Good News for Boeing and Lockheed: SpaceX Just Raised Its Launch Price

In 2016, United Launch Alliance (ULA) CEO Tory Bruno had a dream: to beat SpaceX on launch prices -- or at least come close.

Eight years ago, the former Lockheed Martin (NYSE: LMT) executive announced ULA's plan to develop a new rocket that would launch for less than $100 million and put the company within a stone's throw of SpaceX's then-current $61 million launch price. The goal seemed fantastic at the time. ULA's Boeing -built (NYSE: BA) Delta IV rocket, after all, cost as much as $ 400 million per launch. The company's Lockheed-built Atlas V was a bit cheaper -- but nowhere near $61 million cheap.

Eight years later, though, this goal is within Bruno's grasp. Media reports estimate that Vulcan, which has already begun launching , costs about $110 million -- pretty close to $100 million after accounting for eight years of inflation. Even more surprising, Elon Musk himself seems to be helping narrow the price difference between ULA and SpaceX.

SpaceX, you see, just raised its price.

Image source: SpaceX.

Shh! Don't scare the customers!

SpaceX isn't being particularly loud about it, however. To absolutely no fanfare whatsoever, sometime between May 6 and June 7 of this year, Musk's space company quietly raised the price of its Falcon 9 rocket from $67 million to $69.75 million.

See for yourself. This is how SpaceX described its Falcon 9 on May 6 in terms of price and capability:

Image source: SpaceX.

And here's how the same page looked on June 7 -- and still looks today:

Image source: SpaceX.

Same payload capacity to Low Earth Orbit. Same ability to put a few thousand kilograms on Mars, too. The only thing that has changed is the price.

Admittedly, the $2.75 million change amounts to a price increase of only 4.1%. But it is an increase. And while Falcon's $69.75 million price tag is still a whole lot slimmer than Vulcan's $110 million price; the difference is narrower than it was just a couple of months ago, making it just that much easier for ULA's partners, Boeing and Lockheed, to compete with SpaceX for launch contracts.

History doesn't just rhyme; it repeats

This isn't the first time SpaceX has raised prices, either. The company raised its launch price exactly twice in the last eight years, first in 2016 and then again in 2022 . In contrast, a chart of changes in ULA's price changes over the last eight years slopes sharply down and to the right, falling steadily as the company struggles to match SpaceX prices and hold onto its share of the space market.

In 2021, for example, U.S. Space Force contracts awarded to ULA cost barely more than $200 million and were already down nearly 50% from prices being charged in 2016. By 2023, prices were halved once again, with a bulk purchase of National Security Space Launch Phase 2 launches priced at just $100 million apiece -- precisely the price that Tory Bruno promised eight years ago.

What it means for SpaceX

So, ULA is making progress in cutting prices to compete with SpaceX. What does this mean for SpaceX?

Apparently not much. Even after its latest price increase, the average Falcon 9 launch is still 30% cheaper than the cheapest Vulcan launch price we've seen announced and closer to 36% cheaper than what (the media says) will be Vulcan's average launch price. That still gives SpaceX a lot of room to maneuver and even -- apparently -- to raise prices as its competitors continue to cut.

This means more profit for SpaceX. And this is on top of the already supersized profits SpaceX earns from being able to reuse its rockets while everyone else, ULA included, continues to build expensive disposable rockets. All of this is fueling SpaceX's push to profitability, with some media outlets predicting the space company will earn $4.5 billion this year.

It's also making SpaceX look like a more and more attractive IPO candidate should Elon Musk choose to go that route .

What it means for Boeing and Lockheed

For Boeing and Lockheed, in contrast, all this seems to imply more tough times ahead.

ULA's owners have succeeded in cutting costs dramatically and are continuing to win plenty of work in the booming space sector. S&P Global Market Intelligence data, for example, show Lockheed Martin's space segment sales grew 33% from 2016 through 2023. Operating profits in Lockheed's space business, however, fell 7% over those eight years, and operating profit margins are down from about 12.8% to just 8.9%.

It seems the more profitable SpaceX gets, the less profitable its competitors become . Sad to say for ULA, despite all the progress it's made to date, I don't see this ending well for them.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends S&P Global. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy .