Reusability effect on costs

[the_other_Doug]

Gwynne Shotwell, SpaceX’s president and chief operating officer, said in March that the launch provider hopes to offer price reductions of as much as 30 percent to customers willing to launch their satellites on a reused rocket.

A 30 percent discount would put Falcon 9 prices near $43 million, at least compared to SpaceX’s online list price. Shotwell said further cuts could come as SpaceX improves on the time and cost of turning around flown rocket stages for another launch.

https://spaceflightnow.com/2016/08/30/ses-agrees-to-launch-satellite-on-flight-proven-falcon-9-rocket/

Listen to the boss.

Made a spreadsheet analyzing re-use of F9 first stages assuming various mfg costs, launch ops costs, core recovery costs and refurbish & re-test costs.  Re-use should be very lucrative.

However you need to factor in Recovery % which decreases the # of re-useable cores rapidly unless % is high, and most of all Failure % which also removes cores from the re-use pool.

For example (see attached spreadsheet) at an imaginary failure rate of 0% and recovery rate of 90%, still only 39% of the cores make their 10th flight.  So core robustness is not the limiting factor.
Conversely at a current failure rate of 5% and recovery rate of 90% only 23% of the cores make their 10th flight.
And at a failure rate of 5% and recovery rate of 80% only 8% of the cores make their 10th flight.  Recovery % really matters.

Lots of room for improvement.

True -- but the recovery % is trending in the right direction, I think...

[philw1776]

Yes, already better than the original 70% cited, HOWEVER we don't know what % of the recovered cores are re-flyable.  Right now they're as Musk has said, learning as they go so any % #s are premature.

I should have added another %, the % of recovered cores able to be re-flight certified, and every time you multiply by a % the answer gets smaller.  Lots of work to do.  Time to do it.

[AncientU]

Gwynne Shotwell, SpaceX’s president and chief operating officer, said in March that the launch provider hopes to offer price reductions of as much as 30 percent to customers willing to launch their satellites on a reused rocket.

A 30 percent discount would put Falcon 9 prices near $43 million, at least compared to SpaceX’s online list price. Shotwell said further cuts could come as SpaceX improves on the time and cost of turning around flown rocket stages for another launch.

https://spaceflightnow.com/2016/08/30/ses-agrees-to-launch-satellite-on-flight-proven-falcon-9-rocket/

Listen to the boss.

Made a spreadsheet analyzing re-use of F9 first stages assuming various mfg costs, launch ops costs, core recovery costs and refurbish & re-test costs.  Re-use should be very lucrative.

However you need to factor in Recovery % which decreases the # of re-useable cores rapidly unless % is high, and most of all Failure % which also removes cores from the re-use pool.

For example (see attached spreadsheet) at an imaginary failure rate of 0% and recovery rate of 90%, still only 39% of the cores make their 10th flight.  So core robustness is not the limiting factor.
Conversely at a current failure rate of 5% and recovery rate of 90% only 23% of the cores make their 10th flight.
And at a failure rate of 5% and recovery rate of 80% only 8% of the cores make their 10th flight.  Recovery % really matters.

Lots of room for improvement.

Exactly... have tried to get that point across for a couple months.  It will require a 93.3% recovery rate to get half of the cores to ten flights.

You raise another interesting point, though.  At 5% ongoing failure rate, lots of non-statistical bad things begin to happen, such as frequent interruptions for return-to-flight, declining manifest due to loss of confidence (crew flights will be first to go), and general lack of good will toward their way of doing business.  These items and others like them are difficult to quantify, but will have much greater impact than a spreadsheet can reveal.

In other words, SpaceX may not achieve any of its goals if they have a significant ongoing launch failure rate.  Much more troubling than barge recovery rate...

First of many articles that will pour out on this topic:
http://www.nytimes.com/2016/09/05/business/spacexs-explosion-reverberates-across-space-satellite-and-telecom-industries.html?_r=0

The explosion investigation and launchpad repair seem sure to scuttle SpaceX’s aggressive launch plans this year. The company had hoped for as many as 18 rocket launches this year. It has had eight so far; last week’s would have made nine. Over all, SpaceX has had 27 successful launches of Falcon 9 rockets.

