dmclean62
Mongoose
I was thinking about the "Check our numbers" post for passenger fares and it occurred to me that we can't check the numbers if we don't have the underlying cost assumptions.
For any given transportation service, if there was a standard ship design that did nothing but fulfill that one service with great efficiency, then whatever the ALL IN COSTS would be, that represents the minimum possible price for that service.
All in costs would start with the cost of the ship - what does it cost to operate a ship for a year? How many trips can it make in one year? There's always going to be some time overhead in addition to annual maintenance. What is the depreciation on the ship over a year? (probably the same as if you had a loan for 100% of the ship price?) Don't forget maintenance, crew salaries, and insurance.
For each trip, what are the costs of that trip? Don't forget docking fees, fuel costs, any overhead associated with the service (cargo handlers to load and/or unload, bank transaction fees, fees to agencies lining up cargo or passengers).
Then, figure in "occupancy rate" (or whatever it would be called for cargo) because it won't always be possible to completely fill the ship. There might be "stand by" cargo/passengers at a reduced rate, but that can't be counted on.
Then add in some profit - at least 5%, maybe more.
The reality is that supply and demand will determine what the final cost is, but nobody would offer a service at a loss, so running these calculations would tell you if the price assumptions being used are in any way reasonable. If the prices listed are much higher than these costs show, mega-corporations will invest in providing the service, drive down costs, and competition will ensure. Lower costs will mean that more people will use the service, but only up to a point. You'd have to do some kind of economic model to determine what the demand would be at a given price point.
For any given transportation service, if there was a standard ship design that did nothing but fulfill that one service with great efficiency, then whatever the ALL IN COSTS would be, that represents the minimum possible price for that service.
All in costs would start with the cost of the ship - what does it cost to operate a ship for a year? How many trips can it make in one year? There's always going to be some time overhead in addition to annual maintenance. What is the depreciation on the ship over a year? (probably the same as if you had a loan for 100% of the ship price?) Don't forget maintenance, crew salaries, and insurance.
For each trip, what are the costs of that trip? Don't forget docking fees, fuel costs, any overhead associated with the service (cargo handlers to load and/or unload, bank transaction fees, fees to agencies lining up cargo or passengers).
Then, figure in "occupancy rate" (or whatever it would be called for cargo) because it won't always be possible to completely fill the ship. There might be "stand by" cargo/passengers at a reduced rate, but that can't be counted on.
Then add in some profit - at least 5%, maybe more.
The reality is that supply and demand will determine what the final cost is, but nobody would offer a service at a loss, so running these calculations would tell you if the price assumptions being used are in any way reasonable. If the prices listed are much higher than these costs show, mega-corporations will invest in providing the service, drive down costs, and competition will ensure. Lower costs will mean that more people will use the service, but only up to a point. You'd have to do some kind of economic model to determine what the demand would be at a given price point.