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

[gongora]

The company supposed to allow people to go to Mars for peanuts increasing their prices by 50pct? Pretty significant.

Yep. They're now charging ~$230m for a cargo and ~$400m for a crewed flight (excluding launch), BFR will cost several times that much, everything else is wishful thinking.

I don't think that's accurate excluding launch. Launch (on a new booster every time) is part of the package, separate costs are not detailed anywhere that I know of.

Crew Dragon only has 2 flights per year. If BFR only flies twice per year, it will cost at least that much, but that rate is not sustainable - it will either fly much more (and lower cost per flight), or not at all.

Crew Dragon only has 1 flight per year, and it's more in the $200-230M range including launch if you look at the amount on the task orders for the flights.  The cost of passenger flights to Mars on BFR is unknown and irrelevant right now, that's far in the future.

[WmThomas]

I think SpaceX knew they had way underbid the competition on CRS-1, and for CRS-2 they charged what the market would bear.

They knew, even raising their prices by 50%, they would underbid Orbital, Boeing, and Sierra Nevada.

Isn't that what happened?

If NASA wants the best value, they need a better purchasing method.

[joek]

I don't think that's accurate excluding launch. Launch (on a new booster every time) is part of the package, separate costs are not detailed anywhere that I know of.

Launching on a new booster every time is part of the contract-guarantee-max-price.  Does not mean it will happen or cost that much.  This is the result of typical IDIQ FFP contract cover-your-ass pricing: you can go lower but you can never go higher than what you committed to N years previously.

For the guaranteed missions expect by-the-book and likely new hardware as part of the package.  For the rest all bets are off as they will individually competed task orders.  Whoever can meet the mission requirements at lowest cost will win.

[joek]

I think SpaceX knew they had way underbid the competition on CRS-1, and for CRS-2 they charged what the market would bear.

They knew, even raising their prices by 50%, they would underbid Orbital, Boeing, and Sierra Nevada.

Isn't that what happened?

If NASA wants the best value, they need a better purchasing method.

Underbid Orbital, Boeing, and Sierra Nevada for what?  Pressurized up-mass?  Pressurized down-mass?  Unpressurized up-mass?  Pressurized disposal?  Unpressurized  disposal?

You sure SpaceX can underbid everyone for all of those capabilities?  Not to mention that one of the fundamental ideas behind CRS is to have multiple-redundant providers.

"Best value" is not always the cheapest.  Which is why NASA's CRS portfolio includes multiple providers, because the value equation consists of more than simply lowest cost $/kg or $/mission.

This purchasing method is about as good as it gets in the USG space today, which is basically: commercial providers competing for and providing commercial services.

[Robotbeat]

The fact that there are 3 providers basically guarantees that the cost for the first few is going to be more as there are likely to be fewer total flights awarded to each provider on average.

Additionally, SpaceX's early flights in CRS1 did not carry a full payload, and they used a VERY new and therefore relatively risky launch vehicle. It makes sense that with greater flight history pushing the risk down, the flights are worth more.

Additionally, you have another, what, 10% extra from inflation?

[joek]

...
Additionally, SpaceX's early flights in CRS1 did not carry a full payload, and they used a VERY new and therefore relatively risky launch vehicle. It makes sense that with greater flight history pushing the risk down, the flights are worth more.
...

So the older, more proven and reliable a system becomes, the higher the value/price?  For some, yes, for others, no.  Reward comes with risk, as SpaceX has demonstrated.

That said, I'd agree that NASA likely belongs in the "for some, yes" category, especially when it comes to the ISS.

[RotoSequence]

Am I missing something, or doesn't this whole thing come down to a fixed price service fee with fewer launches to go with it?

[joek]

Am I missing something, or doesn't this whole thing come down to a fixed price service fee with fewer launches to go with it?