The Florida accident is also rippling through the insurance market. Insuring the risk of getting a satellite into space comes in two stages. The preflight insurance is intended to mainly cover the risk of damage to the rocket and satellite on their way to the launchpad. Premiums are a fraction of a percent.

Launch policies, which take effect when the rocket is fired up, are costly, ranging from 5 to 15 percent historically.

But the Falcon 9 exploded during a prelaunch test. So launch policies did not kick in. And the insurance payout will fall on the roughly two dozen preflight insurers.

Richard Parker, managing director of Assure Space, an underwriting agency, is waiting to see the cause of the explosion. If it is a design or manufacturing flaw or an operational error, launch rates for SpaceX flights may well go up. His firm had underwritten a launch policy on last week’s flight at 6 percent, he said.

[philw1776]

Exactly... have tried to get that point across for a couple months.  It will require a 93.3% recovery rate to get half of the cores to ten flights.

You raise another interesting point, though.  At 5% ongoing failure rate, lots of non-statistical bad things begin to happen, such as frequent interruptions for return-to-flight, declining manifest due to loss of confidence (crew flights will be first to go), and general lack of good will toward their way of doing business.  These items and others like them are difficult to quantify, but will have much greater impact than a spreadsheet can reveal.

In other words, SpaceX may not achieve any of its goals if they have a significant ongoing launch failure rate.  Much more troubling than barge recovery rate...

First of many articles that will pour out on this topic:
http://www.nytimes.com/2016/09/05/business/spacexs-explosion-reverberates-across-space-satellite-and-telecom-industries.html?_r=0

The explosion investigation and launchpad repair seem sure to scuttle SpaceX’s aggressive launch plans this year. The company had hoped for as many as 18 rocket launches this year. It has had eight so far; last week’s would have made nine. Over all, SpaceX has had 27 successful launches of Falcon 9 rockets.

The Florida accident is also rippling through the insurance market. Insuring the risk of getting a satellite into space comes in two stages. The preflight insurance is intended to mainly cover the risk of damage to the rocket and satellite on their way to the launchpad. Premiums are a fraction of a percent.

Launch policies, which take effect when the rocket is fired up, are costly, ranging from 5 to 15 percent historically.

But the Falcon 9 exploded during a prelaunch test. So launch policies did not kick in. And the insurance payout will fall on the roughly two dozen preflight insurers.

Richard Parker, managing director of Assure Space, an underwriting agency, is waiting to see the cause of the explosion. If it is a design or manufacturing flaw or an operational error, launch rates for SpaceX flights may well go up. His firm had underwritten a launch policy on last week’s flight at 6 percent, he said.

As launch cadence increases, failure rate has more and more effect with long indeterminate hiatus for RTF.  Assuming their internal costs are in control as Elon and Gwynne assert, THE most important metric for SX has to be failure rate.  It kills quarterly revenue causing cash flow problems and worse yet it can lose customers.  A downward spiral.

[Kabloona]

This is more about "price" than "cost," but I couldn't find a "price" thread.

Gwynne Shotwell now saying SpaceX will offer 10% discount for customers flying on a reused F9 booster,  much less than the 30% number being discussed earlier.

http://spacenews.com/spacexs-shotwell-on-falcon-9-inquiry-discounts-for-reused-rockets-and-silicon-valleys-test-and-fail-ethos/

Gwynne floated the 30% figure back in March:

http://spacenews.com/spacex-says-reusable-stage-could-cut-prices-by-30-plans-first-falcon-heavy-in-november/

[Blackstar]

This is more about "price" than "cost," but I couldn't find a "price" thread.

