Capitalism in space: Having lost their entire commercial market share because of SpaceX’s lower prices, the Russians have finally decided to slash their launch prices by 39%.
As the article notes, the cost for a Proton rocket launch was once $100 million. Then SpaceX came along with a $60 million pricetag. At first the Russians poo-pooed this, and did nothing. When their customers started to vanish however they decided to finally compete, so a year ago they cut the Proton price to match SpaceX’s.
Because of SpaceX’s ability to reuse its first stages, however, that $60 million price no longer worked. SpaceX had a year earlier lowered its prices even more, to $50 million, for launches with used first stages.
This new price slash by Roscosmos probably brings their price down to about $36 million, and thus beats SpaceX.
We shall see whether it will attract new customers. It definitely is now cheaper, but it is also less reliable. Russia continues to have serious quality control problems at its manufacturing level.
That SpaceX’s arrival forced a drop in the price of a launch from $100 million to less than $40 million illustrates the beautiful value of freedom and competition. The change is even more spectacular when you consider that ULA, the dominant American launch company before SpaceX, had been charging between $200 to $400 million per launch. For decades the Russians, ULA, and Arianespace refused to compete, working instead as a cartel to keep costs high.
SpaceX has ended this corrupt practice. We now have a competitive launch industry, and the result is that the exploration of the solar system is finally becoming a real possibility.
Correction: I originally called ULA “the only American launch company before SpaceX.” This was not correct, as Orbital Sciences, now part of Northrop Grumman, was also launching satellites. It just was a very minor player, with little impact. It was also excluded from the military’s EELV program, and thus could not launch payloads for them after around 2005.