Impact of SpaceX rideshare on small sat launchers market

[Robotbeat]

Something like Stoke, however, could easily give Starship a run for its money on smaller payloads (up to medium lift). The heatshield tech is metallic so in principle should have much lower turnaround costs on a per launch basis.

We keep circling back to this. Starship does not need to compete on a launch-for-launch basis for smaller payloads, because the huge majority of smaller payloads are perfectly happy to be aggregated. Stoke, et. at, must have a lower per-launch cost that Starship to compete at all, and this only lets them compete for the relatively small number of satellites that are willing to pay a premium for a dedicated launch. In today's world, the instant you say "constellation" you are talking mostly about dedicated payloads.

I think Stoke’s approach could actually compete on a per-kg basis.

[Robotbeat]

BTW the global launch market is more like $4-5B per year, not $10B.

I’m not sure how much SLS is counted in there, but SLS is $2B per year, for one launch per year. Kind of nuts when you think about it. So take away SLS and the launch market is like $3B per year.

Anyway, yeah, we need to find more launch demand. Starlink and other megaconstellations need to be as big as possible.

[john smith 19]

Agreed. I basically dismissed all small launchers because I think Starship will kill them.

Highly likely for everything that's another vanilla VTO TSTO.

OTOH if you're offering something different that changes the playing field. My instinct is Stokes could be a possability. The number of LV's offering downmass is very limited, but if people want to get to see a serious LEO based industrial base that has got to get a lot bigger, and more regular. Shuttle barely scratched the surface of on-orbit mfg.

I was thinking in terms of SpaceX's pricing of a single Starship launch. That launch will cost the same for a 1 kg payload or a 150 tonne payload. The question is how will they set their price?

Indeed. That is the question.
If it really was a one-price-fits-all regardsless of how much you load on or what orbit it goes to that would shape one market.

But my instinct is that's not how it's going to work.  You want F9 LEO performance, you pay F9 prices. F9 to GTO or GEO. CALL, and so on. 

[DanClemmensen]

I was thinking in terms of SpaceX's pricing of a single Starship launch. That launch will cost the same for a 1 kg payload or a 150 tonne payload. The question is how will they set their price?

Indeed. That is the question.
If it really was a one-price-fits-all regardsless of how much you load on or what orbit it goes to that would shape one market.

But my instinct is that's not how it's going to work.  You want F9 LEO performance, you pay F9 prices. F9 to GTO or GEO. CALL, and so on. 

Oh, yes. A monopolist or market leader does not operate in a theoretical ideal market, as we have both stated. Instead, they pull all sorts of tricks to maximize total profit, and one of the big ones is to differentiate the market as much as they can, including totally artificial differentiators if the customers are stupid enough.

I think the Starship prices will start slightly below the F9 prices (to incentivize the shift away from F9) and will then drop gradually as SpaceX tests the demand elasticity.  If a small launcher enters the market, they may choose to further drop transporter-class missions.

[Robotbeat]

It also costs more for SpaceX to do a GSO mission than a small LEO mission. They can do RTLS vs droneship, less intense reentry, etc.

[jongoff]

Something like Stoke, however, could easily give Starship a run for its money on smaller payloads (up to medium lift). The heatshield tech is metallic so in principle should have much lower turnaround costs on a per launch basis.

We keep circling back to this. Starship does not need to compete on a launch-for-launch basis for smaller payloads, because the huge majority of smaller payloads are perfectly happy to be aggregated.

Out of curiosity, how many small satellite developers have you spoken to about this? I'm just laughing because I had yet another conversation with a smallsat developer last week who was hoping that the small launchers are successful precisely because they're not happy aggregating on Transporter missions. They're far from the first I've heard that from.

~Jon

[DanClemmensen]

Something like Stoke, however, could easily give Starship a run for its money on smaller payloads (up to medium lift). The heatshield tech is metallic so in principle should have much lower turnaround costs on a per launch basis.

We keep circling back to this. Starship does not need to compete on a launch-for-launch basis for smaller payloads, because the huge majority of smaller payloads are perfectly happy to be aggregated.

Out of curiosity, how many small satellite developers have you spoken to about this? I'm just laughing because I had yet another conversation with a smallsat developer last week who was hoping that the small launchers are successful precisely because they're not happy aggregating on Transporter missions. They're far from the first I've heard that from.

