Key Points
More than a decade ago, SpaceX burst into the commercial space launch market, disrupting the industry with an ultralow $61.2 million price for its Falcon 9 rocket — and nearly giving Europe a heart attack. That amount was much less than United Launch Alliance was charging in the U.S., and even less than ArianeGroup could profitably charge for its Ariane 5 rockets in Europe. Ariane CEO Alain Charmeau complained that SpaceX was trying to “kick Europe out of space.”
And so Europe came up with a solution: It would build a new rocketship. Two of them, actually: a $77 million Ariane 62 with two boosters, and a $126 million Ariane 64 with four.
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Image source: European Space Agency.
What’s up with Ariane lately?
The new Ariane 6 rocket finally made its debut in July 2024. Pricing wasn’t made public at the time, but thanks to a report from the European Space Agency (ESA) this month, we finally know how much Ariane is charging — and it’s not $77 million.
Ariane’s November 2025 launch of a Sentinel-1D satellite atop an Ariane 62 rocket actually cost ESA $96 million. That’s a curious number — not just because it’s 25% more expensive than Ariane 6 was originally supposed to cost, but also because it’s almost exactly what ESA and NASA paid in December 2022 to launch a similar Sentinel-6B satellite atop a SpaceX Falcon 9 rocket: $94 million.
Indeed, as Ars Technica points out, the Ariane 62 rocket might even be cheaper than the SpaceX Falcon 9 because, counting inflation, $94 million nearly four years ago would be worth closer to $105 million in today’s dollars. And that raises the question: Has Ariane succeeded in building a rocket that can compete with SpaceX on price?
Unfortunately for Europe, I’m afraid the answer to that one is: no.
SpaceX’s price is not SpaceX’s cost
Allow me to explain with math.
Not all SpaceX launches are priced equally. On SpaceX’s website, the base cost for a Falcon 9 launch currently lists at $74 million. (SpaceX has raised prices on its launches four times since that first commercial launch back in 2014. It hit $74 million earlier this year, just in time for the SpaceX IPO.)
But the final price can vary based on factors including mission complexity, regulatory red tape, whether a launch is reusable or expendable, and… how much SpaceX wants to charge! For example, SpaceX launches for its own Starlink subsidiary may be priced at cost, or even free.
SpaceX has flexibility in what it charges because its launch costs are estimated at a low $15 million. Any price it charges above that — be it $61.2 million, $74 million, $94 million, or even $105 million — is just more profit for SpaceX.
And spread over 165 Falcon 9 launches last year, this adds up to a lot of profit for SpaceX.
If SpaceX charges, say, $105 million for a rocket that costs it only $15 million to launch, well, that works out to a tidy 86% gross profit margin on its commercial launches. Granted, operating costs, taxes, interest on debt — all those eventually add up to pull down SpaceX’s net profit margin on the bottom line.
But still, 86% is a nice number to start with before you begin the subtractions. Just quickly scanning through the numbers on S&P Global Market Intelligence, it seems 86% is more than the gross margins that companies such as Microsoft (NASDAQ: MSFT) or Alphabet (NASDAQ: GOOG) make from selling software!
Europe’s subsidy saga
The situation with Ariane is almost the opposite.
Instead of having a low launch cost and being able to charge a high launch price, and thus make a lot of profit on the difference, Ariane has such high costs that, in 2024, ESA had to beg European governments for a $410 million annual subsidy to keep Ariane prices affordable. Divided among the four Ariane 6 launches that took place last year, this implies that Ariane’s costs may be $100 million more per flight than SpaceX’s.
Long story short, Ariane’s $96 million launch price, although apparently competitive with SpaceX’s, actually masks a much higher launch cost, made affordable only through subsidies. Should Ariane’s European backers ever deny it subsidies, or should Elon Musk decide to cut the price on Falcon 9 launches (while still charging more than they cost SpaceX), Ariane is going to be in a real pickle.
So, short story even shorter: Ariane still cannot compete with SpaceX.
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