Gwynne Shotwell now saying SpaceX will offer 10% discount for customers flying on a reused F9 booster,  much less than the 30% number being discussed earlier.

http://spacenews.com/spacexs-shotwell-on-falcon-9-inquiry-discounts-for-reused-rockets-and-silicon-valleys-test-and-fail-ethos/

Gwynne floated the 30% figure back in March:

http://spacenews.com/spacex-says-reusable-stage-could-cut-prices-by-30-plans-first-falcon-heavy-in-november/

And from the first article:

"At this point that is a reasonable reduction and then, as we recover some of the costs associated with the investment that we put into the Falcon 9 to achieve that, then we might get a little bit more. But in general, it’s about 10 percent right now."

So, even at best, reusability will get a little bit more than 10% reduction in price. One can only conclude that SpaceX's models indicate that they're not going to save much money with reusability, because they're not going to pass much savings to the customer.

[Lar]

So, even at best, reusability will get a little bit more than 10% reduction in price. One can only conclude that SpaceX's models indicate that they're not going to save much money with reusability, because they're not going to pass much savings to the customer.

"only conclude" ??

Actually one can conclude all sorts of things from that... for example, that they have decided their manifest is full enough that they don't need to discount heavily yet, and would rather get more revenue for a while.

[Kabloona]

This is more about "price" than "cost," but I couldn't find a "price" thread.

Gwynne Shotwell now saying SpaceX will offer 10% discount for customers flying on a reused F9 booster,  much less than the 30% number being discussed earlier.

http://spacenews.com/spacexs-shotwell-on-falcon-9-inquiry-discounts-for-reused-rockets-and-silicon-valleys-test-and-fail-ethos/

Gwynne floated the 30% figure back in March:

http://spacenews.com/spacex-says-reusable-stage-could-cut-prices-by-30-plans-first-falcon-heavy-in-november/

And from the first article:

"At this point that is a reasonable reduction and then, as we recover some of the costs associated with the investment that we put into the Falcon 9 to achieve that, then we might get a little bit more. But in general, it’s about 10 percent right now."

So, even at best, reusability will get a little bit more than 10% reduction in price. One can only conclude that SpaceX's models indicate that they're not going to save much money with reusability, because they're not going to pass much savings to the customer.

Seems to me the key phrase is "as we recover some of the costs associated with the investment that we put into the Falcon 9 to achieve (reusability), then we might get a little bit more (price reduction)..."

Which says to me they're simply trying to recoup the major investment they've made in recoverability efforts, the ASDS fleet, etc, before dropping the price significantly.

So it seems they're counting heavily on the appeal of a "previously flown" booster as a flight-proven item that sells itself without a big discount. I don't think they'll have any problem finding takers at "only" 10% off. And the first stage has proven itself to be quite robust.

Now to fix that pesky second stage...

[Blackstar]

So, even at best, reusability will get a little bit more than 10% reduction in price. One can only conclude that SpaceX's models indicate that they're not going to save much money with reusability, because they're not going to pass much savings to the customer.

"only conclude" ??

Actually one can conclude all sorts of things from that... for example, that they have decided their manifest is full enough that they don't need to discount heavily yet, and would rather get more revenue for a while.

There's gotta be a pony in there somewhere, huh?

They were talking 30% seven months ago, only 10% now. So I guess you'd think it is a good thing if they started talking 5%, huh?

And note that this is actually the opposite from the way that companies usually work. They usually offer big discounts up front to attract customers, then they raise their prices. That's how airplane manufacturers do it--the first buyers get deep discounts, the latter ones not so much.

[Blackstar]

Seems to me the key phrase is "as we recover some of the costs associated with the investment that we put into the Falcon 9 to achieve (reusability), then we might get a little bit more (price reduction)..."

Which says to me they're simply trying to recoup the major investment they've made in recoverability efforts, the ASDS fleet, etc, before dropping the price significantly.

Except she did not say they would "drop the price significantly."

She said "a little bit more."

You do realize that "little bit" and "significantly" are not synonyms?

[savuporo]

The revolution in space launch has been postponed by 20%, again.

If they figured out that "their manifest is full" that means they have realized they won't be able to fly any more often than they do now, reusability or not.

[su27k]

Someone has to pay the bill for rebuilding SLC-40, there's also the development cost of ITS, where else do you think the money would come from?

[HMXHMX]

Labor. Labor. Labor.