~Jon

It will end up being a matter of cost, but by "huge majority" I was referring to constellations. I'm sure that all the one-offs would prefer inexpensive dedicated launches and will pay at least a small premium and possible a large premium. I'm not sure that this market segment is big enough to sustain a small launcher company, and as a said, we still have the possibility that Starship may be able to compete even for dedicated launches of small satellites due to economies of scale in launch operations. One problem with the existing transporter missions is that they are infrequent. There is a potential for this to change.

FWIW, I do not know what will happen and I will be quite happy to see a small launcher succeed.

[su27k]

If SpaceX is going to sell full capacity of Starship at FH price (let's say around $150M) as I suspected,

You do realise that is just your personal opinion right?

Well yeah, and your comments are your personal opinion too (unless you work for SpaceX sales, in which case you shouldn't participate in this discussion anyway), so I don't see the point of this comment.

SX actual history is they price relative to the market and keep the lowered costs as additional profit.
Because (as Marketing courses will teach you) cost ¬=profit.

One form of pricing that Marketing courses teach is called "Functional" pricing. So SX sells a Starship ride (because unlike every other transport system you can only buy a ticket-to-ride, on the usual argument that the infrastruture is far too expensive and complicated to duplicate for a customer) and if it's a rideshare then it'll have rideshare pricing, if it's an F9 equivalent it will have an F9 price (to LEO)

If it's an F9 to GEO that won't be the sticker price (as Shotwell has mentioned in the past) it'll be at something that's close to an A6, and likewise if it's an FH then it'll be at FH prices. And if it's an escape mission to another planet CALL.

It's real simple. You want more. You pay more. You want more than anything any other supplier can supply, then you pay the SX price, which will be negotiated with you probably under an NDA. You don't like their price you don't launch. Your choice.

Yes, they'll charge different prices for different market segments, that's hardly news. But they won't hike up price and drive away customers. "You don't like their price you don't launch. Your choice." is dumb, should be obvious that if they increase the price to the point where they lost sales, it's bad for them, that's just sales 101.

Which of the following is more likely?

a. SpaceX charge $300M for full Starship, customer says "I couldn't afford it, how about $150M?", SpaceX says "$300M or no launch" and thus lost the $150M sale.

OR

b. SpaceX charge $300M for full Starship, customer says "I couldn't afford it, how about $150M?", SpaceX says "Ok, $150M it is" and pocket the $150M and a health profit.

You hope SX pricing will be very reasonable.

No, not hope, I expect their pricing will be reasonable, since that's how they have behaved in the past.

There have been multiple times in the past where SpaceX had the chance to hike up price by a lot, but they didn't. For example SpaceX offered a very reasonable price for Europa Clipper ($178M total, launch price would be lower), even though they could have charged anything less than the price of a Delta IV Heavy and still won the contract and claimed savings for NASA.

Same thing with the new Crew Dragon flights NASA purchased, SpaceX only increased the price to account for inflation, even though they could have increased the price to just slightly below Starliner's price.

So yes, SpaceX will have different prices for different market segments, and they will reduce price to beat out competitors, but I don't expect they'll artificially inflate the price to whatever customer can bear or even beyond that. They behave as if there's an internal model of pricing which they think it's fair, they can lower it to compete for orders, but they won't go above it just to screw over customers.

[john smith 19]

Oh, yes. A monopolist or market leader does not operate in a theoretical ideal market, as we have both stated. Instead, they pull all sorts of tricks to maximize total profit, and one of the big ones is to differentiate the market as much as they can, including totally artificial differentiators if the customers are stupid enough.

Market segmentation isn't really a tactic against customers it's a tactic against wouldbe competitors.  Divide and rule.

I think the Starship prices will start slightly below the F9 prices (to incentivize the shift away from F9) and will then drop gradually as SpaceX tests the demand elasticity.  If a small launcher enters the market, they may choose to further drop transporter-class missions.

I can see the first part (which IIRC was what happened when SX started to run "pre-launched" rockets and wanted to incentivise people to use them.

Dropping the prices after that? Why? It's a nice idea but I've seen no indication they will do this.

