How do governmental space programs and private space companies make money?

Question

I imagine designing and building space craft and paying top scientists a wage costs A LOT of money.

So do government programs make money or does it just use up tax dollars without much return?

Also how does a company like SpaceX, for example, make their money?

In: 9

Answer 1

Government programs mostly do not make money. They are budgeted a certain amount of money from the government, and told what the government wants them to do. Just like the military or the EPA or whatever, the government agencies do have some input into what or how they will go about meeting the bigger goals assigned to them, but the goals are defined for them. They did not create themselves and say “we are going to do this so give us money”.

Government agencies do also provide some chargeable services, so do profit from some things they do (like launching satellites for private owners isn’t free for the satellite owner, they get charged for it). Private companies work by providing such services, at a price. A lot of the private space service companies do jobs for the government (are replacing the government agencies for some of the work). Companies will only exist if they make profit, so they charge cost plus profit for all services they perform, and they will keep on providing the services as long as the company makes money.

Private companies exist because someone decided that he (they) could provide the service and make money doing it. They will stay in business only as long as the investors make money, or can deal with losing money (in the hope of eventually making money) after a bit of time. I imagine the start-up cost for a space service is pretty high, and the time frame before making profit is fairly long. government agencies do not have to worry about that. They only have to worry about convincing the government to keep funding them, which will happen as long as the government sees the need for the tasks and goals. The amount of money provided will change but will rarely ever just STOP. The need is always there, just a matter of how much money is going to be directed to filling the need. However, they will be in competition with the private companies, so they also have to pay attention to costs; it isn’t a free ride.