> That price seems crazy to me. It's "just a balloon" I don't see what their hard costs are that make this more than the cost of a commercial flight.
Answer: exclusivity.
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Or to explain the topic in economic terms: with their offering, these companies offer a given supply for balloon rides into the stratosphere. On the other hand, for a given price for such a ride, a demand to buy it for this price. What a company wants to optimize is
(number of sales for a given price) * price.
Since the supply is currently rather limited, the price can be set to a very high value to optimize this function.
> That price seems crazy to me. It's "just a balloon" I don't see what their hard costs are that make this more than the cost of a commercial flight.
They need to make back the cost of R&D. IE, based on how much it costs to design and certify the balloon, the first flight might operate at a loss. They will need to perform X successful flights before they break even on the cost of R&D.
IE, it might cost $10,000 to pay the staff on the balloon ride, but the vessel itself might cost 10 million to design. It might use $200,000 worth of parts, but the factory cost $20 million to build. Those costs need to be amortized by paying passengers.
Almost no prices are set based on cost to produce. When you shop for eggs, do you care if the producer’s costs were higher or lower than normal? Essentially all prices are based on the value people receive from the good.
That is a new development and the massive shift away from cost plus pricing to value based pricing is a big part of the financial squeeze of the lower and middle classes.
Simultaneously, from all sides sellers are now constantly testing the elasticity of consumer budgets to maximize profit until they exclude the bottom x%, it's a huge financial strain for the poorest among us.
Cost plus was never a pricing model differentiated goods. Human psychology just doesn’t work that way; nobody says “having a nice reliable car is worth $20k to me, but I’ll pay $30k because their cost to produce is high”.
That’s kind of the whole point of the capitalist / consumerist model: first movers take high risks with investment and can reap outsized returns if successful, while success breeds competition from new entrants who have a proven market and a product to copy. The expansion of the market means more price competition, driving prices and returns down.
I’m not saying it always works like that, just that it generally does.
I'm glad there are multiple players in this space so they can compete and drive the cost down over time.