[john smith 19]

Out of curiosity, how many small satellite developers have you spoken to about this? I'm just laughing because I had yet another conversation with a smallsat developer last week who was hoping that the small launchers are successful precisely because they're not happy aggregating on Transporter missions. They're far from the first I've heard that from.

Interesting. There has certainly been a perception that a lot of the smallsat builders just need a ride to space. Where they get dropped off is not really that important, just somewhere in LEO.

The question is wheather "Not happy" is enough to get them to pay the (expected) premium of going with a small LV? And are the "Not happys" a big enough (and well enough financed) group to keep at least one sLV mfg in business?

 OTOH if there are already sLV mfg's that can make a profit on launches at SX's price level then they have no problems. They (like SX) simply need to wait for their competitors to fold, possibly buying up any interesting assets they might have. 

Monopolists take over a market when enough of the market just goes "Ho hum, no one else can give me that good a price and I'll just have to go with them. It's not ideal but I'll just have to live with them."

As I think the Commercial Crew programme demonstrated only real competiton lowers prices and delivers actual innovation. If your Congress had it's way NASA would have been forced to downselect with a strong hint that they should have chosen Boeing ("Safe pair of hands.. capsule design is in our DNA," blah blah ). Which would have meant that in fact US flights to ISS would have resumed years later than they did (and you can bet US taxpayers would have been forced to cough up for Boeing's reflight. They'd have had no choice, because in that scenario it's their way, or no way ) I hope US posters remember that lesson.

[john smith 19]

It also costs more for SpaceX to do a GSO mission than a small LEO mission. They can do RTLS vs droneship, less intense reentry, etc.

True. Which raises 2 options.
1)Offer one-size-fits-all pricing, at the higher price, so they are always profitable whatever mission someone buys (and depending on the premium very profitable on all other flights)
or
2) Offer different prices for different missions, once again segmenting the market.

[john smith 19]

Well yeah, and your comments are your personal opinion too (unless you work for SpaceX sales, in which case you shouldn't participate in this discussion anyway), so I don't see the point of this comment.

True, but they are based on logic and SX's past behavior. This is how companies that offer unique capabilities tend to operate. Your view is based on what?

It's real simple. You want more. You pay more. You want more than anything any other supplier can supply, then you pay the SX price, which will be negotiated with you probably under an NDA. You don't like their price you don't launch. Your choice.

Yes, they'll charge different prices for different market segments, that's hardly news.

Really? Some people seemed to be thinking they'd just charge one price regardless of the payload.

No, not hope, I expect their pricing will be reasonable, since that's how they have behaved in the past.

I rarely leave my own quotes in a posting but I've decide to make an exception in your case because I think it's pretty clear what I think their pricing will be. Note particularly those word "You want more than anything any other supplier can supply,"
 Likewise I've dumped your strawman argument because it's exactly that. A strawman.

It would help if you read what I write, not what you think I wrote.   

We've already got a pretty good idea of how SX price payloads up to FH size and that's what I expect them to continue to do. The fact they continue to win commsat launch business says they are competitve with A6. They continue to launch FH so the deals they offer there seem competitive (or for NSS simply the only game in town, and we have very little visibility of their pricing in this segment).

By now SX has a pretty good idea of what it needs to make a profit on its flights and a pretty good idea of what its customers can pay.

Where the monopolist behavior comes in is where the payload is beyond FH. With DIVH gone what's the alternative? SLS? I did not say that SX's monopoly pricing would be unreasonable. I think they do have an internal "pricing model" which takes into various specific tasks, and the some kind of multiplier which allows for payload specific stuff that's not specifically identified, again this is WRT to beyond FH payloads.

But if you don't like it your options are very limited.
 1) Re-negotiate the contract. So instead of SX doing stuff for the customer the customer does them itself, like using the payload engines to do orbit raising or plane changes 
2) Re-design the payload to use other launchers or SH with its public pricing. Since you went with SH to begin with for either the volume or the mass to orbit (IE beyond FH, which they will probably phase out ASAP) this rather defeats the original purpose. 
3) Don't launch.

The point about a monopoly is that there is  no "market price" It's their price or nothing. As far as you know SX's prices have been reasonable, but without any effective competition that's their choice, and their choice alone. It can change. 

