Study Finds NASA Launch Costs Are Rising, Defying Market Assumptions

Insider Brief

• A new study finds that the agency’s inflation-adjusted launch service costs have risen by an average of 2.82% per year from 1996 to 2024, challenging assumptions that launch costs are declining.
• Using internal cost data rather than advertised prices, the study shows no evidence of post-2016 cost reduction despite the entry of new providers and increased launch activity, suggesting that expected market efficiencies have not materialized.
• The researcher attributes the increase to limited competition in an oligopolistic market and notes that NASA’s inelastic demand may incentivize providers to retain cost savings rather than pass them on.

A new study challenges the widespread belief that space launch costs are falling, finding instead that the agency’s inflation-adjusted expenses for commercial launches have risen by nearly 3% a year since the mid-1990s.

In a peer-reviewed analysis published in Acta Astronautica, NASA analyst Moon J. Kim examined three decades of internal cost data and concluded that the commercial launch market, often hailed for its supposed efficiency gains, has not delivered sustained savings to NASA. Instead, the study found that the inflation-adjusted launch service cost increased by about 2.82 percent per year on average from 1996 to 2024.

This contradicts the popular narrative, often based on information from launch providers like SpaceX and United Launch Alliance, that suggests costs are declining thanks to economies of scale and technological innovation.

Kim writes: “These publications contribute to the dissemination of the narrative of decreasing launch costs to media outlets, amplifying it to broader audiences. However, generalizing an industry trend based on the lowest advertised prices can be misleading, as these figures may not accurately reflect the actual costs incurred by customers. For example, launch service customers often require additional safety and assurance features and customization, which increase the final price. Unfortunately, launch service contracts are proprietary and rarely become publicly available, compelling researchers to rely on the advertised prices.”

Closer Look at NASA’s Books

Rather than relying on advertised costs, Kim used the agency’s internal One NASA Cost Engineering (ONCE) database, which records real expenditures for each mission, including all related launch services, integration, and support equipment. After filtering out crewed missions, unlaunched payloads, and Shuttle flights, the final sample included 88 uncrewed missions launched between 1996 and 2024.

Each mission’s cost was inflation-adjusted to 2023 dollars and normalized by launch mass to calculate a per-kilogram price. On average, NASA paid $152,000 per kilogram of payload, with a median of $120,000. Nine different launch vehicles were used across the dataset, and the missions varied in complexity, destination, and risk classification.

To control for these variables, Kim built two regression models. Both revealed statistically significant cost increases over time. The first model showed a 2.82% annual rise in inflation-adjusted cost per kilogram; the second, which accounted for market changes after the 2016 entry of a new launch provider, showed a slightly higher rate of 3.17%—but no statistically significant shift in trajectory.

The results suggest that the rate of change in launch service costs from 2016 to 2024 is not significantly different from the increasing rate observed from 1996 to 2015, according to Kim.

Why Are Costs Going Up?

One possible explanation, Kim argues, is that actual provider costs may be increasing, negating assumed savings from efficiency or scale. Alternatively, launch firms may be retaining any efficiency gains as profit rather than passing them on to NASA. In an oligopolistic market — where just four U.S. firms currently dominate launch services — this is economically rational behavior.

According to the researcher: “The above market imperfections could be a result of the lack of market competition in the launch industry. Despite the government’s effort to foster a competitive market, the current launch industry is an oligopoly. While the demand for space launches has increased in recent years, the number of launch providers has not changed much since the last several decades, with primarily four active U.S. launch service providers in 2024.1 With four companies offering varying capabilities and catering to different customer types, the effects of a competitive market could be severely limited.

The study also points out that NASA’s demand is relatively price inelastic. Because its mission schedules are dictated by scientific and exploration objectives—not market price—it lacks bargaining leverage, making it a tempting target for price discrimination.

Another factor explored was internal cost inflation within NASA itself. Kim examined whether mission delays or internal cost overruns might explain the increase. But a supplementary analysis isolating the cost share directly paid to launch providers showed an even steeper annual increase — 4% — supporting the idea that external pricing, not internal inefficiency, is driving the rise.

Against the Grain

The study stands in sharp contrast to years of optimistic reports citing declining launch prices, many of which reference baseline prices like SpaceX’s $67 million advertised Falcon 9 cost. Yet, Kim notes, these “entry-level” costs are unlikely to reflect the real prices paid by government customers requiring additional safety, integration, and customization.

The findings also highlight a divide within NASA’s own portfolio. While costs for scientific missions are rising, costs for Commercial Resupply Services (CRS) missions to the International Space Station have declined by 1.9% annually from 2012 to 2022. Kim attributes this to the routine nature of CRS flights and their standardized payloads—factors largely absent in the more varied and bespoke scientific missions.

Implications and Future Directions

The study offers a rare, empirical foundation for reassessing assumptions underlying U.S. space policy — particularly the “virtuous cycle” theory that falling launch costs will fuel more space activity, which in turn will drive prices even lower.

According to the researcher: “Empirically verifying the factors shaping the current market environment can lead to reassessing the key fundamental assumptions underlying the United States space policies related to commercial launch services. For example, the policies assume that the launch industry would act as a competitive market with many launch suppliers and customers. However, if the effects of a competitive market are found to be absent or limited in the current environment, such assumption should be challenged. This provides an opportunity to enhance our policies using the economic theories and philosophies that more accurately reflect the prevailing conditions. On the other hand, if a future investigation can verify the rent capturing behavior of the launch service providers, then the assumption that the private companies will pass on cost savings should be revisited with the aim to create such incentives for the benefit of taxpayers”

Kim urges policymakers to reexamine NASA’s procurement strategies and consider alternative models like bulk purchasing, as used in defense contracting.

The study also opens doors for broader comparisons. Future work could explore whether the Department of Defense or commercial customers are experiencing similar cost trends, and whether NASA’s approach to contracting—often treating each mission as a unique purchase—could be optimized for better pricing.