SpaceX Amateur Business Case Study

There have been several times in recent weeks that people either in person or on the internet have speculated about SpaceX’s finances and business model. In some cases the speculations have been that SpaceX is pricing their Falcon 9 below cost to try and drive ULA and other competitors out of business. I’ve seen other analyses on the pro-SpaceX side that seem to think that $6M F9R flights to orbit are right around the corner. I finally got curious enough that I wanted to run some of my own numbers using publicly available information to see what I could learn. I was a bit worried at first that if my analysis didn’t come out looking anything short of amazing for SpaceX that I’d get burned at the stake as a heretic, but I decided to publish this analysis anyway, including my spreadsheet I came up with so others can play with it and draw their own conclusions. Also, to save space I’m going to put all my disclaimers into this footnote1.

The four main questions I wanted to try to answer were:

  1. How realistic/sustainable is the current $61.2M price for an expendable Falcon 9?
  2. How realistic is their goal of $40M for a partially-reusable Falcon 9?
  3. How realistic is their goal of eventual $6-7M Falcon 9 flights if they could recover/reuse both stages?
  4. How much has SpaceX had to rely on spending pre-payments from future launches?

This was a fairly brief, 3hr exercise, so consider at best a really, really crude SWAG, but I gained some interesting insights I had never noticed before. Before I get into answering my two questions, and discussing those interesting insights, I’d like to first discuss the methodology I used, and provide a copy of the spreadsheet in case you want to start poking around.

The point of this exercise wasn’t to create a precise cashflow history of SpaceX, but to create a simplified model that could give some insights into some of the questions I previously mentioned. I wanted to stick with publicly available sources, and wanted to keep things simple and high-level. So I gathered key pieces of data including headcount at various times, list prices for their vehicles, timing of launches, and data on the value of government development contracts they’ve received 2. I then made several core cost assumptions:

  • I assumed that each employee cost SpaceX an average of $150k/yr burdened. This is lower than the traditional $200-250k/yr number you hear for bigger industry player, but is consistent with numbers I’ve seen for aerospace startup companies. This number includes not just direct salary, but also employment taxes, unemployment insurance/worker’s comp, fringe benefits (health insurance and other benefits), and other direct costs of employing people (computers, software seats3, etc). I had originally gone for $120k/yr for this number, but found that the numbers jibed better with historical data points we had if I used the higher $150k/person/yr number.
  • I assumed that “overhead” cost 50% of the direct labor costs. Overhead normally includes the salaries of non-engineering labor (executive, marketing, business, etc), but since I’ve just used a lump rate based on the headcount, this overhead number just includes facilities, infrastructure, tools and machinery, and R&D costs that weren’t for producing flight hardware. So Merlin test engines that didn’t fly would fit under this. As would the pads, the factories, the drone ships, Grasshopper, any Raptor development, etc. This is ridiculously high-level, but it would take a lot of work to get anything more precise. But this seems pretty reasonable since the labor cost included fringe benefits, and all of the indirect labor.
  • I assumed that on average for Falcon 1, Falcon 9, and Dragon, that the non-labor cost of goods sold was 25% of the item’s list price. Ie, if SpaceX says an expendable Falcon 9 costs $60M, I assumed that non-labor COGS was ~$15M. This covers raw materials, consumables, range fees, shipping costs, non-labor marginal testing costs, and all the components and sub-assemblies SpaceX still purchases for the launch4. This number was based on my assumption that SpaceX was probably targeting list prices that they expected to be able to make at least a 10% profit margin on, and that ~2/3 of the cost was labor and fixed costs. It was also based on my limited experience at Altius on space hardware  projects. The analysis didn’t seem wildly sensitive to this number, but it’s also one of the ones I’m least confident in.

I don’t think any of those are wildly controversial, though you can try fiddling with the numbers as you see fit using the spreadsheet I provided.

I then made some more or less dubious simplifying assumptions (many documented in comment boxes in the spreadsheet):

  • Instead of trying to figure out exactly when SpaceX got paid for what milestones for each contract, I typically took the contract value and duration, and evenly spread the value of the contract over the years in question. In reality payments may have been more lumpy, more front-loaded or more back-loaded. If someone really wants to take the time to dig through public records to try and time the payments more accurate, be my guest (and send me a copy of the updated spreadsheet and I’ll put it in an update).
  • I inflated the value of old contracts and revenues into 2016 dollars using Wolfram Alpha, to make costs and revenues easier to compare with 2016 numbers. I’m not sure what inflation calculator they used or if it’s one that is uncontroversial. I also realized that on the cost side I didn’t inflate the labor costs to 2016 dollars. So that may be an update worth doing down the road to be internally consistent. Non-labor COGS is inflated though because it’s based on the inflated list prices. Most importantly, I’m not 100% sure this was a useful way to do things. But that’s what I did.
  • For commercial Falcon 1 and Falcon 9 flights, I assumed the actual revenue for the flight was 10% above the list price on average for “added services.” As I’ve heard from some people who’ve spoken with SpaceX in the past, the list price covers a pretty basic service, and that many items people care about cost extra. One NASA mission (I can’t remember if it was Jason or DISCOVR) for instance was listed as costing $97M even though the list price was only ~$60M. I don’t think there’s anything wrong with this, but I wanted to account for it. Once again, if you disagree with my 10% estimate, feel free to tweak it up or down. I didn’t include this added service 10% for CRS flights, since I assumed those were baked into the price.
  • Probably the biggest and most explicitly incorrect assumption I made was that SpaceX only got paid for flights upon completion, and that all of the revenue (and non-labor COGS) for that flight happened in the year that the flight occured. In reality, in order to get a manifest slot you almost always have to pay a non-refundable deposit, and there are many milestones along the way, that typically front-load a lot of the cost of a launch so that by the time you get to the actual launch, you’ve already paid most of the money for the flight, with the actual flight itself only the last of several milestones. This is pretty common in industry as I understand it. The reasons I didn’t include some sort of modeling of prepayments was for a few reasons: a) I don’t think there’s enough public info to accurately time prepayments for commercial flights even if I wanted to, and b) one of the main questions I wanted to answer was how much SpaceX was using spending front-loaded pre-payments to finance cashflow. Fortunately, we should be able to estimate how much of the prepayment money they’ve spent based on the difference between cumulative revenues + investments – costs. Basically if they’ve spent more money than they have received from completed flights, R&D contracts, and investment, it seems like the only real place that money could come from would be spending pre-sales.
  • For CRS flights, I assumed that the Falcon 9 + Dragon cost $1.6B/12flts = $133M/flt in dollars of the year that the flight occurred. I assumed that the price of the Dragon and added services was this $133M number (inflated to $2016) minus the inflated Falcon 9 list price for that year.
  • I assumed SpaceX got paid list price even for flights that failed. My guess is this isn’t precisely true, but probably closeish.
  • For years when I didn’t have an explicit headcount, or one I could remember for the earliest years, I interpolated from years on either side.
  • For years leading up to the first Falcon 1 flights, I assumed that Elon invested money to counter any difference between the revenues and costs, since there weren’t many preorders they could take milestone money from to finance cashflow.
  • There was ~$100M of non-Elon investment in SpaceX from various groups like Founders Fund and DFJ in the 2008-2012 timeframe. We had timing of the 2008 money, but not for the remaining $80M, so I evenly distributed it (and inflated it to 2016 dollars).
  • I only went up through 2015 in the historical data, so I don’t include any revenues or data for Dragon V2 flights, Falcon Heavy flights, or reusable Falcon 9 flights in the historical section. Even in the what-if sections, I explicitly leave out Dragon V2 flights5 and Falcon Heavy flights to try and focus on the specific questions I wanted to answer, and to keep this model from rapidly ballooning into something too complex to get useful information out of.

