You are mixing up Falcon 9 launches with the far lower revenue Falcon 1. Their manifest shows on average 2 non-NASA Falcon 9 launches per year.

Put people on those Falcon 9s (the 12 Dragon modules that aren’t used by NASA)

And now you’re back to the fantasy market. To try to show that my estimate was “lowballing”, you have to make stuff up, as Major Tom would say.

With regards to the rest of your nonsense… 4 flights a year non-NASA is extremely lowballed. Going by their (irregularly updated and out of date) manifest they were expecting 3 flights a year non-NASA along with 2 CRS. That’s 5 flights in one year, and this is before they got the most recent launch contracts. We can safely assume that they are capable of doing 10 to 12 flights a year. With 2 CRS at $135 million a flight (contract / 12 flights) and 2 CCDev at $350 million a pop (remember, they guarantee cheaper than Russians), you come out to about $970 million a year from NASA (assuming they *just* undercut the Russians and the Russians don’t lower the price to $30 million per seat or something, compelling SpaceX to do the same). 6-8 private flights a year comes out to $300 to $400 million. That leaves NASA with around 60% of the revenue stream (a far cry from your near 90% made up nonsense).

Put people on those Falcon 9s (the 12 Dragon modules that aren’t used by NASA because they want new ones for each flight) and you are profiting big time, since each flight would come in around $120-130 million, and the cost of the Dragon module will be sunk.

Josh, why don’t you actually work out the consequences of these numbers. The Falcon 9 launch price is about $50m, assuming the commercial customers haven’t bargained for big discounts, but I’m making as many assumptions as I can make in favor of your side of the argument while still staying within the bounds of rational expectations. They have about 2 other customers per year signed up for Falcon 9. $320 million per year for CRS and $100m per year for other gives NASA responsible for 3/4 of the ongoing Falcon 9 plus Dragon revenue and other customers 1/4. Let’s say they sign up 2 more other customers per year. That would still leave NASA with 3/5 of the Falcon 9 revenue. I’m not counting Falcon 1 here but we’re also not counting COTS, just CRS: adding in these two makes NASA’s revenue share to the overall company larger still.

If they win “Commercial” Crew, 2.5 flights per year at $400 million per flight is $1,000m per year. Plus CRS is $1,300m per year, vs. only $200m per year revenues from the four other customers per year assuming they pay the list price. That gives NASA as 87% of SpaceX’s revenue. And that’s assuming they don’t drive away other customers by focusing on NASA HSF and driving up their costs.

Without “Commercial” Crew, they could rival ArianceSpace and ILS which get about 10 orders per year each. At $50 million per order that’s a nice $500 million per year. But they can only compete if they avoid the overwhelming requirements for symbolic safety that would gold-plate the Falcon 9 under “Commercial” Crew.

Obviously these are just specific scenarios and the real number of commercial orders they get will turn out somewhat larger or smaller. But in any probable scenario they have more financial incentive to do “Commercial” Crew than real commerce, which is highly unfortunate for the prospects of lower launch costs, as engaging with the NASA HSF bureaucracy is absolutely the worst strategy I can think of to try to lower launch costs.

As for the 1,000 workers, that costs about $200m per year which is comfortably less than what they will be getting from CRS payments alone.

You really think that SpaceX would waste its time lobbying NASA

They already have engaged in energetic lobbying. Bigger contracts in the future will mean bigger lobbying. What galaxy are you living in?

Those are just made up FUD numbers. Commercial Resupply Services are over a period of years, averaging out to 2.5 flights a year. Commercial Crew, likewise, would be maybe 3 flights a year at most, if they’re lucky. For CRS it works out to about $320 million a year for the whole freaking company of a thousand employees with major outlay, because NASA doesn’t want reused Dragon modules, they’ll have to build 15 of them. I would be shocked if $320 million a year for 5 years would even keep them afloat.

SpaceX needs many launches, that’s why Shotwell focuses on the fact that NASA is under half of their launch manifest (with more to be added by the end of the month). They make money by launching a lot of rockets not by sitting around letting NASA pay 2-3 times market ratest to launch 2-3 times a year! Your whole analysis is just nonsense.

There’s a reason SpaceX has two launch pads (refurbished Titan and Omelek Island), so that they can launch, launch, launch!

Furthermore, a company dominated by NASA will end up engaging in great deals of political lobbying including choices made to suit pork barreling politicians rather than economic efficiency, and it will end up producing wildly distorted technology to satisfy the highly irrational political realities of the Exploration Directorate.

