How Does SpaceX Make More Than $1 Billion Every Year?

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SpaceX

SpaceX or Space Exploration Technologies Corp. is amongst the most celebrated and noted companies in the world involved in space transportation and aerospace manufacturing services. It was founded by Elon Musk in 2002 and the business model of this company revolves around decreasing the amount spent on space transformation, which may facilitate the procedure of Mars colonization. 

SpaceX is recognized all over the globe for several reasons, the major one being that SpaceX is the only firm in the world that has successfully launched several satellites and managed to land the rockets back on Earth. 

Currently, SpaceX is valued at more than $36 billion and is amongst the most valued companies in the world. Now, you must be wondering how this company makes money. With such huge investments, failures, and trials, it seems unreal for any private company to make money. However, the company may launch 15 commercial missions in 2020. Assuming an average revenue standing at $80 million per launch, this amounts to almost $1.2 billion in revenue for 2020. 

Significant Events In The Journey Of SpaceX

  • Elon Musk got interested in Mars Venture in 2001. He wanted to send a small nursery to Mars and analyze plant development on the planet. This primary aim enhanced his enthusiasm for space exploration.
  • Next year, he went to Moscow to buy ICBM (inter-continental Ballistic Rockets) for transporting a nursery to Kosmotras. He was asked to pay $8 million by the maker of ICBM for the same. And he considered it to be very expensive.
  • Then, he got the idea of making his own rocket organization. And formed Space Exploration Technologies Corporation. 
  • With the help of Tom Mueller, a rocket designer, the company designed Falcon 1, which became the first rocket that fulfilled the undertaken mission. 
  • After the accessibility of this rocket was commercialized, SpaceX sent RazakSAT (a Malaysian satellite) to space in 2009.
  • Then, two more rockets, Dragon and Falcon Heavy, were developed in subsequent years after Falcon 9 became the main shuttle for space travel. 
  • Currently, SpaceX is under $1.6 billion payload with NASA and has approximately 70 dispatches under the company’s contracts with NASA and other private firms are amongst the major contributors towards the company’s revenue.

Hardware Projects Of SpaceX

  1. Launch Vehicles 

  • Falcon1 – A small rocket used for placing several hundred kilograms in low earth orbit.
  • Falcon9 – An EELC-class medium-lift rocket that can place a maximum of 22,800 kgs to orbit.
  • Falcon Heavy – It is a heavy-lift rocket. Its configuration is performed by a conglomeration of 3 Falcon9 first stage cores as well as 27 Merlin 1D engines and propellant crossfeed.
  1. Rocket Engines 

  • Merlin – The rocket engine created for Falcon Rocket family.
  • Draco – The hypergolic liquid-propellant engine for a rocket for which nitrogen tetroxide oxidizer and monomethylhydrazine fuel are used.
  • Kestrel – A LOX/RP-1 pressure-fed engine for the rocket, which was the 2nd stage main engine of the Falcon1 rocket.
  • SuperDraco – This engine is a more powerful version of the Draco engine.
  • Raptor – It is a full-flow, methane-fueled, staged-combustion rocket engine designed for the future Starship launch system. 
  1. Spacecraft

  • SpaceX Dragon – The conventional ballistic capsule, which can carry 7 astronauts or cargo into orbit or beyond it.
  • Crew Dragon or Dragon 2 – The successor of Dragon aircraft and has wider windows as well as new flight computers, avionics, modified outer mold line, and redesigned solar arrays.

So, How Does SpaceX Earn?

SpaceX

Currently, the revenue drivers of the company are average revenue per launch and the number of successful launches per year. Let us discuss these two factors in detail below.

Average Revenue Per Launch 

The company has fixed prices for launching commercial satellites. It also offers considerable discounts to customers who wish to reuse rocket components. The company has also got several million dollars in one-time payments connected to its long-term contracts with several customers like Iridium and NASA, which boosted payments in the initial years. 

This helps in explaining the decrement in the average cost per launch to almost $72 million in 2017 from somewhat $175 million in 2014, which is a massive reduction. This price is expected to decrease with time, as more small-sized clients opt for low-cost benefits provided by reused rocket systems. 

Currently, the cost is $62 million. The company charges almost $20 million more for complex governmental space missions, such as launching GPS for Air Force. In 2020, SpaceX launches have formed a 60:40 ratio for commercial against governmental missions. If $72 million is considered for every start across the entire business of SpaceX and about 18 missions this year, the company’s total revenue would round up to be $1.3 billion. 

Since SpaceX is a private company, it is assumed that the cost of one Flaxon9 rocket would be approximately $50 million while the company charges $62 million. If refurbishment and depreciation costs are included, the profit can be up to $42 million per launch. However, none of these numbers can be confirmed until they are affirmed by the company. 

Number Of Successful Launches Per Year

SpaceX

This refers to the number of successful launches this company carries out every year. This number has been increasing from 6 in 2014 to a total of 87 as of June 2020. Because SpaceX is using reused components, the cost is reduced along with downtime between launches. Eventually, this will improve the company’s potential to produce more rockets and satellites. This means that the company can fulfill more orders at lesser times and by investing in lesser resources. 

Other Plans 

The company also plans to launch Starlink, a satellite-based internet system, which would sabotage the current internet market all over the world. Through Starlink, even those areas which do not get network signals would receive high-speed internet. 

  • Space tourism is another earning model for SpaceX.
  • The company is also working on point-to-point travel across the earth through rockets, which would decrease traveling time from 24 hours to 30 minutes.

The Bottom Line

SpaceX is able to make so much money because of its unique business models. The company aims to reduce production time and cost by reusing rockets, which it is able to do. Apart from producing rockets for its clients, the company is working on other plans like Starlink, space tourism, and point-to-point technology, which will make this company unbeatable in terms of profits.

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