The falling
price of orbit

Start with the number

People talk about "cost per kilo." That just means how much it costs to send one kilo of stuff up into space. A kilo is about the weight of a bag of sugar.

The Space Shuttle stopped flying in 2011. Sending one kilo up on it cost about 54,000 dollars. That is more than most cars cost. The rockets that came next were cheaper, but they still cost 9,000 to 14,000 dollars a kilo. Better. Still a fortune.

Then SpaceX built a rocket called the Falcon 9. It does the same job for about 2,500 to 3,000 dollars a kilo. So in about one lifetime, the price of getting to space has dropped by around 85 per cent.

One simple idea did most of that. An old rocket cost tens of millions of dollars to build. You used it once, and then it fell into the sea and was gone. Imagine an airline that threw away the plane after every flight. That is how space worked for fifty years. Then SpaceX landed its rocket and flew it again. Some of its rockets have now flown more than twenty times each.

A rival called Rocket Lab says the same thing. Its finance chief, Adam Spice, put it simply: if you cannot use your rocket again, you have no future.

What it really costs

Most people never pay that low price, because they do not fill the rocket up. A Falcon 9 costs about 74 million dollars to launch. But most customers only use a small part of it. So the real cost for them is more like 20,000 dollars a kilo. It is like paying for a whole plane just to send one parcel. There is a way around it. Lots of little satellites can share one rocket and split the bill. That drops the price to about 6,500 dollars a kilo.

There is another catch. The price is not the same as the cost. SpaceX charges more than a flight actually costs it. The extra bit is profit. And that profit pays for everything else.

And there is one number you hear a lot that is not quite right. People say SpaceX launches 90 per cent of everything. Last year it carried a bit over 80 per cent of the weight that went into space, not 90. And most of that weight was SpaceX’s own stuff. It has its own internet satellites, called Starlink. Take Starlink out, and count only other people’s stuff. Then SpaceX’s share drops to about 46 per cent. That is less than half. Count by number of launches instead of weight, and it is about 52 per cent.

So why does SpaceX carry so much? One reason. It flies its own internet company on its own rockets. Starlink brings in about 61 per cent of its money. The rockets are there to help the satellites. And that is the thing every rival has to fight.

The toll booth

Making rockets is a small business. That surprises most people. Add up all the rocket launches in the whole world last year. Together they made about 12 billion dollars. That sounds like a lot. But the whole space business is worth about 600 billion. So launches are only 2 or 3 per cent of it. The satellites and the services are about twenty times bigger.

Think of launch like a toll booth on the road into space. It is not the whole road. It is just the gate you pay at to get on. Make the toll cheaper, and more cars can use the road. Every space business has to pay to launch. So if launch gets ten times cheaper, lots of ideas that were too expensive before start to make sense.

How big could space get? A big study by McKinsey says 1.8 trillion dollars by 2035. Other banks say about 1 trillion, somewhere between 2030 and 2040. Do not trust any single number too much. But they all point the same way. Up. And the businesses that sit on top of the rockets grow the fastest. The rockets are the small part. The real value is in what they carry.

What you could build up there

Now imagine the price keeps falling. Down to a few hundred dollars a kilo. That is what SpaceX wants from its next rocket. At that price, some wild ideas start to make sense. A few are real already. A few are still just dreams on a slide. Both are worth knowing about.

The biggest dream is power from space. You put a giant solar panel up in orbit. Up there the sun always shines. The panel beams the energy back down to Earth. People have wanted this since the 1970s. It was always too expensive. But a study last year did the sums at about 500 dollars a kilo. At that price the power would cost about the same as power on the ground. Europe wants to test it around 2030. China is already building the part that catches the energy.

The fastest-moving idea is computers in space. Data centres on Earth are running out of power. And they are hard to keep cool. But in space the sun never sets, so there is loads of power. Google wants to fly its own AI chips up there. Its own study says that at about 200 dollars a kilo, around 2035, a data centre in space beats one on Earth. A company called Starcloud already ran an AI program on a chip in orbit last year. Within months it was worth over a billion dollars. There are still hard problems. Cooling a hot chip in space is really tricky, and some clever engineers think it will take a lot longer. But the money is coming in, because the trip keeps getting cheaper.

Some ideas are already happening, quietly. A few materials and medicines come out better when you make them with no gravity. So small factories fly up, make them, and bring them home. The old space station retires around 2030. New companies are each raising hundreds of millions of dollars to build the next ones. And at the wild end, there is asteroid mining. Just one small company is still trying. It has never even had a working deep-space mission. Cheaper launch makes more things possible. It does not make all of them smart.

Can anyone actually make money doing this?

Building rockets is a great way to lose money. And the people who do it will tell you so themselves.

SpaceX is the best rocket company there has ever been. In June it sold shares to the public for the first time. It raised 75 billion dollars. That was the biggest sale of its kind in history. It valued the company at about 1.77 trillion dollars. But now SpaceX has to show its real books. And the books say the rocket side lost money last year. The only part that made a profit was Starlink, the satellite side. So the rockets feed the satellites, and the satellites feed everything.

So why is the company worth so much? Because people are betting on the future. They are betting on the next rocket, and on a new AI business SpaceX has added. Not everyone believes it. A famous investor, Jeremy Grantham, called it the craziest sale in the history of the world. And the experts cannot even agree what SpaceX is worth. The most hopeful ones say 227 dollars a share. A firm called Morningstar, whose job is working out what companies are worth, says just 63. That is how wide the gap is.

The same story is true right across the industry. Rocket Lab grew its sales by 38 per cent last year. It still lost about 200 million dollars. So in June it bought a satellite company for about 8 billion dollars. Now it owns the customer as well as the rocket. Blue Origin is Jeff Bezos’s rocket company. It has spent about 28 billion dollars over 25 years. And it only took outside money for the first time this month. Of all the hundreds of small rocket companies started since 1990, about 84 per cent are gone, or never made it to space.

So the lesson is simple. Just selling launches does not pay. The companies that survive do one of three things. Some own the thing on top of the rocket, like SpaceX owns Starlink. Some win a government that pays extra to launch its own satellites. And some take money from a country that just wants its own way into space. Cheap launch is great for the world. But on its own, it is a hard way to get rich.

What happens next

So why is India’s little rocket this morning such a big deal? Because for ten years this was a story about one company in one country. Now it belongs to lots of them. Skyroot got to space for about 160 million dollars. That is tiny next to what the American giants have spent. And it is already worth over a billion. India wants 8 per cent of the world’s space business. It wants to grow its own space industry from 8 billion dollars in 2022 to 44 billion by 2033. Skyroot will not beat SpaceX at building rockets. It does not need to. It wants the businesses that ride on cheap rockets. And it wants to reach space on its own, without renting a foreign billionaire’s rocket.

The same thing is happening in other places. In Japan, a rocket company backed by Toyota is building a cheap rocket for a first flight in 2027. Europe has put more than 4 billion euros into keeping its own way into space. China now launches more often than everyone except the United States. And last week it brought a rocket booster home. One company’s story is turning into a story about lots of countries. And the falling price of a kilo opened the door.

The good news

The good news is bigger than any one company. Some people will get rich. Most will not. But that was never really the point. Getting to space used to belong to just two superpowers. Now it belongs to anyone who can pay for the trip. And the trip keeps getting cheaper. A company that did not exist twelve years ago flew to space this morning, from a beach in southern India.

The rockets were always the small part. The real question is who builds the things that fly on them.

If getting to space keeps getting cheaper, what would you build up there?