L8 - Life Cycle Cost, Pricing and the Cost per Flight

Question 1

Understand what is included in life-cycle costing

Answer 1

• Entire series of expenses that emerge in the process of generating an idea for a program to fully implementing/selling it
• Cost – if you pay for it, it is a cost
• Price – set by the market – cost of producing something has little to do with selling price
o True cost virtually impossible to know

Question 2

Understand launch cost approaches and the IAA standard for estimating cost-per-flight and price-per-flight

Answer 2

• Cost per flight = vehicle cost + direct operations + indirect operations cost
o Vehicle recurring cost – cost of one unit for both expendable vehicles and reusable vehicles (amortization cost, expendables like SRB, and refurbishment cost)
• Often also includes profit, product liability insurance, financing cost ∴ is a price
o Direct operations cost – all activities directly related to ground preparations of a vehicle plus launch and mission operations
• Propellants (except expendable SRBs), consumables, mission planning & prep, flight control, transit, launch facilities fees, vehicle failure impact (expendables only), public damage insurance fee,
o Indirect operations cost – fixed annual cost budget divided by # launches
• admin, management, general financing, marketing, customer relations
• Price per flight = cost per flight + business charges
o business charges – 5-12% profit, R&D cost amortization (ONLY if vehicle is operated by same company that built it – otherwise this is included in vehicle selling price)
• Complete user cost = price per flight + optional insurance cost

Question 3

Understand how the IAA cost/price standard can be used for business planning of suborbital vehicles

Answer 3

No answer! Sorry, go figure it out yourself! ^^