Sort of.  The guaranteed missions are likely baked and fixed price.  For missions beyond those guaranteed, the standard NASA process will apply: (1) NASA will issue a request to qualified providers for the mission; (2) qualified providers respond; (3) NASA selects a provider and awards a task order.

For missions beyond those guaranteed, there will be a set maximum price for a given mission type in a given year; that price will have been set when the original proposals for CRS-2 were submitted.  For those out-years, providers may bid lower, but may not bid higher.

Generally sucks for everyone as it tends to drive prices up due to out-year uncertainties.  Such is life with USG FAR IDIQ contracts such as CRS-2 or NLS.  On the nominal plus side, it provides NASA/USG budget predictability and it shifts out-year risk to the providers.

[raketa]

Spacex will charge same money as other provider. They will make part of BFR money this way. Their price will not under cut other providers, no reason give NASA discounts if not give them more flights.

[AncientU]

The company supposed to allow people to go to Mars for peanuts increasing their prices by 50pct? Pretty significant.

Yep. They're now charging ~$230m for a cargo and ~$400m for a crewed flight (excluding launch), BFR will cost several times that much, everything else is wishful thinking.

Yes, the price for NASA will be high, many times the cost for their own flights.  The flights for delivering the Starlink constellation can be compared to the price for cargo deliveries... about 10x more for NASA (nominally $25M for Starlink launch, $230M for ISS cargo).  A Lunar BFR/BFS may easily be priced for NASA over $1B...  maybe $2B... and still a be a great deal (150t to the surface).

[AbuSimbel]

Comparing this to the BFR, or worse projecting costs for the BFR based on this is comparing apples to oranges, there's not much to add.

[AncientU]

Comparing this to the BFR, or worse projecting costs for the BFR based on this is comparing apples to oranges, there's not much to add.

Why wouldn't the underlying pricing structure be exactly the same?  Obviously the details -- bells and whistles requisitioned -- would be different, but SpaceX costs vs. prices for NASA missions should be unchanged.

$1-2B is incredibly cheap for a delivery of 150t when you look at comparable deliveries:
1. Delivering cargo to ISS with SLS/Orion ($1-2B per flight)
2. Lunar sample return missions ($1B plus cost of launch -- reference below)
3. $2-3B for Bigelow/Vulcan-Centaur Lunar Outpost
4. 150t delivered to the Lunar surface via NASA-only hardware and SLS (Several $10Bs)
And SpaceX cost per launch of BFR/BFS will be tiny fraction of that -- sub-$100M, even during early years.

http://spacenews.com/lunar-sample-return-team-eyes-another-new-frontiers-run/

[AbuSimbel]

Comparing this to the BFR, or worse projecting costs for the BFR based on this is comparing apples to oranges, there's not much to add.

Why wouldn't the underlying pricing structure be exactly the same?  Obviously the details -- bells and whistles requisitioned -- would be different, but SpaceX costs vs. prices for NASA missions should be unchanged.

$1-2B is incredibly cheap for a delivery of 150t when you look at comparable deliveries:
1. Delivering cargo to ISS with SLS/Orion ($1-2B per flight)
2. Lunar sample return missions ($1B plus cost of launch -- reference below)
3. $2-3B for Bigelow/Vulcan-Centaur Lunar Outpost
4. 150t delivered to the Lunar surface via NASA-only hardware and SLS (Several $10Bs)
And SpaceX cost per launch of BFR/BFS will be tiny fraction of that -- sub-$100M, even during early years.

http://spacenews.com/lunar-sample-return-team-eyes-another-new-frontiers-run/

Well as others have said the price for NASA is driven by their requirements, not SpaceX charging as much as possible.

Full reusability changes the game and NASA requirements have to change accordingly. If things work as intended with the BFR, projecting BFR prices to NASA as a function of commercial prices and basing this on F9 + Dragon doesn't make much sense.
 
This is my bet.