So all told, this is a flawed, but hopefully useful model. And one you can tweak to your hearts content to see if you come to different conclusions than I.

How Well Does the Model Do?
We don’t have a lot of data points to compare with, but there are two data points worth looking at:

  1. The model suggests that not counting DARPA and USAF contract R&D money, Elon had to put in ~$103M of his own money to get Falcon 1 to the point where it was flying. That’s around $85M in then-year dollars, so in the right ballpark for the ~$90M Falcon I development budget you hear quoted. It’s not perfect, but close enough to suggest we’re in the general ballpark.
  2. The cumulative cost through the first flights of Falcon 9/Dragon in 2010 are estimated at ~$800M inflated. The canonical number was $390M for Falcon 1 + Falcon 9v1.0 development, which would imply that Dragon was around $350M or so once you separated out operational costs and such. This also seems close-ish.

I’m sure that with more time and a more granular approach you could probably get the numbers closer, but this suggests we have a model that’s at least in the right ballpark.

Answers to The Four Questions
So, if you assume that my model isn’t entirely useless, we can now take a look at my three questions from earlier. This is what the “what if” columns on the right are for. The short version is that I think:

  1. While I think you can make the case that SpaceX isn’t yet to a flightrate where they are making profit at the current $61.2M list price, my model suggests they’d only need ~13 Falcon 9 flights with 3 of those being CRS flights in 2016 in order to breakeven at that price point. With the amount of people and infrastructure they have, 13 flights per year (with 3 being CRS flights) doesn’t seem unreasonable, even if they don’t make it all the way there this year. So this confirms my intuition that their $61.2M number for Falcon 9 isn’t so much them trying to sell at a loss to push out their competitors, but more them not having reached the flight rate that they’re theoretically capable of with their current team and infrastructure.
  2. Based on this model, I also don’t think getting down to $40M/yr for a semi-reusable Falcon 9 is totally unrealistic. There’s a lot of squishiness in my model about how I account for reusability, but it seems like we’re probably only talking about ~15-18 flights with ~3 of those being Dragon flights in order to make that at least somewhat realistic, assuming the downsize to ~4000 people after the commercial crew development is over. Which seems doable. If they keep their full 6000 people, they’d need nearly 30 flights per year to break even at $40M/flt, which seems optimistically high, but I don’t think they need the full 6000 people once the commercial crew development and certification is completed. This more or less confirms my intuition that a modest price decrease with reuse seems realistic.
  3. Dramatic drops in price seem pretty optimistic though. Even if you assume that the non-labor COGS drops by 90% per flight with reuse, and that they can get back down to 2500 people to service everything, it still seems like you’d need >50 flts per year to make those prices work, and I don’t consider that remotely realistic yet with the current market. If they kept their current team size, they’d need over 100-150 flights per year to make the $7M/flt number work… I don’t think that’s likely to happen. That said, even a 30% drop from their current prices is pretty amazing.
  4. There does seem to be some merit to the belief that SpaceX has been living off of prepayments. If you ignore the $1B fidelity investment last year (ie assume that it was set aside explicitly for the satellite business, and not used to finance cashflow), SpaceX has currently spent around ~$1.2B of prepayments (down a little from a high of around ~$1.3B in 2014). If you assume that they priced Falcon 9 with only a modest 10% profit margin6, that means that around $1B of that prepayment money that they’ve already spent is money they’ll need to carry out the missions on their manifest. With ~40ish flights on their manifest, they have a backlog worth ~$3B, so that represents a lot of their backlog that they’ve already spent. They’ve probably done some of the work for those flights, but does anyone really think they’ve done ~1/3 of the work needed for those 40 flights? Probably not. That said, is this some fatal problem? Probably not. The Google/Fidelity investment is about the same size as this amount, so even if something were to happen they’re probably safe now. And with the commercial crew contracts, they actually had more completed revenue than costs, and that’s likely going to get better this year if they can get their flight rate up. Lastly, so long as their manifest continues to either grow or at least stay steady, that will also help with cashflow. Unless they have another launch failure and 6 month standdown within the next year or two, I think they’re probably safe. Or at least as safe as any other commercial operator in this industry.

Other Observations

There were also several other interesting observations that stuck out to me:

    SpaceX has only recently reached the point where their revenue from actual flights has surpassed their revenue from DARPA and NASA R&D contracts. They’re currently at $1.7B from flights vs $1.5B for R&D contracts. And most of their flight revenue to-date has come from CRS missions.But while SpaceX has benefited a lot from their public-private partnership with NASA, it looks like over the next several years more and more of their business will be coming from commercial and non-NASA customers.A lot of their current team-size is likely driven not by Falcon 9 and Dragon fabrication and flight operations, but development work for Commercial Crew. With how NASA chose to run the Commercial Crew program, more as a traditional contract development with deep NASA oversight, maybe this isn’t that surprising.If SpaceX suffers another launch failure in the next 1-2 years, I think they could probably survive as a company, but expect that would significantly delay their ability to field their LEO commsat constellation–ie they’d have to spend a lot of that Fidelity/Google investment to cover cashflow while they work through the return to flight.I wouldn’t be surprised if SpaceX downsized after commercial crew certification is over. It would make achieving their cost targets more realistic, and they probably won’t need as big of a production staff if reuse really pans out in the way they expect.Based on my model’s prediction of their cost structure, and how much of their prepayments they’ve already eaten through, I’m skeptical that they’re moving anywhere near as fast with Raptor and MCT as most of their fans seem to think they are.