Ignorant slandar. You really think that SpaceX would waste its time lobbying NASA when 1) they’re the lowest bidding competitor and 2) they’re the furthest along with COTS? They don’t have to. Actions speak louder than words. There’s also, again, the fact that 2-3 launches a year through NASA does not make a robust space company, and that SpaceX is focused on launching as many rockets as they can. You might have some coherent argument if SpaceX was not actively seeking contracts and was not actively going out there and looking for commercial partners to loft their satellites.

In the meantime letting NASA pay for their technology development. It’s a win win.

If however SpaceX bows out of or loses its bid for “Commercial” Crew and focus on other customers, NASA’s monopsonistic power and distorting incentives will diminish.

NASAs monopsonistic powers when they’re only concievably paying SpaceX for 2-3 flights a year. Haha, genius.

I’m not referring to an exactly perfect monopsony of simple economic models, but to the the monopsony power and dominating incentives of a company whose revenue and profits are dominated by the money of one customer (here NASA). SpaceX already gets over half of its revenue from NASA and if it won “Commercial” Crew it would be getting well over three-quarters. The share of profits attributable to NASA would be far higher still, perhaps even 100%, since NASA is willing to pay much more per launch than private customers. So NASA has some degree of monopsony power now but in a “Commercial” Crew future it would have an overwhelming amount of monopsony power. Practically all SpaceX’s profit motive would be to satisfy the wants of NASA and its funding politicians, and almost none of it to satisfy other customers.

The distorting effects of monopsony power and dominating incentives would be made far worse by the fact that NASA’s preferences, driven by political lobbying and economically unaccountable fantasies, are radically different from those of real commerce. The need to meet the byzantine customized NASA HSF requirements and that fact that practically all of its profits will come from NASA under “Commercial” Crew will give SpaceX a strong incentive to drive up its per-launch costs higher than satellite customers can afford in order to satisfy the preferences of NASA and is funding politicians, since these higher prices are still much lower than what NASA is willing to pay. “Commercial” Crew thus gives SpaceX an incentive to drive its real commerce customers away which means NASA becomes an even larger portion of SpaceX’s revenue — a vicious cycle.

Furthermore, a company dominated by NASA will end up engaging in great deals of political lobbying including choices made to suit pork barreling politicians rather than economic efficiency, and it will end up producing wildly distorted technology to satisfy the highly irrational political realities of the Exploration Directorate. We’ve already seen many examples of politicians and NASA officials asking or demanding that SpaceX and Orbital Sciences hire many soon-to-be-laid-off Shuttle and Constellation workers, for example. We’ve only seen the tip of the iceberg of such efforts, it will only get worse as SpaceX becomes more dominated by NASA politics.

SpaceX will if it wins “Commercial” Crew will turn into a NASA zombie, a path similar to the one taken by the once entrepreneurial commercial space startup Orbital Sciences. The dream that SpaceX will lower launch costs will be lost, except in the very narrow sense that it will still probably come in much lower than Ares-1 would have. But as a NASA zombie it won’t come in significantly lower than Soyuz for HSF and it will no longer be competitive in the real commercial market for satellite launchers. If however SpaceX bows out of or loses its bid for “Commercial” Crew and focus on other customers, NASA’s monopsonistic power and distorting incentives will diminish. Given its great development efficiencies so far, SpaceX will have very good shot at substantially lowering launch costs for real commerce. This would be of the greatest possible benefit to the long-term cause of space development as well as constituting a much-needed return of the U.S. to a competitive advantage in the real commercial launch market.

I suppose the definition I looked up for monopsony is incorrect. Feel free to indicate what you intend it to mean.

Advising, yes. Certifying, absolutely not. That would be disastrous. If it ever happens by any government agency, leave it where it belongs, with the FAA.

One important distinction is NASA’s rockets have no commercial value, while SpaceX gets to leverage this value, effectively reducing development costs. They build everything largely from scratch so their non-labor costs are minuscule. They focus on re-usability, which could save them even more money. They also have the potential to be a major foreign revenue stream, which is something America really needs right now.

No matter how you add it up Ares 1 is several times more expensive to launch. That’s even worse when you compare Orion’s per seat cost, and I need not mention its scant cargo capacity. Then there is the HUGE development cost. So we should pay billions in development just to pay tons more per launch? It just makes no sense.

Worse yet, Orion is just a low earth orbit vehicle until 2030 or so when Ares 5 and the Earth Departure Stage would be completed. With VASIMR, SpaceX, and Bigelow making steady progress, odds are Constellation will be obsolete before it is even completed.

BTW, please don’t think that this means that we should dismantle NASA! NASA is hugely important. It just needs to understand that there is certain things the government is good at, and others it is not. Instead of designing, cost-plus contracting, and operating launch vehicles, NASA would be far better off advising and certifying private industry, performing excellent science, and setting its goals in terms of rewards for exploration and technology achievements. NASA needs to help build a real space industry, not impose a communist style state controlled system on them.