Commercial space launch is a business, and launch services are priced based on what customers are willing to pay versus the competition.To propose that SpaceX would offer launches at 1/10 the price of their competitors ignores basic market economics.
Right, you are. But let's stick to the launch costs; not the launch price tag. The cost is very much a component of engineering and hence more interesting in Tech Log.
About this claim with respect to return to launch pad
once perfected, it'll reduce orbital costs by at least an order of magnitude
So far, they "only" returned the 1st stage. It is arguably the easier one to return because its kinetic energy is lower. Also, the mass penalty of carrying recovery h/w is relatively lower. It's all about the mass fraction that you impact.
Given that the 2nd stage would have to start its recovery maneouver at around Mach 25, the weight of thermal protection alone will eat directly into the revenue payload. I don't have the maths for it but my gut feel is that it would net an *increase* in $/lb to orbit.
But... if (big if) the cost of the launching h/w is proportional to the engines, then: 1st stage=9 Merlins; 2nd stage=1 Merlin. A divide by 10, right here.
Perhaps the claim wasn't that far fetched, if we allow a few qualifiers.
One argument weighting against the "reusables" is that such approach cuts into production rate and thus raises the cost of the few launchers that are being build (reduced economies of scale, etc.). Being valuable means that the launch will now include loss insurance. Also, being more valuable, there will be an incentive to make them more wear and random failure proof, farther eating into our mass. All such insidious practicalities will erode the final $/lb.
Personally, I can't wait until they announce that they are flying a refurbished stage and tell us what it took.