All told, I think this was an interesting exercise, even if it turns out that some of my assumptions were off by a bit. My big takeaways are that SpaceX’s current price numbers seem realistic, and their $40M price target with reuse is also probably also achievable eventually. Their financial situation seems less precarious now than it has been at any point in their history, though even one more launch failure anytime soon would hurt quite a bit. I also really don’t think they have a clear path forward to the more optimistic numbers they’ve thrown out, even with full stage reuse, but $40M for a Falcon 9 is still pretty amazing. I genuinely hope ULA and/or Blue Origin can continue to step up their game enough to stay competitive with SpaceX–it would be awesome to have two or three US providers able to launch rockets reliably at those kind of prices–that would go a long way towards enabling the kind of space future we’d all like to see.

Anyhow, go nuts with the spreadsheet, and if anyone has a ton of time on their hands and wants to try and time the revenue and estimate prepayments and all that better than I have, I’d be interested in seeing what you come up with, and may even post the results if they’re interesting enough.

[Update 1: A commenter pointed out that this site ( provides data on the timing and size of previous SpaceX investment rounds. Between this and government data on contract payment timing, we could probably increase the fidelity of the spreadsheet by quite a bit. If anyone wants to do that, let me know. If not I’ll see if I can find the time to do that in the coming days.

Also, while this impacts revenue going forward, not historical revenue, SpaceX did win a contract for matching funds from the USAF for upper stage engine development. This will help lower the number of flights they would need to break even by at least one or two. Continuing to win big government development contracts like this will help SpaceX going forward.]

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Jonathan Goff

Jonathan Goff

President/CEO at Altius Space Machines
Jonathan Goff is a space technologist, inventor, and serial space entrepreneur who created the Selenian Boondocks blog. Jon was a co-founder of Masten Space Systems, and the founder and CEO of Altius Space Machines, a space robotics startup that he sold to Voyager Space in 2019. Jonathan is currently the Product Strategy Lead for the space station startup Gravitics. His family includes his wife, Tiffany, and five boys: Jarom (deceased), Jonathan, James, Peter, and Andrew. Jon has a BS in Manufacturing Engineering (1999) and an MS in Mechanical Engineering (2007) from Brigham Young University, and served an LDS proselytizing mission in Olongapo, Philippines from 2000-2002.
  1. Disclaimers: #1: I’ve done paid work for both SpaceX and their main competitor ULA, though while I’m not doing any work for either of them at the moment, I’ve done significantly more work for ULA over the past 5yrs. I also have friends at both companies, so I’m not the most unbiased person in the world. #2: I’m not doing this with any input from anyone at either SpaceX or ULA. This is purely an amateur exercise that in no ways represents the official position of SpaceX, ULA, or my own company. #3: I’m not a finance/green-eyeshades guy, and am not claiming this is an accurate financial assessment. In fact, I’m pretty sure this model is at best a SWAG. I’m going to make all sorts of simplifying assumptions, and this was based on a couple of hours of scouring public sources on the internet, so take my model with the appropriate sized grain of salt. That said, I’ll provide the spreadsheet so you can play with it and make it as fancy as you want.
  2. primarily for the DARPA FALCON SLV program, and the NASA COTS and Commercial Crew programs
  3. Don’t underestimate how expensive this can be–good engineering software is often crazy expensive even for lower-end software than what SpaceX uses
  4. They may do the assembly and manufacturing of many big ticket items in-house, but they’re definitely still ordering a huge number of components such as valves, actuators, structural elements, fasteners, plumbing fittings, sensors, electronics, connectors, etc, etc. And that stuff can add up really quick.
  5. Though I expect they’ll likely cost and be priced around the same range as the cargo Dragon flights, so theoretically you could treat a Dragon V2 flight as another cargo Dragon flight for sake of spreadsheet tweaking.
  6. Probably a safe bet
Jonathan Goff

About Jonathan Goff

Jonathan Goff is a space technologist, inventor, and serial space entrepreneur who created the Selenian Boondocks blog. Jon was a co-founder of Masten Space Systems, and the founder and CEO of Altius Space Machines, a space robotics startup that he sold to Voyager Space in 2019. Jonathan is currently the Product Strategy Lead for the space station startup Gravitics. His family includes his wife, Tiffany, and five boys: Jarom (deceased), Jonathan, James, Peter, and Andrew. Jon has a BS in Manufacturing Engineering (1999) and an MS in Mechanical Engineering (2007) from Brigham Young University, and served an LDS proselytizing mission in Olongapo, Philippines from 2000-2002.
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45 Responses to SpaceX Amateur Business Case Study

  1. Gwynne has been quoted as saying the Google/Fidelity investment has not been set asside. They’re using it for day to day costs. Otherwise, great.

  2. Neil says:

    Really. I hadn’t heard that before. Just that it hadn’t been quarantined for any particular purpose.
    Think the average salary’s a bit high. Stock options are significant. Higher productivity levels than traditional companies could be factored in.
    But EM is on the public record as stating that SpaceX has been profitable for at least the last several years and you need to be so otherwise a business can lose tax breaks and various concessions or so I’ve been given to understand.
    Otherwise thanks for taking the time to do this little exercise on behalf of those of us somewhat less inclined mainly through laziness I admit (my reason 🙂 ).

  3. Jim R says:

    It would be nice if dev contract and investment can be breakdown into one row per specific contract/investment.

    Also I’m not sure about this part: “Based on my model’s prediction of their cost structure, and how much of their prepayments they’ve already eaten through, I’m skeptical that they’re moving anywhere near as fast with Raptor and MCT as most of their fans seem to think they are.”, maybe some clarification would be helpful regarding how this conclusion is reached.

