That is an interesting part to this question. What constitutes being shaken down?

SpaceX charges less for its launches than any other launch provider with similar capabilities, yet the company was able to develop a self-landing reusable first stage, a Dragon cargo capsule, a Falcon Heavy rocket (estimated alone to cost $500 million), and made four major modifications to Falcon 9 on the revenues of launching only about 50 payloads. Did SpaceX overcharge for those launches or was it acceptable for them to make ten million dollars or more profit per launch (about 20-ish percent)?

As I like to say, profit is the reward for improving efficiency.

Competition is also a good way to ensure that you don’t get shaken down by an unscrupulous contractor. Competition between Bigelow and Axiom should help keep each company honest. When Ixion and Sierra Nevada start making space-habs, too, then we should start to see much more efficiency in that industry.

It is like any other business plan. What does NASA charge now for an experiment, and what does it offer its current customers? This is a limit on what you can charge or your opportunity to provide better service for your own potential customers.

Next, you need to determine what it costs for your operations. What does a space-hab cost to build and to launch, how long does one last, what does a seat cost to get there and back, and what does it cost to operate it all? How many experiments can you get to sign up for your service? This gives you an idea of what you need to charge per experiment or experimenter/astronaut that a customer wants to send up.

Unfortunately, there does not seem to be a lot of potential customers beating on Bigelow’s door. This is disappointing news. Perhaps the cost of transportation is scaring off many customers.

I don’t know what it costs to build a space-hab, but the launch of a B330 is limited to ULA, as Falcon’s fairing is too small, so launch is probably $100 million to $200 million. Four Dragon seats are estimated to cost $55 million each, so seven would be around $35 million each. Starliner seems to be about 2/3 again more expensive, around $55 million each. However, B330 supports only six people, so the costs become around $40 million and $60 million per seat, respectively.

So does Starship change all this?

Starship may be able to take six (or a hundred) people for $7 million or so, which would reduce the cost per passenger to around $1.3 million. If a B330 fits inside a cargo Starliner, then launch costs drop dramatically, too.

Bigelow sees the space hotel business as being lucrative, and if he can combine four or five B330s into one space-hab, then each hab would hold around 24 to 30 people, perhaps 20 to 25 tourists and the rest as staff. On Starship, this would cost around $280,000 to $350,000 per tourist for transport.

Such dramatic improvement in transportation costs is coming due to commercialization of the space industry. If transport can improve in efficiency that dramatically, can the rest of commercial space, including space habitats, improve as dramatically? Probably so, because it cost around $100 billion to put together the ISS and it seems to be costing another $50 billion to operate it for a quarter century. I’d bet that commercial space-habs won’t cost that much. And I’d bet that over the next couple of decades there will be more efficiencies found for their construction and operation.

But Bigelow said that the pump needs to be primed in order for all this to start.

Jim Davis: Your question is a fair one. We really don’t know. I think however that if some of the makers of modules are not squealing, then we are paying them too much. Bigelow’s actions here suggest NASA’s price offer was getting close to the right range.

My point is that NASA is the only customer who has ever purchased space station modules. What possible criteria could they use to determine if they are being “coerced” into paying more than they should? There is no market for space station modules so there is little prior knowledge on which to base a judgement.

But you’re a private customer. Suppose you were buying space station modules out of your own pocket. How would you determine whether you were paying a fair price or were being shaken down by an unscrupulous contractor? You don’t want NASA to provide these companies too much money. Fair enough. How much is too much?

Jim Davis: You are joking, right? My point is that as a customer, NASA should behave like a private customer who needs a product but does not have unlimited funds obtained by coercion. As a government agency, NASA in the past has not done this, but instead provided blank checks to its contractors (cost-plus contracts). The result has been bloated, over-prices products that take forever to be delivered.

A private customer can’t tolerate such behavior. They demand low prices, efficient operation, and results. All I am urging NASA to do its to follow this approach, not its past behavior.

This isn’t that hard to understand. It is however difficult for government agencies to execute. They need as much prodding, encouragement, and even criticism to push them in this direction.

If NASA provides no money at all, that would force them to work very efficiently and really lower costs, which would make very easy to charge less to outside customers and very quickly widen their customer base.

Right?

Ultimately, of course, we should expect manufacturing and other commercial activities in locations where resources — including human supervision — and suitable infrastructure are available and transport of products to markets is a practical matter. In Upper Michigan, for example. Or Mare Imbrium on the Moon, or Valles Marineris on Mars, or yet uncharted locations on bodies deep in the Kuiper Belt. In the latter case, I foresee that we will eventually need to conglomerate materials from distant sources (AU’s) over extended periods of time (years, or even decades) in manufacturing processes which will produce goods for distribution to equally distant markets. One would like to think that economic analyses are potentially as solid and rigorous as say Newtonian mechanics, but I suspect the differences of time and distance in the space environment will lead to governmental and business decisions which differ considerably from those on Earth.

We can send up people pretty cheap now. But who is in line to do this? Governments at no profit.
The next to go up would be university researchers. Either in conjunction with private business or public/private funding.
This can all be done while connected to the ISS.

After this the next option would be private corporations if something can be found to be manufactured more profitably in space than on Earth.

After that is tourists. And rich tourists want a rich experience. Not all are just excited to just be in space. They will want that zero G sex experience. High quality food cooked by celebrity chefs. And of course the ever favorite space walk.
I can not see that happening in anything small like the ISS.
100 people minimum. Think of it like building a casino and hotel except in orbit. Several billion in investment. And it will have to have at least a small section at some significant portion of gravity. You can not cook in zero G.

> On this last point I think Bigelow might be wrong.

I think that he might be right. In congressional testimony, Andrew Rush stated that it would be very difficult for him to turn a profit if he had to pay even commercial prices for transport to LEO. And Made in Space is the poster child for in-orbit manufacturing.

Bigelow has (I believe correctly) identified sovereign clients as the most likely customers for his inflatable modules in LEO. Those clients won’t be sending their national astronauts to LEO in order to make money but as part of their national pride — e.g. to make hero astronauts to encourage their young people to pursue STEM. Here Bigelow seems to be assessing that market (something that he has probably formally done) and found it wanting.

Rather, I think that the future for commercial space in not in LEO where there’s practically no material resources and instead, on the Moon where polar resources can greatly reduce the amount of payload that needs to be launched from Earth to support a permanent base leading to settlement. The business case for HSF is most likely retirement and the customer demand to experience the freedom of partial gravity and the status that being part of that community provides.