Rand Simberg of Transterrestrial Musings was able to slip in an unscheduled presentation titled "Lies, Damned Lies, and Launch Costs." He started off talking about Marginal Costs. Marginal Cost is the cost of doing the next one. It is computed as the Cost (N + 1) - Cost (N).
He talked about the cost of driving a car. There are a number of costs in owning a car, most of them are fixed. When driving just one more mile, the marginal cost is mostly the cost of the fuel.
Another example is a restaurants. They have a number of fixed costs, owning or renting the building, utilities, employees, and marketing. Just sitting in the restaurant costs them money. The marginal cost is in selling food. If they can sell you one more item, they are making more profit, which is one of the reasons fast-food places like to super size dishes. Moral: To Save money and lose weight, don't eat out.
The Space Shuttle has huge fixed costs due to a large "Standing Army" to support it. It is in the range of three to five billion a year. The average cost of a launch is around a billion per flight. It isn't the fuel that is the expensive costs.
This explains the cost disparities. Some times people report the cost of a flight by including the development costs. Others are just focused on the marginal costs.
How do we reduce the average costs? There are a couple options. You can reduce the fixed costs, but still need some standing army.
Another example is the Space Station. How much do Space Stations costs? In the early 1990s the SSF was estimated to cost about thirty billion. The cost of the hardware was about five billion. One lesson is we could spend twenty five billion. This would give us the full program, but we wouldn't have a station, or we could spend thirty five billion and have two space stations. The government typically chooses the first option.
What costs should we sue? Depends on the type of policy decisions. If we have an existing launch system, then it makes sense to focus on the marginal costs. If developing a new launch system, then need to think about the total cost.
When considering using the shuttle for exploration, you need to use the average cost.
When considering cost of flying existing launch vehicle can use marginal costs. When looking at development a new launch system have to factor in the development costs. This is why it is hard to justify a new launch system.
When making a decision to buy a launch do we consider average cost or marginal cost? Neither, we should just focus on the price.
Espendable rockets have high marginal costs, because have to build a new vehicle with every flight. Reusables in theory have a low marginal cost. Just like a car the marginal cost is basically the fuel. The shuttle is the worst of both worlds. It is partially expendable, where the most marginal cost is, and there is a low flight riate, so can't take advantage of reusability.
What does it mean for VSE, the total cost for the program will be about fifty billion. We'll have to fly fifty flights to get the cost down to one billion per flight.
Many of these decisions are politically motivated. Politically it is nice to get a few people to the moon. It would be nice to have lots of people going to the moon, it would drop cost.
We need to break out of the expendable mind set. With low marginal cost we could have lots more flights.
The full agenda
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