Say it three times.

If the rocket is free, the propellant is free, the range is free, and the insurance is free, take the number of bodies required by the company, multiply by whatever FTE cost you want and divide by the number of launches.  That's the minimum cost per flight.

[envy887]

So, even at best, reusability will get a little bit more than 10% reduction in price. One can only conclude that SpaceX's models indicate that they're not going to save much money with reusability, because they're not going to pass much savings to the customer.

"only conclude" ??

Actually one can conclude all sorts of things from that... for example, that they have decided their manifest is full enough that they don't need to discount heavily yet, and would rather get more revenue for a while.

There's gotta be a pony in there somewhere, huh?

They were talking 30% seven months ago, only 10% now. So I guess you'd think it is a good thing if they started talking 5%, huh?

And note that this is actually the opposite from the way that companies usually work. They usually offer big discounts up front to attract customers, then they raise their prices. That's how airplane manufacturers do it--the first buyers get deep discounts, the latter ones not so much.

Companies with the lowest prices on the market, whose services are in high demand, usually aren't offering discounts to anyone. Especially when the market is relatively inelastic and they have a lot of R&D that needs revenue.

[Semmel]

Labor. Labor. Labor.

Say it three times.

If the rocket is free, the propellant is free, the range is free, and the insurance is free, take the number of bodies required by the company, multiply by whatever FTE cost you want and divide by the number of launches.  That's the minimum cost per flight.

Valid point. However, I could have sworn that the reason why SpaceX offers rides for less money than other firms is due to the lower labor cost (looks at Jim).

[guckyfan]

Labor. Labor. Labor.

Say it three times.

If the rocket is free, the propellant is free, the range is free, and the insurance is free, take the number of bodies required by the company, multiply by whatever FTE cost you want and divide by the number of launches.  That's the minimum cost per flight.

Most of these people will do development and building a new type of rocket. It is not part of the cost of flight. You are arguing that the rockets will pay for development which is what will happen, but that's from profits out of the launch, not part of the launch cost.

[HMXHMX]

Labor. Labor. Labor.

Say it three times.

If the rocket is free, the propellant is free, the range is free, and the insurance is free, take the number of bodies required by the company, multiply by whatever FTE cost you want and divide by the number of launches.  That's the minimum cost per flight.

Most of these people will do development and building a new type of rocket. It is not part of the cost of flight. You are arguing that the rockets will pay for development which is what will happen, but that's from profits out of the launch, not part of the launch cost.

Sooner or later, launch customers pay for everything. Either that, or the taxpayer pays.

[savuporo]

Labor. Labor. Labor.

Say it three times.

If the rocket is free, the propellant is free, the range is free, and the insurance is free, take the number of bodies required by the company, multiply by whatever FTE cost you want and divide by the number of launches.  That's the minimum cost per flight.

Most of these people will do development and building a new type of rocket. It is not part of the cost of flight. You are arguing that the rockets will pay for development which is what will happen, but that's from profits out of the launch, not part of the launch cost.

Umm, accountant, lawyer and janitor payroll are part of your launch costs, if you only have a single revenue stream.

Also, citation needed on " most people are in R&D", I don't think that's true

[guckyfan]

Most of these people will do development and building a new type of rocket. It is not part of the cost of flight. You are arguing that the rockets will pay for development which is what will happen, but that's from profits out of the launch, not part of the launch cost.

Umm, accountant, lawyer and janitor payroll are part of your launch costs, if you only have a single revenue stream.

Also, citation needed on " most people are in R&D", I don't think that's true

You quoted my post, read it again.

Development and building a new rocket is not the same as R&D. The new rocket is ITS.

Also support posts like accountant, lawyer and janitor costs are split between all parts of the company, they are not launch cost.

[savuporo]

Also support posts like accountant, lawyer and janitor costs are split between all parts of the company, they are not launch cost.

The cost of the company is the cost of the launch as long as you have one revenue stream, which is launch services. The more you launch and the higher the revenue, the thinner you spread these costs across a single launch. It's pretty simple, really.