwax]

Maybe if Dragon 2 was landing propulsively and could be reused >10 times without major refurbishment. But that option does not exist for the lack of enough balls on NASAs side (they didnt want to 'test' propulsive landings on cargo missions) and the lack of investment on SpaceX side (they didnt want to test propulsive landings as dedicated missions). The fast is, doing stuff in space is expensive, no matter how much the launch cost. And without a solution for THAT problem, none of the above mentioned dreams will come true. NASAs way is not the right one here. An alternative has to be invented. Lets see what SpaceX and Blue Origin can come up with on their own.

Isn't this exactly what SpaceX was proposing but then replaced with BFR? Dragon 2 is mostly kept around because it's the fastest way they can get an HSF certified vehicle

[DistantTemple]

And my argument is, that Dragon 2, as used for ISS, is NOT on a way to achieve that fantasy future. Maybe if Dragon 2 was landing propulsively and could be reused >10 times without major refurbishment. But that option does not exist for the lack of enough balls on NASAs side (they didnt want to 'test' propulsive landings on cargo missions) and the lack of investment on SpaceX side (they didnt want to test propulsive landings as dedicated missions). The fast is, doing stuff in space is expensive, no matter how much the launch cost. And without a solution for THAT problem, none of the above mentioned dreams will come true. NASAs way is not the right one here. An alternative has to be invented. Lets see what SpaceX and Blue Origin can come up with on their own.

Moving from Dragon to the BFR, SX [is]moving away from how it operates with NASA. You might say that is in the future, but as well as NASA SX has worked launched a multitude of commercial satellites. There is no released information about the need to increase prices in that market. SX have not only streamlined the F9, but everything from engine testing (only a handful of people instead of the "hundred" previously assumed necessary, automatic flight termination system, meaning lower range cost, and ease of planning frequent launches... I think you are right, we are in an industrial revolution in space procedures, as well as rocket design and manufacture. Its about like the move from handweaving to dangerous factories, to modern weaving factories, with much higher safety, but orders of magnitude lower cost. From new alloys, to tent factories SX are finding ways to cut out the meetings... and time wasting.
Being able to trace a bolt to its manufacturer, and access its test report, and know it was (stated in its record that) it was manufactured from the correct alloy, using the correct proceedures, and to the specified tolerances... does not mean someone has to measure it with a micrometer, or follow it with a camera and notebook. All this is becoming cheap and routine. If you complain of a dead mouse in your cereal, you will end up in court, because the company will have an automatic photo of every single packet being filled and sealed! (recent news story in the UK).

So SX has already broken the "fantasy" in so many ways. NASA is not closely involved in BFR. NASA won't be involved with SX's offshore launchpads... NASA couldn't stomach propulsive landings, but SX is doing it anyway, where NASA isn't involved! But NASA is (still) helping in at least three ways 1. Paying SX lots of good money for its services. 2. Sharing some technologies with SX. 3. Being a positive and supportive anchor customer of SX...
NASA is not the only organization that can manage quality control, and engineering standards. But (unlike NASA) SX it will use the latest methods and technology to do this. And SX doesn't have to have NASA to maintain their standrds. If SX starts losing satellites, it will loose customers, and if it looses astronauts, it will attract more regulation, and hold up its vision. SX is already proving it does not need a man with a red flag walking in front! It is out of diapers, and trainining harness!

[CuddlyRocket]

[Bezos] did try to nobble SX by attempting to patient droneship landings though!

I suspect Bezos knew that such a patent would in all likelihood be declared invalid, but Blue Origin applied for one because either the courts would find that they had a valid patent or that there could be no such valid patent. The alternative is to risk someone else applying for such a patent, which if the court did uphold it might cause BO serious difficulties. In the event, SpaceX challenged it and the courts did rule that there could be no such valid patent (because of extensive prior art), leaving the option of droneship landings free for BO to pursue if it wanted to. Lots of patent applications are done for similar reasons.

[joek]

You didnt get my argument. I am not debaing the way they price Dragon 2 in particular. The thing that I bring up is the fantasy...

We got your argument, such as it is.  Which is irrelevant with respect to this thread.  Your  debate-with-self-pontificating-to-world-at-large does not belong here.  It belongs in a different thread unrelated to ISS or CRS-2 and related pricing.

Isn't this exactly what SpaceX was proposing but then replaced with BFR? Dragon 2 is...

Moving from Dragon to the BFR, SX [is]moving away from how it operates with NASA. You might say..

Please stop this noise.  BFR-BFS has nothing to do with CRS-2 or any other ISS deliveries and associated pricing for the foreseeable future.  Put it in Semmel's fantasy thread.

[envy887]

Dragon is not designed for super-low cost acres to space. The expended trunk, the hazardous hydrazine procedures, and the high ballistic coefficient resulting in much higher heat shield wear, and the generally not streamlined operations profile mean it cannot make space accessable to normal people. It's a good solution for NASA, corporations, and well heeled tourists, but that's about it.

[Robotbeat]

[Bezos] did try to nobble SX by attempting to patient droneship landings though!

I suspect Bezos knew that such a patent would in all likelihood be declared invalid, but Blue Origin applied for one because either the courts would find that they had a valid patent or that there could be no such valid patent. The alternative is to risk someone else applying for such a patent, which if the court did uphold it might cause BO serious difficulties. In the event, SpaceX challenged it and the courts did rule that there could be no such valid patent (because of extensive prior art), leaving the option of droneship landings free for BO to pursue if it wanted to. Lots of patent applications are done for similar reasons.

No, they could’ve just publicly proposed droneship landings. Then no one could’ve patented it. Can’t patent something that has been publicly proposed by someone else.