WRT to SX's rideshare policy I think it's set a price that puts a chunk of money in their pocket but not enough to nourish any of their compeitors. It also keeps their launch crews in training. That's their choice. This is how they operate today.

I'll leave you (and everyone else here) to think about what that suggests about how they will operate in the future when we expect Starship to come online.

You might like to look up the Diamond Selling Organisation for example.

[Hyperborealis]

By your definition, SpaceX has a monopoly where they offer a unique capability, viz. launch capability beyond FH capacity. Would you prefer they not offer that capability? that they submit any unique capability to regulatory approval? that they commit to a pricing scheme that will "nourish" their competitors?

I think you are confused about the distinction between innovation and monopoly.

[Robotbeat]

It also costs more for SpaceX to do a GSO mission than a small LEO mission. They can do RTLS vs droneship, less intense reentry, etc.

True. Which raises 2 options.
1)Offer one-size-fits-all pricing, at the higher price, so they are always profitable whatever mission someone buys (and depending on the premium very profitable on all other flights)
or
2) Offer different prices for different missions, once again segmenting the market.

If they overpriced Transporter missions, they may not have enough demand to fly regularly. Plus it would mean their megaconstellation competitors wouldn’t be able to use the Falcon 9 affordably for tests. This would be greater anti-competitive behavior than the supposed thing you’re complaining about.

SpaceX isn’t a launch company. They’re a megaconstellation company with a launch side project.

People need to stop complaining that spacex is lowering prices because they have the capability to do so. It’s not SPaceX’s fault all these smallsat companies poo-pooed reuse for years and then had a failure of a business plan.

[Robotbeat]

The absolute gall of people to complain about reuse, which required a massive amount of upfront investment and risk, actually lowering prices… are y’all on some Committee To Keep Humanity Stuck On Earth?

[toren]

....
SpaceX isn’t a launch company. They’re a megaconstellation company with a launch side project.
...

This^^^. There's a presumption from some of the posters in this thread that 'launch' is, ought to be, and will always be a market disaggregated from those it touches, instead of being integrated into (for instance) satellite engineering, operations, and or the services it provides. Or for that matter that rocket hardware will always be integrated with flying said rockets.

Elon sure doesn't see it that way - at this point SpaceX has a vertically integrated business including rocket hardware, rocket launch, satellite hardware, operations and satellite based services. Some of which it breaks out as separate offerings, and some it doesn't. Elon is driving towards the larger market sizes shown upthread in #81, which itself understates the goal since he's aiming at a share of the even larger Internet based communications market. Analyzing SX actions in terms of segmentation of the current launch market is missing the point.

I've found two bases for analysis to be useful:
1) Elon is dead serious about going to Mars, has a reasonable guess at the funding that will be required, and is going to head for any touching market that offers enough revenue to both throw off the profits and justify the capitalization to raise that funding.
2) Elon 'grew up' in Silicon Valley culture, has many of its assumptions baked in, and applies them when possible to space. For instance, riding a learning curve by continuous improvement of many examples of a product, and forward pricing to increase volume towards that end. Valleyites also think in terms of 'platforms' that generate a market and allow the platform provider to gain benefits from it. It's worth thinking about Transporter in those terms, as well as the incipient move to host payloads on Starlink. I will be totally unsurprised when the first Starships to make lunar or Mars orbit unload a bunch of Starlinks as their first operation...

[john smith 19]

By your definition, SpaceX has a monopoly where they offer a unique capability, viz. launch capability beyond FH
capacity.

I think you'll find that's more or less the usual definition of a monopoly, but lets see what Investopedia has to say

a situation in which a single company or group owns all or nearly all of the market for a given type of product or service."

So that's pretty much everybodie's definition.

Would you prefer they not offer that capability?

At present they are not offering anything.   We are assuming they will be successful in development and I'm sure something will be flying eventually short of something happening to Musk himself, and possibly even then, depending on how invested the rest of the SX upper management team are to his vision. 

that they submit any unique capability to regulatory approval?

All launch vehicles in the US  are subject to FAA licensing and approval. And if they are planning to carry people that will need substantially more inspection.

that they commit to a pricing scheme that will "nourish" their competitors?

You're mistaking an observation for an expression of of approval, or disapproval.