  4. Chris Stelter says:

    Good analysis, Jon. I think you’re right about MCT/BFR, but wrong about Raptor. SpaceX necessarily will be investing a lot in Raptor. If fully exercised, they’ll invest more in Raptor in the next couple years than they invested in building Falcon 1 and the initial Merlin engines. This is not at all insignificant. And I suspect as well that they will put Raptor to early use in an upper stage (that will certainly be designed for reuse, otherwise why bother?). SpaceX has only ever known continuous R&D, and I think they’ll lose very good people if they don’t keep an aggressive R&D stance. Falcon 9 development is going into just tweak-mode, and while Falcon Heavy will be keeping the team busy, their propulsion team (and others) will be idle if not given an aggressive new project. The most obvious one is a new, fully reusable Raptor upper stage for Falcon 9 and Falcon Heavy, mentioned in their Air Force contract. This will bridge between now and MCT (which is an enormous project, starting with the fact that finding a good launch site will be hard), and will retire most of the biggest technical risks of MCT.

    As far as 50 launches per year needed to get down to $7 million Falcon 9: I think the market will grow over the next decade at about the rate that it already has, which is a pretty good clip (8% annually?). I think 30-40 launches per year is not out of the question by the time they could get a reusable Raptor upper stage working reliably and repeatably. And the 4000 satellite constellation, fully replenished every 4 years, could easily keep a fully reusable Falcon 9 launching 50 times per year alone. And the LEO constellation also solves the major economic drawback of full reuse, which is that the cost may be reduced faster than the launch market can grow, thus leading to reduced revenue. Of course, many have failed trying to do a LEO constellation.

    I also think that SpaceX has not completely given up the idea of serving a possible orbital tourism market. This would provide significant additional demand, I think, for a $7 million Falcon 9 (and perhaps another $8 million for Dragon). Even if the market is fairly small even with low-single-digit cost-per-seat, say, $150-300 million per year, that’s still 10-20 additional flights per year. I don’t think that’s unrealistic, even though SpaceX will likely be eventually sharing that market with Blue Origin.

    As far as MCT, I think that the reason why Musk is uncharacteristically subdued about talking about Falcon Heavy replacing SLS is that SLS is building the business case for MCT. Musk knows that SLS and Orion are inefficient, but if SLS builds a backlog of large payloads used to justify SLS (even if the payloads are mere paper right now), then that enhances the possibility that MCT could end up being basically paid for by NASA in the future (instead of EELV-heavy-class vehicles like Vulcan and Falcon Heavy which really make much more sense for what NASA is proposing). Additionally, SpaceX may be put in a place early on where NASA has SLS and Orion, but no Mars lander. Either MCT/BFS or a sort of mini-BFS based on that Raptor stage I mentioned earlier, could fit that role fantastically. SLS is building BFR’s business case while sucking up NASA’s money that could be used for what would be a duplicate capability for BFS or a mini-BFS. So by the time SLS/Orion and ISS funding starts to be freed up for a Mars (or Moon) lander (if that ever occurs), the Raptor-upper stage would likely be flying regularly (and being recovered, reused), and MCT/BFR/BFS itself already well under development, and SpaceX likely will have actually proved their EDL mettle at Mars (using some sort of Falcon Heavy launched payload). A perfect on-ramp time for SpaceX to be integrated into the program of record, either for launch or as the lander or possibly even both.

    This is not guaranteed to work, but now MCT has two potential (though non-guaranteed) funding sources, both the LEO constellation and NASA. And very likely its greatest technical risks will have been retired by the Raptor upper stage for F9/FH.

    So I do not expect SpaceX to draw-down their workforce now. I expect them to continue to expand (though at a slower rate). SpaceX’s business model is like Amazon. The plan is to grow the company’s value continuously, not to make a profit. The profit they do make is rolled back into R&D (which increases the company’s value). And they can monetize some of that growing company value by raising capital and using that to pursue more R&D, further increasing the company’s value. This is how they’re bootstrapping the infrastructure needed to build a Mars city. Drawing down the workforce goes counter to this strategy, and I don’t see it being part of their plans for the next decade at least. Then again, things may change and they may have to draw down their workforce anyway.

    Trent: When originally made, the investment WAS put aside (put in SolarCity bonds or the like), but that was before the launch failure, so makes sense that Gwynne said they were using it. Good timing, actually, since that smoothed over the big dip in payments that no doubt coincided with the Falcon 9 stand-down.

  5. Jim R says:

    Sorry, wish I can modify my comment, just saw there’re comments on the cell explaining the dev contracts and investment, that’s very helpful. However I wonder if there’s one investment missing: It’s matching investment for COTS, based on NASA’s COTS report SpaceX invested $454M in COTS, I assume this is real money that comes from investors?

  6. Jonathan Goff Jonathan Goff says:

    Agreed, I expect that at least some of that was used to “pay back” prepayment money they had already spent, and some was rolled into accelerating R&D in various areas, and some was put into the satellite venture. But that’s my speculation.

  7. Jonathan Goff Jonathan Goff says:

    Thanks for the comment! A few quick replies:
    1- The burdened labor costs is not just direct salaries, but also includes a lot of other things that would normally be considered “fringe benefits” or “overhead”. Of that $150k/person/year average, my guess is that the salary component is less than $100k/person/year of that, possibly down in the $80-90k/person/year.
    2- Re: Elon’s profitability comments, I think Elon was technically correct. As I mentioned, this model does not show prepayments. If we had better details on prepayments, they would almost certainly show a “book profit”, because those are real payments that count as revenue in the year they are received, even if they’re front-loaded. For instance, imagine you had a booster so awesome that everyone was willing to do a 50% up-front down payment. You might have only done ~2% of the work at that time, but if that payment is non-refundable, it’s still revenue in that year, even if it takes another 5 years before you’ve reached the point where you’ve done 50% of the work for that launch.

    You *can* get yourself in trouble this way though, if you pre-spend too much of the money you needed to actually build the hardware to complete that contract. I was actually pretty worried about that previously. But I think with the Google/Fidelity investment, and the Commercial Crew contracts, that they’re in a whole lot less danger of that being a problem now.


  8. Jonathan Goff Jonathan Goff says:

    I don’t think there’s a missing investment for the COTS matching funds. I think almost all of that was done in the form of the company “investing” front-loaded prepayments from future Falcon 9 and CRS flight contracts. I had suspected that was the case, but this model strongly reinforces that theory. Though I should probably add that at least some of the COTS matching funds probably were from the $100M of outside investment I already list. But more than a little of the matching funding looks like it came from taking front-loaded milestone payments from NASA CRS payments and using them to unlock the COTS funding milestones.


