Mark Whittington has a useful overview of COTS. The only problem is in this paragraph:

The Falcon 9 is designed to launch up to 24,750 kilograms into low Earth orbit for a cost of seventy eight million dollars, according to the SpaceX web site. That compares to a cost of two hundred fifty four million dollars to launch 25,800 kilograms into low Earth orbit estimated for the Delta IV Heavy, a competitor to the Falcon 9 built by the Boeing Corporation.

No. Those numbers are the price, not the cost. Confusing the two words is one of the reasons that people get confused about whether or not we’ve made any progress in reducing launch costs over the years (partly because we don’t really know what launches actually cost, particularly in Russia, but also with the Shuttle, due to opaque bookkeeping).

Price is what is charged to a customer. Cost is the amount of resources that the launch provider has to devote to providing the service. If cost is less than price, then the provider makes money; if it’s the other way around, then the provider is operating at a loss. I’m sure that SpaceX costs (at least its marginal costs) are less (and probably quite a bit less, to account for the business risk factor of developing it) than the published price, or there would have been no point in going into the business. I’m also sure that Lockheed Martin is not losing money on Atlas launches.

In both cases, of course, the average cost is highly dependent on flight rate. This is one of the reasons that EELV prices have gone up dramatically over the last few years. In fact, I used that example in my piece in The New Atlantis a couple years ago as an explanation to why vehicle design is at best a secondary issue of launch costs, while flight rate is a primary one. There’s an appalling amount of ignorance, even within the professional space community, as to the reasons for high launch costs, not to mention low reliability (see comments in this post for an example), which is one of the barriers to improving the situation. And of course, the problem is made worse by the lack of recognition of their lack of knowledge. As the old saying goes, it’s not what we don’t know that hurts us, it’s the things we know for damn sure that are wrong.