I think you are confused about the distinction between innovation and monopoly.

Well you're entitled to your opinion.
Let me suggest a distinction for you.
"Innovation is a way (but not the only way) to form and enforce a monopoly."

On a personal note I've been hugely impressed with SX's achievements and very much want them to succeed at settling Mars, which is quite clearly Musk's goal, hence my starting threads on how to power such a settlement, and how to make a settlement survive on Mars. Of course that all begins with mass transport, and by that I mean hundreds  of starships at least if Musk is going to reach a goal of a "Million people on Mars"

[john smith 19]

If they overpriced Transporter missions, they may not have enough demand to fly regularly. Plus it would mean their megaconstellation competitors wouldn’t be able to use the Falcon 9 affordably for tests. This would be greater anti-competitive behavior than the supposed thing you’re complaining about.

Ahhh. I see the confusion. I was talking in terms of starship, you were talking in terms of F9 transporter missions. My PoV was regarding the impact of starship.

SpaceX isn’t a launch company. They’re a megaconstellation company with a launch side project.

With a few 1000 left to launch IIRC to complete the buildout.

It's certainly a PoV.

People need to stop complaining that spacex is lowering prices because they have the capability to do so.

"Lowering prices" in a specific non-core market segment. The qualification is quite important.
Their prices elsewhere remain competitive, not you'd-have-to-be-crazy-to-look-at-anyone-else-but-spacex level. Not a surprise.
As someone who'se looking for a 10x reduction in launch costs to release an avalanche of space industry, on-orbit accomodation and ultimately settlment it's still in the 10's of $m it was when they started, so from my  PoV not a significant change in their core pricing, which is not a significant change relative to the rest of the multi tonne to GTO market.

It’s not SPaceX’s fault all these smallsat companies poo-pooed reuse for years and then had a failure of a business plan.

Which proves that Musk does not poo-poo a poo-pooing by his competitors. No sir. He takes a poo-pooing seriously.

Actually I don't think most of the current crop of wouldbe LV mfgs have poo-pooed reuse. They usually say it's on the todo list after they get something flying, which if you think about it is exactly how SX did it. Got an ELV flying reliably before trying to make full reusability work, before realising that they'd need a clean sheet design to do so.

In this regards Rocket Lab's decision (and Peter Beck's munching on his hat    ) to try to make reuse work at the sLV level (with minimal changes, rather than scrapping the whole stage design) is most significant. Their work is acting as a pathfinder for other sLV mfgs.

Wasn't that what Musk said he wanted? More companies to embrace the idea of reuse up to full reusability?
I think it was.

[john smith 19]

The absolute gall of people to complain about reuse, which required a massive amount of upfront investment and risk, actually lowering prices… are y’all on some Committee To Keep Humanity Stuck On Earth?

Except as has been pointed out it has not. 

Because costs (the business has to pay) are not equal to prices (the customer pays to get the business to do something for them).

Reuse has worked out real well for SX. For the customers it's more of a mixed bag. 

[john smith 19]

I've found two bases for analysis to be useful:
1) Elon is dead serious about going to Mars, has a reasonable guess at the funding that will be required, and is going to head for any touching market that offers enough revenue to both throw off the profits and justify the capitalization to raise that funding.
2) Elon 'grew up' in Silicon Valley culture, has many of its assumptions baked in, and applies them when possible to space. For instance, riding a learning curve by continuous improvement of many examples of a product, and forward pricing to increase volume towards that end. Valleyites also think in terms of 'platforms' that generate a market and allow the platform provider to gain benefits from it.

Which is so much nicer (and legally safer) than saying "Establish an effective monopoly" or "walled garden" but the effect is the same.

It's worth thinking about Transporter in those terms, as well as the incipient move to host payloads on Starlink. I will be totally unsurprised when the first Starships to make lunar or Mars orbit unload a bunch of Starlinks as their first operation...

Me either.
You might also consider rule 3
3) Do the simple stuff first so your investors see you are doing something with their money. Then hope or pray that something turns up to solve the difficult parts of the problem you glossed over in your sales pitch.
That's less of a SX thing (excepting F9 S2 recovery and reuse of course) and more of a general rule of thumb with startup types. Radian and Hermeous come to mind for example.