Product and Service Pricing: Launch Vehicles

Abstract

O the last 12 years, a growing number of domestic and foreign enterprises have entered or expressed interest in entering the international market to provide commercial launch products and services. The supply of launch products and services now exceeds projected demand, and competition among providers is intense. This heightened competition has led to private and governmental concerns about the conduct of international launch competitions, particularly with regard to pricing practices. This chapter utilizes economic theory and publicly available information to provide an overview of the economics of the commercial space launch industry and its pricing practices. This is a difficult task, particularly because the commercial launch industry reveals little about its economic decision making to the public. Nonetheless, it is hoped that a sufficiently accurate picture of the industry emerges to assist persons interested in understanding and addressing the complex problems facing this industry. An outline of this chapter will be beneficial to the reader. The first section provides a brief history of the commercial launch industry. The second section describes the competitive environment of the international launch market and the entities that participate in this market. The third section covers the cost structure of the commercial launch industry, highlighting the extraordinary importance of government space launch programs to the competitiveness of commercial launch providers. The fourth section presents a pricing behavior model for the commercial launch in-