  9. Jonathan Goff Jonathan Goff says:


    Unless they continue to land large R&D contracts, I expect they’ll have to slow down their growth for a while to catch up on backlog. A lot of their rapid growth recently has been fueled by large government contracts like CCtCap. But once that funding goes away, they’ll have to really ramp their flight rate up to make up for that lost revenue if they don’t downsize a little after the contracts are over. I’m not saying they have to downsize, but I think that it’s more likely than not that they’ll have at least one year in the next five where they were noticeably smaller than the year before. But that’s just my opinion.


  10. Brock says:

    Fun article. I only have two substantive comments –

    1. EM has said that the Falcon 9 costs $12M to produce, not the $15M in your assumption. I doubt that changes a whole lot, but I thought I’d mention it.

    2. I disagree that the launch market won’t grow to support a full RLV flight rate. Besides the OneWeb and SpaceX LEO satellite constellations, there’s also Bigelow Aerospace to consider. They’ve got a number of national and corporate customers signed up to lease space on their BA330 space stations.

    If SpaceX reaches the $40M flight cost with partial RLV, that number could grow. Bigelow’s current pricing plan is $25M per seat to fly to one of their stations, but a Dragon on top of a partial-RLV Falcon 9 would have to add over $100M to the cost of the flight to justify that price. That seems a tad high, even if you assume Bigelow is building is some resale profit on the seat. Put another way, I expect Bigelow will be able to charge much less than $25M for the seat, and their customer list will grow, which will increase the flight rates considerably.

    Also I don’t think you appreciate what a huge cash flow boon the fully RLV version of Falcon 9 would be during its first years. Consider the revenue from “only” reducing the price to, say, $35M when the cost of the flight to SpaceX is just fuel and flight staff. Rather than cut the price all at once they could reduce the price in stages from $40M down to the $6-7M price as the market expands, all the while they’d be soaking up 100% of the competitive-bid flight market (barring competition from Blue Origin). That could pay for a lot of R&D on MCT and Raptor.

  11. Jonathan Goff Jonathan Goff says:

    1- Good point on the Falcon 9 production costs. My SWAG was a lot closer than I expected! I think I’ll leave it at 25% though for the expendable version, because there are other marginal costs associated with launching a Falcon 9 that might not be included in labor, overhead, or the $12M to *produce* the Falcon 9. But that at least shows I’m probably in the right ballpark with that number.
    2- I’m pretty skeptical about dramatic increases in flight rate without dramatic decreases in flight price. I’m also skeptical about SpaceX’s ability to ramp up to 50 flts per year with the architecture they currently have. Note, they’ve proven they can change their architecture over time, so that’s not a permanent roadblock, I just think there’s a lot between here and flying 50 Falcon 9 class flights per year. That said, you’re right that if their marginal costs go down, lowering their price slower than they lower their cost could definitely be helpful.


  12. ken anthony says:

    I can’t imagine SpaceX hasn’t done a future liability analysis? My understanding is they’ve been constantly profitable since before they reached orbit with F1. (The magic of accrual accounting.)

    I think it would take more than a few launch failures at this point for SpaceX to stumble. Contrary to what many believe, it’s much easier to manage a large company than a small one because you have more margin for failure (knowledge factor can work against you but that’s a much smaller issue.) Of course, failure is more spectacular for bigger companies, only proving how bad management can be.

    I’m just glad to see competition begin to step up. Once we start moving BEO flight rates should support a robust industry.

  13. Chris Stelter says:

    Jon, RE:flightrate: SpaceX has had about a one-per-month tempo for several months using basically just one launch site, and sometimes even getting down to just ~3 weeks. In a couple years, they will have 4 launch sites. Their current architecture doesn’t need to significantly change to allow ~50 flights per year, if you include the current plan to acceptance-test-fire recovered stages at the launch site (basically, just some extra hot-fires) and to streamline Hawthorne/McGregor by not shipping the engines back to Hawthorne but integrating them at McGregor after individually acceptance-firing them as is their current plan (as I understand it). I guess you could say that’s not their “current” architecture, but at that point we’d be basically in agreement.

  14. Jonathan Goff Jonathan Goff says:


    They’ve had two launch sites (Vandenberg and the Cape) this time. Adding another two may help for some missions, but it’s not clear that range issues are the gating factor. I’m still skeptical that what you’re suggesting would actually support a 50flt/year rate.


  15. Chris Stelter says:

    Jon, they /barely/ had Vandenberg. It was barely used at all. SpaceX will take a while to get to their full launch rate. I expect no more than about 50% year-on-year growth in launch rate (with the probable exception of this year, which may be about double last year).
    2016 12
    2017 18
    2018 27
    2019 40.

    The soonest they’d reach 40 launches is 2019, but I expect it to be in the mid-2020s sometime if everything goes swimmingly, which basically never happens. 40 launches is probably the limit of the “traditional” market plus some growth, not counting the SpaceXstellation.

  16. Suiram says:

    Great write up. And glad someone took the time to publicly do this in a transparent way.

    On Elon’s comments about being profitable. I guess I am one of those green-shade guys. He only said they were cashflow positive not profitable. This is exactly related to prepayments. SpaceX would only recognize revenue from a launch after it has been completed. Up until then they would be receiving cash to their balance sheet (Asset) via prepayment but also reflecting a a deferred revenue (liability) as they have to make good on the product the money is for.

    So no income would be earned and no profit achieved, but their cashflow statement is more straightforward. Thats where any prepayments would get recognized immediately. Therefore the consistent wording of Elon and VC board member’s comments as “cashflow positive” for many years are because of favorable payment terms on launches and probably on the R&D payment terms as well.

    If you consider SpaceX a startup still, cashflow positive is still a big deal and in some ways more important than profitability as this stage.

  17. Jonathan Goff Jonathan Goff says:


    Thanks for the comment! While there are many people far more qualified than I to do this kind of analysis, I was kind of surprised that nobody had made a serious effort to do this yet. Far too many of the so-called analyses I’ve seen (like the Motley Fool article from earlier in the week that really was what bugged me enough to get me to do the research) haven’t bothered to quantify anything or to use any of the publicly available info other than misinterpreted ambiguous quotes from Elon. I wish this blog weren’t just a hobby that I do when I’m not running my business, because there was a ton of additional data I could’ve used to try and dig deeper, like the SEC filings that give better timing for investments, and the public government payment records that could allow us to more accurately time government payments. But even without time to do that, I figured I could at least provide people a framework to start with.