[speedevil]

Why wouldn't the underlying pricing structure be exactly the same?  Obviously the details -- bells and whistles requisitioned -- would be different, but SpaceX costs vs. prices for NASA missions should be unchanged.

Desire to drive the costs of stuff down.

If I am trying to colonise Mars, I absolutely in no way want developers working on hardware that costs $25K/kg, when my cost of getting stuff to Mars is $1500/kg, for a throw-away unoptimised spacecraft, and under $150 for a slightly optimised one.

Spending $2B on a payload and $500M on launch is not better than spending $10M on a payload, and $50M on launch, if it means I can purchase stuff for Mars at $50/kg, not $20000/kg.

Innovative pricing structures may be a way to drive this.

For example, very discounted prices - but only if SpaceX gets IP rights to your payload, or the option to purchase it for the launch cost, instead of launch it for you.

[AncientU]

There certainly are partnering relationships that could drive prices down toward SpaceX costs.  We'll see if NASA wants to entertain such arrangements (which will mean giving up dictatorial control).  ISS cargo and even more crew is NOT such a partnership.  The mark-up is NASA's to choose.

Innovation in pricing structure is dependent on innovating in NASA's processes.

[philw1776]

The company supposed to allow people to go to Mars for peanuts increasing their prices by 50pct? Pretty significant.

Yep. They're now charging ~$230m for a cargo and ~$400m for a crewed flight (excluding launch), BFR will cost several times that much, everything else is wishful thinking.

A testable prediction.
If BFR costs "several" times as much, excluding launch, then SpaceX will quickly go out of business at 3/4ths of a billion or more per shot testing BFR and using it to launch their Skynet constellation.
I really, really do not think Musk and Shotwell are that stupid.

[john smith 19]

It’s not a cost-plus contract. That means SpaceX can charge higher prices.

Nor did I say it was.

But it’s not the same service: the risk premium is now much smaller than it was.

So it's less risky, but charged at more?

Hmm.

I think SpaceX knew they had way underbid the competition on CRS-1, and for CRS-2 they charged what the market would bear.

They knew, even raising their prices by 50%, they would underbid Orbital, Boeing, and Sierra Nevada.

Isn't that what happened?

Pretty much

If NASA wants the best value, they need a better purchasing method.

Damm right. 

Remember the CRS contract is innovative, by NASA standards. 

[john smith 19]

SpaceX has already said it is going to fund BFR/S largely from profits generated from Falcon 9 & Heavy flights.  This is nothing new.

I think the $14 Billion dollar crew transport contract they won from NASA might also contribute a few bucks to the pot.

Depending on profit margins the SX flight schedule to date may have raised a $Bn in profit.

You're not going to build a whole new factory and build and flight test a vehicle the size of 2 A380's (and considerably heavier) with new engines, new construction methods and beyond anything this industry has seen in size for that kind of money. 

Issuing that contract to SX may have insured NASA's long term HSF future.

[rayleighscatter]

It is offensive that Orbital ATK is paying dividends instead of working on reusability.

SpaceX is paying its investors as well, they just use private investing instead of public. The billion dollars from Google wasn't a gift, they're getting something in return, either a fixed rate or a share of profits (the same goes for their other investors).

[HMXHMX]

It is offensive that Orbital ATK is paying dividends instead of working on reusability.

SpaceX is paying its investors as well, they just use private investing instead of public. The billion dollars from Google wasn't a gift, they're getting something in return, either a fixed rate or a share of profits (the same goes for their other investors).

They are getting neither; investors in SpaceX only see equity appreciation (presumably substantial given current valuation).  If there are any outstanding note-holders, they may be seeing interest payments, but they are not usually considered investors.

I believe the overlooked issue with the CRS pricing increase is: what might the actual BFR "public" pricing really be in light of the ~$7m/flight claim that was made upon unveiling the current BFR?  For example, we might consider early SpaceX announcements of pricing for the initial F9 ($18m, circa 2005) with the current reality.

Omnia quae mercatus feret.