    And I totally agree that being cashflow positive is extremely important at their stage. I wish we were more regularly cashflow positive at Altius. I’m not sure though if I’d still categorize SpaceX as a startup, not just because of size, but because they seem to have found a “repeatable and scalable business model”. I’m sure there’ll be plenty of course adjustments as time goes on (I personally hope that they pivot to focusing more on high-flight-rate reusability than on rocket size), but unless they have another launch failure this year, I expect them to be at a flight rate where they’re at a point where they can sustain their current prices, and start driving them down as they prove out reusability.


  18. Martin Elvis says:

    Jon: I too am skeptical about a factor 10 cost reduction. Simply, unless they are recovering the 2nd stage engine then they are still throwing away 10% of the complex tech each time (plus less fancy stuff). That has to limit the savings.
    But a factor 2 or 3 would still be pretty significant. What launch rate would they need to get to those factors? (Full disclosure: I’d like to quote you in a paper I’m writing.)

  19. Martin Elvis says:

    re: Bigelow related passenger flights. We can make a simple estimate:
    Bigelow Aerospace advertises rates of $25M/110 cubic meters for 60 days . That translates into a substantial $450M/year in revenue for one BA330 module.

    If this “2 months and 110 m3” is the standard rental, then there would be 6 teams on-board Alpha (=2xBA330) with changeovers 6 times/year. If a team is 2 scientists (e.g. to work shifts), then 12 flights/year using CST-100/Dragon-2 on Atlas-V/Falcon-9 class launchers would be needed to ferry up the scientists. That implies monthly crewed flights. While this is a minor increment to the current ~50 flights/year of this vehicle class, it is a factor 4 increase over the present rate of crewed flights of ~4 flights/year. Together with orbital tourism, these flights would make on-orbit testing (section 3.5) and servicing (section 3.6) more routine. Note that ULA is partnered with Space Adventures to promote orbital tourism with CST-100.

  20. Paul D. says:

    How many F9 cores have they made so far? I’m wondering because we can start trying to see how their production costs will decline going forward. The usual experience curve for aerospace is 10-15% cost reduction per doubling of cumulative production.

  21. gbaikie says:

    “3. Dramatic drops in price seem pretty optimistic though.”

    And this why Musk can’t get to Mars settlements without “other stuff”- ie lunar water mining.
    Though “other stuff” might be suborbital travel replacing air travel which starts by the suborbital travel “joyrides” of up and down- which has yet to be started.
    It seems to me that lunar water mining is quickest and easiest path to get to Mars settlements.
    One needs a rocket fuel market in space, and exploration of the Moon to determine if
    lunar water is minable. Both could happen within a decade- but both appear to require governments being involved in making it happen- by developing depots to operational level and lunar exploration program of about 40 billion and lasting less than 10 years which done prior to a NASA Mars exploration program.
    Obviously, NASA’s development and subsequent operation of SLS will make doing this to more difficult in many respects.

    Another way is a focus on assisted launch- or improvement in spaceports. One could say SpaceX already on this path with it’s private spaceport- or one can say a problem with spaceports is they are run by governments.
    But I think getting spaceport operating from ocean locations is the way to go with private spaceports, especially in regards to high flight rates

  22. Paul451 says:

    “They’ve got a number of national and corporate customers signed up to lease space on their BA330 space stations.”

    No they haven’t. It’s an internet myth that they have “seven MOUs”, based on a single mistaken Space.Com article, which has been repeated in enough places to become a self-perpetuating “wiki-fact”. But it’s not true.

    Except for BEAM, they have three MOUs. A mutual-promotion agreement with Spaceport Florida, probably a mutual-promotion agreement with a scientific instrument maker in Britain, and an MOU with the UAE govt. Only the latter could conceivably be related to an actual lease for a future BA-330.

  23. Jonathan Goff Jonathan Goff says:

    And this why Musk can’t get to Mars settlements without “other stuff”- ie lunar water mining.
    I think many Musk true believers would claim that he doesn’t need that other stuff, because he’s going to make tons and tons of money from his LEO satellite constellation. There is definitely a possibility that he could make enough money between that and SpaceX to make an attempt at a SpaceX-centric Mars settlement initiative. I’m skeptical that’ll work without outside elements like your suggestion of lunar or NEO-sourced propellants (along with other pieces including depots, aerocapture, etc). But it’s possible.


  24. Jonathan Goff Jonathan Goff says:

    I agree that Bigelow’s prospects for success often seem to be overoptimistically taken for granted. To-date most of their work has been focused on the inflatable structures themselves, and not on all of the other capabilities necessary to make for a useful space facility. Bigelow is great on showmanship, but it remains to be seen if they can convert that into actual useful space facilities and customers. Don’t get me wrong–I hope they can get into regular operations, and get to eventual monthly flights to their facilities. That’d be awesome. But with their first facilities not even planned for launch until 2020, I think that their odds of getting to even quarterly crew flights within a decade are only modest at best.


  25. Andrew Swallow says:

    The Chinese have just announced that they are going to launch the core of a new spacestation in 2018. Bigelow may have a mini space race on their hands.

  26. Chris Stelter says:

    The same arguments that say that it’s hard to see big cost reductions for RLVs have assumptions that, when applied to lunar resources, make lunar propellant seem even worse.

    Big upfront investment needed.
    …which requires large markets.
    Plus very low maintenance high-performance equipment (whether an “Earth” RLV or a “Lunar” RLV, aka a reusable lander, or even the wear-and-tear on lunar ground equipment and any kind of reasonable non-rocket-launch).

    I’m in favor of people trying extraterrestrial resource acquisition, so long the business case doesn’t rest on “RLVs can’t work or aren’t that good anyway, but a FAR more complicated set of infrastructure with far less-well-understood engineering with essentially a lunar RLV (or Mars RLV) can work just fine, and in fact can provide kick-butt return on the multiple billions of investment to even just start mining the Moon, etc.”

    If you’re going to be optimistic, you must be equally optimistic about alternatives.

    And bringing Earth-launch really, really cheap is something that HAS to be done, in my opinion, for any of the other stuff to make sense. Falcon 9 is just the beginning, and we’re in for a long road (but with multiple actors like Bezos and XS-1, etc… which is a very good thing as people think up better ideas, people switch companies, and know-how gets spread throughout the industry), but I don’t think Earth RLVs should be so severely handicapped as they usually are by extraterrestrial mining advocates (which I am).

  27. Chris Stelter says:

    There’s also a mental bias where the lower-TRL something is, the less you see any of its practical flaws and so the better it looks compared to a higher-TRL thing. We tend to see some of the practical issues of high-TRL ideas, often inflate them, and often treat some of even the more solveable problems as fundamental restraints (which they often aren’t).

    It’s like people who say RLVs are never going to get below $500/kg, but a Sling-a-tron or a light-gas-gun, now THAT’S going to solve all of our launch cost problems. (Not referring to you, Jon, but another Sling-a-tron advocate that we both might know.)

  28. Paul451 says:

    Off-topic, but the thing I like about ISRU from lunar ice is that the first step is, obviously, doing a ground assay. (Robotically.) Such as drilling a core sample from the ice.

    If the ice has collected over significant time and not been churned too much by meteorite impacts, that core will be an extraordinarily valuable scientific sample. Essentially a chronologically ordered sample of who knows how many millions of asteroid and comet impacts. How long have the permanently dark craters been permanently dark? A hundred million years? A couple of billion years?

    If that’s not worth a flagship-class NASA mission, I don’t know what is.

  29. Martin Elvis says:

    re: Lunar Water.
    I suggest getting the new book by Paul Spudis that’s coming out tomorrow:
    “The Value of the Moon: How to Explore, Live, and Prosper in Space Using the Moon’s Resources”.
    Paul Spudis is an expert on lunar science and one of the discoverers of the water in the permanently dark craters. I’m not sure how commercially-minded he is though.

  30. Jonathan Goff Jonathan Goff says:

    I completely agree about your point wrt to some ISRU advocates who pooh-pooh or handicap RLVs (I hopefully don’t count in that category in your book). I think a wise developer of Lunar and/or NEO resources will try to be as realistic as possible (not overly optimistic, but definitely not overly pessimistic) about both the potential and timing of earth-to-orbit RLVs and in-space reusable stages. Earth-to-orbit RLVs may be competitors with lunar/NEO sources for raw materials, but they also can lower the cost of emplacing the infrastructure to harvest those materials. And for the foreseeable future, the cost of launching (and shipping to the Moon/NEOs) your earth-supplied hardware elements is probably going to dominate the cost of setting up a lunar or NEO ISRU facility.

    I think a wise ISRU operator would take an approach that uses the best currently available transportation to get an initial beachhead on the Moon and/or NEOs, and use that beachhead combined with lower cost earth-to-orbit RLV launches to enable scaling up to full scale at a much lower cost than trying to ship it all at once with whatever is cheapest today. I think that’s their best shot for staying as competitive as possible. From the really crude BOTE numbers I’m seeing, an RLV-leveraging approach for lunar resources might enable them to stay competitive with RLVs for delivery bulk materials to LEO in the long-term. Ignoring RLVs is the best way to guarantee they’ll eat your launch.


  31. Jonathan Goff Jonathan Goff says:

    I both like Paul Spudis and his work, but also think he’s a bit myopic at times. Lunar ISRU is potentially very important, but I do think he gives RLVs and commercial enterprise short shrift sometimes. Like with most thought leaders, the best approach is to try and borrow their best ideas and ignore their ideas that seem least well supported in the big picture. The fact is that while there are many brilliant people in this community (Elon, Henry Spencer, Spudis, Zubrin, etc), all of them are human, all of them have limits on their perspective, and while you shouldn’t lightly ignore brilliant people, one should also feel comfortable occasionally disagreeing with them, especially on matters of how to approach solving a problem.

  32. Chris Stelter says:


    A smart approach to lunar or Martian propellant is to actually leverage an Earth-RLV stage. Like a reusable upper stage (without the heatshield for the Moon). …which is basically Xeus/ACES (for the Moon) and SpaceX’s BFS (nominally for Mars, but would make an awesome reusable lunar lander without the TPS… provided that there’s lots of CO2 in those cold traps).

  33. gbaikie says:

    And this why Musk can’t get to Mars settlements without “other stuff”- ie lunar water mining.
    I think many Musk true believers would claim that he doesn’t need that other stuff, because he’s going to make tons and tons of money from his LEO satellite constellation. There is definitely a possibility that he could make enough money between that and SpaceX to make an attempt at a SpaceX-centric Mars settlement initiative. I’m skeptical that’ll work without outside elements like your suggestion of lunar or NEO-sourced propellants (along with other pieces including depots, aerocapture, etc). But it’s possible.

    ~Jon —

    It’s possible, but when?
    If NASA were to develop an depots until they were operational system and explore the Moon in order to determine if there was minable water vs what NASA is currently saying it’s going to do, this should be very helpful to Musk- shorten the time needed.

    And would make it faster, even if, the NASA exploration of the Moon determines that lunar water not as viable as some imagine it could be- and therefore is no commercial lunar water mining by the time Musk is landing people on Mars.
    And if commercial lunar water mining start in about 10 years from now, that would supercharge any NASA Mars exploration and future Mars settlements.
    And bringing nearer a future where Earthlings are getting electrical power from solar energy harvested in Space.

  34. Chris Stelter says:

    gbaikie: have you actually considered how expensive lunar water is likely to be? Please think about it for a while. It’s not obvious that it helps ANYTHING (outside of an actual lunar base, which would be dramatically helped by lunar ISRU), to be honest, once you include practical considerations.

  35. Jonathan Goff Jonathan Goff says:

    We’re getting quite a bit off-topic, but why do you think lunar water is likely to be so expensive? Are you talking transportation costs back to Earth, or extraction/refining/processing into propellant?


  36. Chris Stelter says:

    Okay, yeah, sorry to both Jon and Gbaikie.

    It requires a lot of processing of regolith for a small amount of water, running machines in deeply cryogenic environment with super abrasive dust in a full vacuum. It requires a significant investment in basically having an ISRU plant up and running with plenty of power and a landing pad and a lunar RLV/lander with automated loading of propellant, launch operations. You also have to use most of your mined water just for the reusable lander. A lot of people assume this will all be run by a small crewed base. That’s likely going to cost a LOT of money to set up. I just think an Earth-RLV starts looking pretty nice, especially since you need one anyway, and adding a few extra launches (at very low extra marginal cost) to it wouldn’t be that hard.

    I’d like to see a complete estimate of what an initial lunar water extraction and transport operation would look like.

  37. Jonathan Goff Jonathan Goff says:

    Thanks for clarifying. I think you’re overestimating some of the challenges, but probably pretty close to right on others. I think though that if done right it could still be competitive even if the startup costs are non-trivial. But that’s a blog post (or series) for a later day.


  38. gbaikie says:

    Thanks for clarifying. I think you’re overestimating some of the challenges, but probably pretty close to right on others. I think though that if done right it could still be competitive even if the startup costs are non-trivial. But that’s a blog post (or series) for a later day.

    ok, but to briefly answer:
    “gbaikie: have you actually considered how expensive lunar water is likely to be? ”

    It seems the price has to be less than 1/2 cost of shipping water from Earth to lunar surface.
    So dependent on what the earth launch costs would be [the topic of post] and lower this is, the more minable lunar water would be- as would be the case with Mars settlements.
    But launch cost could be high- even higher than present, and the Moon “could be” commercially minable. One needs exploration to help determine this [and there will be other factors involved- ie, who would be involve in doing it could be big factor].

    No one mines anything without first doing exploration and information which would be needed would at level of 1 km square region- 10 years or more of lunar water mining could be done within 1 square km area.

  39. Martin Elvis says:

    Jon: I agree that RLVs and, especially, a commercial approach are essential to any large-scale future in space.
    I have a paper almost done that tries to construct one plausible path. (It’s in the context of advancing astronomy and planetary science, but not limited to that.)
    That’s where I’d like to quote you on the number of launches needed for a factor 2 and a factor 3 reduction in $/kg to LEO using SpaceX RLVs. Any chance you could provide those numbers? Most helpful if you could. Thanks.

  40. Jonathan Goff Jonathan Goff says:

    Unfortunately I don’t know if my model is detailed enough to really make a prediction like that. Especially with all the complicating factors of non-Falcon 9 revenue streams (contracts, Dragon, Dragon V2, Falcon Heavy, etc), the crude way I estimated per-flight costs, not knowing for sure how many SpaceX employees are allocated to which project, etc. My gut says though that even with really optimistic numbers, there’s no way they’ll get to a 2-3x reduction in cost without getting up into at least the 20-30+ flights per year rate, maybe more. And who knows what percentage of those savings will be passed on the customers immediately, especially if they don’t have any competitors keeping pressure on them to reduce their prices.


  41. Chris Stelter says:

    By the way, I think reuse may end up being a bigger deal for Falcon Heavy than Falcon 9.

    If they had 10 Falcon 9 flights per year all expendable, I have no doubt that they could manage that kind of flight rate given their current manufacturing capability (once they get it tuned up).

    But 10 Falcon Heavies? That’s 30 cores, 840 (!) Merlins. I know SpaceX says they’re sizing their production capacity for 40 cores per year, but that’s a really, really aggressive manufacturing rate. My bet is they’re not near that kind of capability in reality. And I don’t think 10 Falcon Heavy flights per year is an insane number as far as demand. Proton launched 11 times in 2010, Ariane 5 flew 7 times in 2012, etc.

    Reuse is basically enabling for Falcon Heavy. And it could allow SpaceX to achieve that factor of 2-3x in cost reduction for reuse. Once they get in the swing of things (this will take many years, still!), I could easily see sub-$1000/kg out of Falcon Heavy. Remember that SpaceX should be able to reuse about 95-97% of Falcon Heavy, versus 85-90% of Falcon 9. And given the multiple cores and multiple engines per core, it allows them to saturate their manufacturing capability earlier than you usually would. For instance, whereas normally 10 launches per year would be marginal for partial reuse, it’d be right in the sweet spot for reusable Falcon Heavy.

    And Falcon Heavy would also have plenty of margin for most missions that SpaceX could afford to invest in more robust structures, addressing one of Jon’s concerns.

    Still, Falcon Heavy is significantly more complicated than Falcon 9, so getting reliability high enough for this to work may be hard.

  42. Paul D. says:

    “Still, Falcon Heavy is significantly more complicated than Falcon 9, so getting reliability high enough for this to work may be hard.”

    As I’ve pointed out in comments on this blog before, one of the cool things about the propulsive landing technology SpaceX is using is that it provides margin to save missions in the event of engine failures. There’s extra propellant that can go into delivering the payload to orbit, even if that means sacrificing the otherwise reusable cores to do so.

  43. PHILLIP GEORGE says:

    How will SpaceX pay for Mars? 13 flights is not a lot of flights. They should hit > 13 next year remember will have 3 launch sites. In 2018, SpaceX will have 4 launch sites. I easily see flight rates of 20-30 flights/year by 2021. The question becomes what do they do moving forward in regard to price and increasing flight? I think that SpaceX wants to increase their flight rates. What is SpaceX going to do with all those returned cores? Even if they only get 50 percent returned first stages – that is 6 returned 1st stages this year alone. Additionally, they want to increase demand. To increase demand – the price to space has to come down. SpaceX though is having a disruptive effect on the space industry at $60 – 90 million flights. Do you think ULA and ESA would be developing Vulcan or A6 now if it was not for SpaceX? Even if SpaceX only lowers the returned cores launch price to $50 – 80m, what does it do the launch market? Vulcan is expected to cost over $100m in 2019/2020. Atlas is how much -$100m+

  44. Chris Stelter says:

    The dynamic effects on the launch market are hard to predict, however I think there will be increased demand. Annual launch rate is increasing at about 4.5% per year since its nadir in 2004. That’s a doubling time of about 16 years, and I think most of that is driven by commercial launch. In addition, I believe the average launch mass among commercial launches has increased as well.

    Still, at this rate, it will take until 2025 until 1967’s peak of 141 orbital launches is reached.

  45. ABV says:

    Looking back at this, getting up to 25-30 flights this year with reuse being $50 million, they should be doing all right!

    Of course they probably won’t reduce head count since they are all in on BFR.

    It seems like they will need to raise capital for the satellites. It will be a tightrope walk for Elon to do that without diluting his ownership too much.

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